If the farmer you know seems a little distant at this time of year, it’s because he may have a lot of other things on his mind than Christmas shopping and drinking eggnog.
The past several years have been profitable. And while the 2012 drought was a psychological downer, most grain farmers with crop insurance were able to weather that challenge.
But times are changing. With gross revenue per acre expected to drop about $200 due to lower grain prices and increased costs of crop production, profitability will be calculated with red ink for many farmers in 2014, particularly those who have agreed to higher cash rent demands from land owners. While that was a choice, many farmers felt they had no choice.
Management of revenue risk becomes a key element when working capital is tight, and 2014 crop insurance policies will be readily subscribed by some farmers who can’t farm without them and cut by others with tight budgets, who probably need them even more.
When Congress reconvenes, an early action will be to approve the new Farm Bill, and the U.S. Department of Agriculture will soon roll out a 2014 farm program that could be as complex as the last one, but deserves attention because of the financial safety net it provides.
Why is a safety net needed? When federal officials foiled the plot to steal seed corn genetics when they found some Chinese crawling through Illinois and Iowa corn fields, China began rejecting U.S. corn and market prices dropped. Farmers have no way to protect themselves from such developments, and that is the reason the Farm Bill is a safety net. But signing up for the farm program will require several complex choices.
As commodity prices have fallen to levels of production cost, farm operators will be spending more time with their marketing plan because they are no longer dealing with dollars of profit per bushel. Now it’s pennies. And managing risk against such price shocks as the Chinese seed caper will not be easy.
However, there are other thieves entering the fields that farmers will be worried about in 2014. One of those is corn rootworm, which has outsmarted the latest technology and can survive what used to be a deadly dose of Bt toxin. The 2013 failure of some popular Bt hybrids will require more planning and strategy in 2014 to prevent a further erosion of that insect control, and subsequent yield loss.
Another pest that will steal yields is Palmer amaranth, a new weed that many farmers are just learning about, but which will invade the added soybean acreage in 2014 and get a stranglehold on many fields. It has resistance to many herbicides and the ability to pass on that resistance to its half million offspring. Controlling it is a complex and expensive process.
Many farmers are also concerned about the quality of corn in farm bins, which may have been put into storage wetter than usual in the fall, and may have to stay in the bin longer because of low prices. Their concerns about maintaining the quality will be weighing on many minds when the weather warms up.
Better yet, a gift registration for him may be the best Christmas present for the whole family.
Source - http://herald-review.com/
