Thursday, December 18, 2014

The Ups and Downs of Farming
December 19, 2013 by John Parker | No Comments

Most people would not like to go to work and not know what income they will get from their labor. Yet, that is what grain…

Most people would not like to go to work and not know what income they will get from their labor. Yet, that is what grain farmers are experiencing this fall.

Prices local grain farmers and those across the country are getting for their corn and soybeans are considerably lower than for the past two years. In fact, some agricultural economists are saying that their prices are below what it has cost them to grow their corn. That is bad news and makes profits look tough.

While soybean prices are also down, they did not drop as bad as corn. Fewer acres were planted and there are fewer soybeans going to market.

Why the big drop in price? Mostly it is because there is much corn in the country and worldwide. There apparently is a sizeable surplus and that does not spell good news for the growers.

With the good prices of the past two years, much land was brought into cultivation and planted to both corn and soybeans. Since corn was the more profitable of the two, more acres were planted to this grain.

With all the problems local corn growers had the past two falls in getting their crops harvested because of wet weather, it has to be discouraging to see prices drop as much as they have. Predictions are that corn prices probably will not improve much in the next few years.

However, no one knows what the weather will deal. A drought or extremely wet year that reduces the crop can bring about a big improvement in prices. One just never know what one will get.

Lower grain prices, as discouraging as they are for growers, create a brighter picture for livestock farmers. Lower grain prices mean lower feed prices for those dairy cows or hogs or beef cattle.

With lower feed prices, it gets a bit easier for livestock farmers to make a little more money. With dairy cows, for example, feed prices make up a big chunk of the cost of producing milk. So, dairy farmers are not unhappy with lower grain prices.

Locally, many dairy farmers grow much of their own feed. So, wide swings in corn prices are not as important to them because they market their corn in the form of the milk they produce.

Soybeans are another matter. Many dairy farmers use soybean oil meal for a source of protein. So, lower bean prices can mean lower protein costs.

Interesting predictions are being made because of the lower grain prices. Some economists are saying farmers could see a big increase in milk production and in the number of hogs raised.

Dairy farmers, for example, have the ability and sometimes the tendency with good profit levels to want to produce more milk. They can do this fairly quickly, to some extent, by feeding more grain and protein. But, larger increases take more time by raising more cows and expanding herd size. In the past there have been big swings in milk prices and that has made it hard for dairy farmers to plan their business.

So, lower grain prices do not make grain growers very happy, but to livestock farmers, they are good news. What is not good for one can be good for the other one. Farming is an interesting business.

Parker is an independent agricultural writer.

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