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Change means opportunity for US farmers, conference highlights

Moorhead, Minneosta, on Monday, Sept. 12, 2022 was the site of the “Next 5 Years,” conference, hosted by the Northern Crops Institute, featuring speakers taking a look at big trends, such as sustainable agriculture, renewable energy, and political forces at play.

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Nelson Neale of CHS Hedging speaks Monday, Sept. 12, 2022, in Moorhead, Minnesota, at the Next 5 Years conference hosted by the Northern Crops Institute.
Jeff Beach / Agweek
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MOORHEAD, Minn. — Nelson Neale sees some similarities between current trends in the ag economy to trends that predated the 1980s farm crisis.

Neale, the president of CHS Hedging, points to:

  • Increased food and energy prices.
  • Rising interest rates.
  • Instability in global politics.

But that doesn't mean he is pessimistic. It’s quite the opposite.
“I’m very optimistic, and the reason I’m optimistic is because with change comes opportunity,” Neale said.

But he says he wants farmers and those in the ag economy to be aware of that history and think about what they can do to avoid repeating it.

“The most obvious is, hey, don’t get overextended; focus on buying inputs and locking your prices through some sort of marketing plan that gives you an acceptable margin and continue to do what you’ve been doing,” Neale said. “It’s all about managing your margin and staying disciplined.”

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Neale was speaking in Moorhead on Monday, Sept. 12, at a conference called the “Next 5 Years,” hosted by the Northern Crops Institute, featuring speakers taking a look at big trends, such as sustainable agriculture, renewable energy, and political forces at play.

One of those big political forces is the Russian invasion of Ukraine and the effects it has had on production, exports and energy prices.

David Ripplinger, associate professor at North Dakota State University said that while energy prices are higher here in the United States, it is far higher in Europe, where dependency on Russian natural gas is crippling ag industries.

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David Ripplinger, North Dakota State University, associate professor
Evan Girtz / Agweek

Rising costs have forced the shut down of a fertilizer manufacturing facility in the United Kingdom and has hindered ag processing.

Ripplinger said the longer term effect will be stopping investment in ag processing in Europe when energy is cheaper elsewhere, like the United States.

“The U.S. is arguably the only energy and food secure country in the world,” Ripplinger said.

The energy shortage presents a major opportunity for U.S. agriculture, he said.

“Renewable natural gas is probably the single biggest immediate opportunity with renewable diesel,” Ripplinger said. “Both of those have the opportunity to … capture some very significant premiums.”

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What’s behind the opportunity is clear: “The driver is California’s state policy,” Ripplinger said. The state’s Low Carbon Fuel Standard is emulated in other states, with Minnesota being among the states where the idea is being discussed, and even in other countries.

“Many of them look to California because they have built a robust system that works,” Ripplinger said.

The demand for renewable diesel made from soybeans is helping drive plans for soybean crushing plants in Minnesota, North Dakota, South Dakota, Iowa and Nebraska. It may also mean an acreage shift to additional soybeans. Neale said that might mean fewer acres of other crops, such as corn or cotton, but not necessarily.

“We do, however, export roughly half of our soybean crop internationally,” Neale said. “It may be that the U.S. pulls back on some of the exports with soybeans and diverts that into the renewable diesel space.”

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Heavy machinery has been working to prepare the site of the North Dakota Soybean Processors plant at Casselton, North Dakota.
Jeff Beach / Agweek

Reach Jeff Beach at jbeach@agweek.com or call 701-451-5651 (work) or 859-420-1177.
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