still in the future for many producers
March 31, 2014
Commodity corn prices have driven the U.S. agriculture sector for at least five years now. Strong demand from the ethanol industry coupled with improvements in corn technology such as drought resistance have contributed to record sales years for implement dealerships and skyrocketing land prices, especially in areas where corn was not so common ten or even five years ago.
The improvements in corn technology have allowed corn to expand into other countries like China and the Ukraine, which are now competing with the U.S. for the global corn market. In addition, the politics of ethanol have become more uncertain. As one magazine put it, "gone are the days when a farmer could make a profit just by getting out of bed in the morning."
Everyone knew that the high prices wouldn't last forever. Land prices in the midwest have slowly begun to stabilize, and implement dealerships are preparing to make fewer sales and do more repairs on existing equipment. But what about seed corn costs?
"No, they don't really go down, but they haven't gone up either" says Toby Kirsch, Legend Seeds' regional sales manager for the western Dakotas. Legend Seeds, based in DeSmet, S.D., focuses on developing varieties of corn and other grains for the Dakotas and Western Minnesota and Iowa. Legend Seeds corn prices range from $70 to $330 for a fifty pound bag.
In the more arid region west of the Missouri River, the rules of the corn game are a little different. Producers plant an average of 10 pounds per acre of corn, as opposed to 25 or 30 east of the river. And more of the corn is fed directly to cattle, often owned by the same operation. Also, lower corn prices tend to contribute to higher cattle prices, so the cattle feeder growing his own corn will welcome the shift. The basic equation however is the same; the most corn you can grow is the best. That means, according to Kirsch, selecting the best variety or varieties of corn for your region, regardless of cost.
"My customers out there don't want to sacrifice that genetic quality by cheapening the inputs," he says. "The area they're going to change is how much corn they plant, or whether they're gonna plant corn at all." West of the river, Kirsch says, how many acres are planted to corn is hinged to drought or even the perception of drought. Even if prices are good, some producers west of the river won't plant corn anyway if it looks like drought is likely. "Inputs are sure not going down, so the question West River this year is, are you going to plant 1,000 (acres) or maybe just 500?" Kirsch also hasn't noticed a huge decrease in seed corn purchases either. "I would say we're down maybe 10 percent from last year. A lot of the guys west of the river don't buy their corn 'til April, when they know how the weather's going to be."
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Ed Hawks of Hawks Herefords near Plainview agrees that buying cheaper seed corn is not an option. "We've grown corn here forever. I guess there were a few years when we stopped but we started back up again." Hawks grows 500-700 acres of corn most years, chopping about a third of it for sileage. On good years, he sells some as commodity corn. He's planning to plant more corn this year than ever before. "Actually, we're going to spend more per acre this year, around $42 an acre just in seed. You can't plant cheaper corn, you can't cheat on fertilizer, you can't cheat on ground prep," he says. "We've tried cutting corners some years, and boy, it always came back at us."
Hawks uses six to eight varieties of corn from two different companies. Varieties with differing maturities theoretically spreads the risk of crop failure, although he's not entirely sure that's necessary. "I know guys who just plant one kind, and they get by alright. But the varieties we use, there's ones we trust, and there's always some new ones a guy is trying to talk you into." He's trying three of those this year.
"You just can't cut corners. We've tried some minimal-till corn some years, but boy when those weeds come you have to be right in there, or they'll take all the moisture and choke that corn out. There just isn't any easy way around it. Ideally you should spray, till, plant, and then spray. I never get all of that done, but that's because I don't have time. If I had six guys working half days here, I could get all my work done and they'd be happy because they could spend half the day fishing. I guess I'd need six tractors though."
The implement dealers would be happy to see him.