Is another bust in farming a sure thing?
FARGO, N.D. -- "Things are seldom as good as they say it is in the newspaper -- and almost never as bad," Mikkel Pates says to friends at least once a month for the past 20 years, often over a "nice cup of tea."...
FARGO, N.D. -- "Things are seldom as good as they say it is in the newspaper -- and almost never as bad," Mikkel Pates says to friends at least once a month for the past 20 years, often over a "nice cup of tea."
It may be warped for writers to start out columns by quoting themselves. I hope you'll forgive me for taking this liberty.
My inspiration comes from the British dramatist and critic George Bernard Shaw, whose quote -- "I often quote myself. It adds spice to the conversation." -- is famous with high school debaters.
I'm relating my quote to the agricultural economy and the premature reports of another farm crisis on the order of the early 1980s. The rhetoric regarding the health of the farm economy has flipped faster than a famous radio talk show host can switch political parties.
I agree; it's a fact that commodity prices trends have undergone a stunning -- breathtaking -- change.
But I'm going to stick my neck out and say I don't think the aggregate effect will be as bad as the current headlines.
Let's look at 2008 crop returns and then look ahead to 2009.
Returns from 2008 will depend on many things. How much did the farmer sell in advance? How much did the farmer buy in advance? How much was the farmer able to harvest before the devastating rains and then the snow? How will insurance work?
Pointy-pencil lenders and agribusiness people are scratching their heads about just what will be the impact of the unharvested sugar beets, corn and soybeans, now anguishing in the muck. People at the top of our agribusinesses are just now beginning to ferret out the answers for themselves.
True, farmers in the southern Red River Valley are in the most difficult straits. I'm told of beet farmers who have harvested only 10 percent to 20 percent of their contracted acres.
Officials at Minn-Dak Farmers Cooperative of Wahpeton, N.D., declined to speculate what will happen with crop insurance in regard to the beets. Crop insurance executives aren't much help. Surely Minn-Dak would like more beets to efficiently run its plant. It's probably optimal to get the average of 20 tons of beets and is pushing the limits at 25 tons. If beets brought in so far would calculate at some 18 tons an acre -- despite those left in the field -- it's still a sub-par result.
Which entity exerts has a bigger influence on what farmers will do? The farmer-owned co-op? The crop insurance companies? I'm betting farmers will succeed in doing what's best for them individually.
As for the other crops, sources I talk to think farmers probably will wrestle with the corn crop for several months, despite the fact that corn doesn't stand forever.
The zero-out date for soybeans is Dec. 10. It remains to be seen how crop insurance companies will deal with it. Generally speaking, farmers will need to demonstrate a reasonable effort to bring the crop in.
We'll find out what "reasonable" effort is.
Corn farmers probably can come out on the crop revenue coverage for the 2008 crop, but standing crop in the field, or corn stubble presents new problems for next year's crop -- especially corn following corn. And then there will be decisions about prevent-planting insurance.
Input costs probably will decline. Fuel and fertilizer prices have moderated. Land rent should be tempered by the current headlines of doom and gloom. Meantime, I hope stressed-out farmer friends can take a deep breath.
Farming in the "Double Jeopardy" phase at high commodity prices wasn't always fun, either, even when it's lucrative.
Not every logical and reasoned decision can be a winner when Mother Nature is in the game.
I'm thinking crop prices will recover from harvest levels, like they most always do. Come March and April, farmers will have a different attitude and will be anxious to go at it again.