The Planted Row: Grain prices in slump, time to explore options

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Farm Forum

If farmers want to make their farms more profitable, they have quite a few options. They can produce higher yields, farm more land, reduce input costs, make better marketing decisions, and diversify their operations.

Whole industries have grown up around the first option, producing higher yields, and efforts toward that end have been highly successful. It’s common knowledge that farmers today harvest much greater yields than did their forebears. That’s great news for consumers, but it’s a mixed blessing for farmers. Farmers all over the world are producing more food, fiber and fuel, and the law of supply and demand tells us when there’s more of a commodity on the market, the price goes down. So while a bumper crop is good, if everyone has a bumper crop, everyone is going to take a hit on the price they receive.

The second option, farming more land, is a difficult one to manage. Often, competition for farmland is fierce, and if cash prices for crops are below the breakeven, farming more land won’t help.

The third option, reducing input costs, is certainly advisable in times of low crop prices, but sometimes reducing inputs can have a negative effect on yields, and the trade off can be difficult to balance.

The fourth, making better marketing decisions, is great if you can manage it. There are plenty of strategies and products on the market to help, but in a period of sustained low-prices, there are only so many options available, and none of them may be good.

That brings us to the fifth option, diversifying the operation. Like most farm decisions, this one doesn’t come without risks or steep investments, but it can position a farm or ranch to make profits on multiple fronts and potentially survive periods of low prices. My own family’s farm was nearly lost in the 80s. However, by scaling back, adding a vegetable operation and, eventually, an ever-expanding agritourism element, the farm survived and is currently growing.

I’m glad to see that so many operations in our area have remained diversified. The row crop operations that also have cattle are in a good position right now. The farms or ranches that have hunting lodges and offer hunting tours are capitalizing on a form of agritourism. Anaerobic digesters that produce biogas are becoming more popular with larger cattle operations. Those are all great options for diversification, but new ideas are being developed all the time.

On page 5G of today’s Farm Forum, you’ll find a story from the Bismarck Tribune about western North Dakota farmers harvesting carinata, a variety of mustard, that will be processed into jet fuel. North Dakota farmers planted 6,000 acres of the crop this year for Agrisoma Biosciences, a Canadian seed producer. The company hopes to increase production to 50,000 acres next year. According to the Agrisoma website, the company has partnered with South Dakota State University to coordinate the introduction of carinata in our region.

Agweek recently published a story (http://bit.ly/1Uq7p5b) about farmers in North Dakota and Montana making money by adding lentils to their rotation. The crop grows well with limited water, fixes nitrogen into the soil from the air, and can be more profitable than wheat. The biggest challenge with lentils, of course, is finding a market for them.

With many economists forecasting years of lower corn and soybean prices, crops like carinata and lentils could become an important way to add diversity to our crop landscape and help keep farmers afloat. I hope those with the power to get things moving in the industry explore the potential profit to be had by building an infrastructure to help farmers get crops other than beans or corn to market.

Contest winner

This week’s Farm Forum 50th anniversary cash giveaway contest winner is Starla Keller of Aberdeen, S.D. Starla will receive a replica windmill and is eligible to win the $5,000 cash grand prize. Prizes are mailed at the end of each month.