Down on the farm

Published 2:56 pm Saturday, October 3, 2009

During a brief period when rain wasn’t saturating southern Minnesota last week, Brad Heydt began harvesting soybeans east of Sargeant. He feels fortunate he and his brother will be better off than some farmers in the area.

“We’ve had pretty good luck with beans, but it really varies throughout the area,” said Heydt, who farms about 2,300 acres, and is expecting to yield about 50-60 bushels of beans per acre.

“We’ll be out right,” he said. “It’ll be an above-average year. If your ground isn’t as heavy, it’s going to hurt.

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“I don’t want to make it sound like everyone’s going to have a good year,” Heydt added. “It’s farming — you never know.”

Farmers are looking at two very extreme sides of the spectrum this year — a better-than-expected harvest, and some of the worst milk prices many dairy producers have ever seen.

A dry, cool summer could have been detrimental to soybean and corn crops, but they were mostly salvaged by a warm, wet September.

Dairy producers, on the other hand, are facing grim conditions, with low milk prices and high production costs forcing many to sell cows and for some, even quit the business altogether.

‘Everybody worried’

Larry Larson farms alfalfa and owns Sargeant Grain Co. with his son, Don.

A board member with the Minnesota Farm Bureau, Larson said farmers are getting about 30 bushels per acre; 50 to 60 bushels on heavier ground.

“Everybody worried, but we had a wonderful September,” he said. “We could get frost, and we wouldn’t see much damage now.”

As of Tuesday, Larson said a few farmers reported they beginning to harvest soybeans, and expected some to haul in loads that afternoon.

“A year ago, prices got really high,” he said.

He said, however, that corn is down to about $3 per bushel.

“We could see corn going down to $2.50,” he said.

Many farmers, he said, are holding over corn from last year.

“I look for a really good crop here,” he said. “Carry-over is a big thing, and the carry-over looks good.”

In the immediate Sargeant area, he said, crops are looking “the best of any place.”

“I look for grain prices to (eventually) go really down,” Larson said. “Right now there’s been strong demand for beans and corn. For awhile, the ethanol plants were pushing the bids up and up.

“We need to be sharp on our marketing,” he said.

Gene Anderson, who farms about 340 acres of oats, hay, alfalfa, corn and soybeans near Sargeant, said Thursday he was half-finished combining beans.

“They’re running fairly good,” he said. “I think the corn crops are coming good. We’re thankful we had a warm September — we had a very cool summer. The crop’s behind.

“It’s going to be a later harvest than some years,” Anderson said.

He also owns about 40,000 hogs across Mower County. Hog producers, on the other hand, are continuing to struggle.

Larson said that the H1N1 flu, formerly called the swine flu, has affected hog producers because it scared countries such as China —although it is not related to pigs — and hurt exports.

“This H1N1 thing just killed it,” Larson said. “The pigs never got this disease. We’re really dependent on exports. Thirty-eight countries shut off their buying for awhile.

“We’ve basically raised more than we can sell,” he said. “If we get rid of some hogs, and get rid of some cows, the grain farmers are in trouble.”

Larson said some hog producers are having a tougher time than even dairy farmers.

“Hog producers are in worse shape,” he said. “They’ve been in trouble for about two years.”

‘It’s gotta get better’

Anderson, who serves as treasurer of the Mower County American Dairy Association, said the dairy industry has taken a hit, and some farmers may never bounce back.

“Most of them have to borrow money every month,” he said. “They (industry experts) try to make us believe we are producing more than we are consuming, but I have a hard time believing that story. They put the milk on the board of trade about a decade ago, and ever since then it’s been volatile.”

He remains optimistic, however, that prices will rise within a year.

“They tell us we’re not going to see much improvement until next June,” he said. “I have a hard time believing we won’t see better prices than that. I feel that when it gets better, it’s going to go fast.”

Anderson owns 41 head of dairy cows. He said he hasn’t reduced his herd so far, but knows many dairy producers have.

“I feel the best thing one needs to do is look at their cows, and get rid of some poor producers … put a heifer in there,” he said.

“It’s gotta get better, that’s all I know,” Anderson aid.

A ‘perfect storm’

Duane Alberts, vice president of the Minnesota Farm Bureau, called the current situation for dairy farmers a “perfect storm.”

Exports were “outstanding” in 2007-2008, particularly to Mexico, he said.

“When the world recession kicked in a lot of those exports dried up,” Alberts explained. “The dairy farmers also lost a lot of domestic because of people not going out to eat. People started staying home for awhile.”

“In a situation like this a dairy farmer needs to sell as much milk as he can and that’s a paradox,” said Alberts, who owns about 640 head of dairy cows with several family members near Pine Island.

“I cannot overemphasize how bad the situation is,” Alberts said of the dairy industry. “We’re losing a lot of dairy farmers. There are a lot of co-op elevators and feed mills who are wondering how many farmers they will have when this is over.

“We know that prices will recover,” he said. “The problem is, when prices recover, there will be a lot who will not recover.”

He said there is about a 2 percent surplus for milk now, and although that number not seem like much, “all it takes is a 2 percent surplus to drop prices considerably,” he said. “We’re hoping the milk supply diminishes another 2 percent here, but it won’t happen before the end of the year.”

Milk prices were at $12.40 per hundredweight as of Thursday, he said. At one point, they were below $10. If prices reached $14 to $15, dairy farmers could begin picking themselves back up, Alberts believes.

“It’s not enough to save a lot of dairy farmers,” he said. “Every dairy farmer is different, depending on if they own their own land or if they pay rent …. the general number right now to break even at about $16,” he said.

‘We’re all involved’

As vice president on the Farm Bureau, Alberts is involved with the dairy profitability advisory committee, which includes representatives from all walks of the industry — producers, dairy equipment manufacturers and others.

He said their purpose is to “try to find solutions to the problems that Minnesota’s dairy industry is facing.”

“We’re making some progress,” he said. “It’s going to be a long road back, because the export market is something that takes a long time to develop. We’ll be hoping that the domestic and world recession improves so people start consuming.”

At his own farm, they have been taking steps to improve nutrition and cow comfort, such as working regularly with a nutritionist and remodeling a barn with larger stalls.

“This is definitely not the time to have anything wrong on the dairy farm,” he said. “That was expensive and not something everyone can do.

“We’re just trying to conserve money in any way we can,” Alberts said; for example, they are not purchasing new farm equipment this year.

Alberts said he believes — by the time prices are at normal levels again — he will have lost about six neighbors in the dairy farming business.

“We sure hope things turn around,” he said. “It’s not just dairy farmers — it’s hog farmers, it’s honey producers, it’s just about everyone. We’re all involved.”