Ag specialists: Corn farmers could be looking at losses
SIOUX FALLS (AP) — Corn farmers in the Dakotas will likely face per-acre losses this season as high seed, land and fertilizer costs eat up any potential profits from low commodity prices, farm management specialists in the region said.
Jared Hofer, director of the South Dakota Center for Farm/Ranch Management at Mitchell Technical Institute, said some grain farmers either broke even or faced small losses last year, but this year’s spread between input costs and sale prices will likely widen.
“So your revenue is half but your expenses are still as high as they were three years ago,” Hofer said. “The math doesn’t work very well.”
Farmers in the Dakotas experienced historically high net farm incomes from 2010 through 2012 as corn, soybean and wheat prices skyrocketed while input costs trended higher but at a lesser rate. Since then, South Dakota corn prices decreased more than 50 percent while soybean and wheat prices each slipped by about 25 percent, according to the most recent farm trends report from SDSU Extension.
Andrew Swenson, a North Dakota State University Extension Service farm management specialist, said the total production cost for a bushel of corn in North Dakota will likely be about $4, though this year’s excellent growing conditions could likely boost yield and bring that cost down to about $3.80. The current sale price in the state is about $3.10, he said.
“It will be tight, for sure,” Swenson said. “The impacts are going to vary from farm to farm.”
Swenson said farmers with little or no land debt might have a better shot of breaking even or turning a small profit.
Hofer, whose center aims to help South Dakota farmers and ranchers become better business managers, said landlords, crop insurers and those who sell seed, fertilizer, chemicals and machinery will all make a profit, so they should consider working with farmers so they, too, can profit.
“Everybody in that cycle is making money except for the farmer,” Hofer said. “Why should the farmer be the only one to have to bear that burden? So I guess what I’m trying to get at is if you’re truly a friend of agriculture, you’ll give a little bit to help keep the farmer going.”
Hofer said a diversified agriculture operation can help. For a farmer and rancher selling livestock and grain, livestock sales might help offset grain losses. Diversification could also include having a side job.
“Being a diversified operator is a great way to manage risk,” he said.