Shhh!, we're farming hard, living happily in '08
FARGO, N.D. -- Crop farmers in the region had the biggest year in history in 2007 and 2008 could be (shhh) just as good. An embarrassment of riches had been whispered in hallways through this past winter, but the facts were out of the bag a few w...
FARGO, N.D. -- Crop farmers in the region had the biggest year in history in 2007 and 2008 could be (shhh) just as good.
An embarrassment of riches had been whispered in hallways through this past winter, but the facts were out of the bag a few weeks ago when economist Andy Swenson at North Dakota State University in Fargo put out his annual report of North Dakota Adult Farm Management records. Average net farm income for farms in the state in the 2007 farming year was $192,000 -- average. And that's after costs for the home, vehicles, gas and other family and business costs (heavy on the slash) are taken out.
"That would be a salary of $300,000 for you and me in town," said a fellow (not Swenson) who is intimately knowledgeable of farmers and their financial picture. Not bad for a career that isn't the 40-hour-per week grind, year-round, he said. And hey, with Roundup Ready crops and larger, better equipment these days, the time a farmer takes to actually put in a crop and get it out probably are much lower than in the past. He wondered what average per-hour wage is for crop-only farmers these days. (If you see a study on how many hours farmers actually spend on their operations, let me know.)
One lender acquaintance of mine barely could hold in his emotion when he forced himself to describe today's farm profits as merely "strong." "They'll probably shoot you if you tell it like it really is," he says. This six-figure town career guy questioned (He may have been joking.) whether he'd been wise to go into the lackluster career. Maybe he should have gone farming, the lender wondered.
I'm no psychoanalyst, but I've noticed most farmers still have a hard time talking about how good things really are. Bring up these levels of profit and the subject is quick to change. We never know how long this will last, they'll say. It could end tomorrow.
All of this 2007 profit was predicated on the fact that farmers purchased their inputs at cost levels associated with more historically normal crop prices, they'll say.
Let's not forget that input prices are up for 2008, they'll add.
And then some farmers -- some of them -- emphasize me that some farmers (surely not the fellow I'm talking to) didn't really sell their crops at the $18- to $20-per-bushel prices. They typically don't say that it's probably OK to sell wheat at $7 to $10 per bushel, when the break-even price is under $4.
Despite the unprecedented prosperity, I have to say many farmers I talked to last winter still were edgy -- maybe more than ever. While making big profits, they were dealing with big numbers. When you're seeing prices swing between $8 per bushel and $12 per bushel, for example, it can make you crazy.
Looking ahead, farmers seem headed for another banner year. Fertilizer, diesel, seed and chemical costs have increased -- true. (Politicians are busy studying whether someone is making a killing. Do these studies ever go anywhere? Do they study windfall profits for farmers?)
People who deal with farmers confidentially tell me they're seeing some happy, happy folks, and for good reason. The 2007 crop is largely sold. The 2008 crop isn't made, but farmers are seeing another banner year. Besides, farmers are still in the season when they're generally happier, actually getting out there and growing the crops. Marketing isn't usually their favorite part of the deal, especially when decisions have huge consequences.
The pessimists will say they lost out on some cash rent bids, making it more difficult to cover their fixed costs. Others will complain that they didn't benefit as much as they might have on early fuel or fertilizer purchases. Optimists will look at the bright side. Their asset value is going up, so it's easer to get financing. There's multiperil crop insurance, with buy-ups. If crop prices go up by fall, some policies allow them to capitalize. Unlike the past, there is plenty of price to cover the expenses. With profit potential better than the so-called "go-go" 1970s, now is the time to farm "hard," putting as much into a crop as possible.
Life is good.