by Stan Wise
Farm Forum Editor
If you grow crops east of the Missouri River in South Dakota, chances are good that you grow corn and soybeans. You might have more crops in your rotation, but odds are you’ve got corn and beans in there.
How happy are you with the current commodity prices for corn and soybeans?
In the past, decades ago, were corn and soybeans grown on your land? Not likely. Chances are good that wheat and other small grains were grown on your land back then.
What about before that? Probably grass.
I think it’s a safe bet to say that your farming methods and crops look pretty different from those of your ancestors. Do you think your grandchildren and great-grandchildren will be growing the same crops you are now?
According to a report by the Organization for Economic Co-operation and Development and the Food and Agriculture Organization of the United Nations, Brazil will overtake the United States as the world’s top soybean producer by 2026, and the largest increase in corn production will take place in South America. I’ll give you three guesses as to what that’s going to do to U.S. commodity prices.
That’s less than 10 years from now. Will your kids be ready to take over the farm before then? If not, that means this is your problem, not your kids’.
Do you think corn and soybean demand is going to go up enough inside of 10 years to offset the effect of production increases on prices?
Some people are trying to make sure that they do. For instance, National Farmers Union recently announced a campaign to promote government policies that will increase the use of biofuels. That might help out if they can pull it off and if we don’t grow cellulosic ethanol production in this country to meet any new ethanol demand.
But let’s not forget that the oil industry is fighting ethanol expansion tooth and nail.
Let me ask you another question. If oil is fighting ethanol and ethanol is fighting oil, who is fighting electricity?
The last time I visited my in-laws back on the East Coast, my wife’s uncle had a Tesla electric car parked in his garage. Let me tell you, it’s a pretty sweet ride. And though it is an expensive vehicle, Tesla is coming out with a more entry-level model with prices starting around $35,000.
The tech industry is making progress on both the storage capacity and recharge times of batteries.
So, if you were a person inclined to gamble, what would you bet is going to happen first — the ethanol industry beats the oil industry and takes over as our nation’s leading fuel provider or electric vehicles take over our roads?
Some pretty well-funded companies are already betting that it’s going to be the latter. If you’re planning your farm to be a corn and soybean farm in 10 years, you’re betting, too — just not on the same side.
Luckily, this isn’t a dice roll that will be decided in the blink of an eye. You’ve got a little time to gauge which way the wind is going to blow. However, with commodity prices low, it’s a good time to ask yourself if you can make more money by doing things differently on your farm. Can you grow seed for cover crops or pollinator plots and make more profit? Is there a specialty crop that would work for your farm? Can you make changes that would allow you to drastically lower your input costs while still managing your insect and weed pressures? Should you consider going organic?
With prices in a slump and no real hope for a sustained rally outside of dramatically increased demand for commodities, it’s time consider more than just cutting costs.
It’s time to consider changing everything.