Grain producers far from getting rich




John F. Kennedy said “the farmer is the only man in our economy who buys everything at retail, sells everything at wholesale, and pays the freight both ways.”

In a bumper year where wheat producers are reporting great yields, one would expect Idaho farmers might meet or exceed their breakeven point. However, as prices fell below $5, discounts were added for low falling numbers and stocks exceeded demand, hope for even a small income dwindled.

Jonathan Rosenau, Idaho County director for Idaho Grain Producers Association (IGPA), said at 100 bushels per acre a grain producer would need $3.50 per acre in return to break even. With this year’s low falling number discounts, many producers in Idaho, Nez Perce and Lewis counties received as low as $2.70 per acre.

“Most farmers don’t want to get rich,” he said. “We want to feed our families and make a decent living.”

Rosenau figures with the cost of inflation on cost of inputs, market prices should be closer to $26 per bushel rather than the $4 per bushel the market offered this year.

In a report produced by the University of Idaho Extension Office in Moscow, the net farm income for 2016 was expected to fall for the second year in a row. It reported net income to be down 31 percent to $1.3 billion in 2015. Revenues were expected to decrease by 8 percent while expenses were only expected to decline by 2 percent.

The U of I report also notes Idaho agribusiness dollars create $27 billion, or 21 percent of total economic output, in sales; almost 126,000 jobs, 14 percent of state employment; and more than $10 billion, or 16 percent, of state gross domestic product (GDP). Agribusiness also is Idaho’s largest industry, ranked by base sales; third largest GDP; and fourth largest job base.

“I can’t imagine what our communities would look like if we lost half our farmers right now,” Rosenau said. “Our towns would be nothing.”

He makes the statement not to be boastful, but makes a more realistic statement about concerns many in the agriculture industry are raising. Young farmers, new to the industry, are being hit especially hard and weighing whether they will return next year.

Those new to agriculture who just purchased equipment, land purchases or rental agreements, as well crop insurance, fertilizer, fuel and seed are feeling the pinch.

In a release dated Aug. 4, the US Department of Agriculture-National Agricultural Statistics Service (NASS) stated “U.S. farmers spent $362.8 billion on agricultural production in 2015, down 8.8 percent from 2014, reversing a long-term trend of growing costs.”

Rosenau said costs of input have at least leveled off and some even dropped slightly. Costs for fuel and fertilizer, he said, both declined slightly. However, with the drop in market price coupled with the discounts, grain producers are pulling $2.25 to $3.35 per bushel lower than a year or two ago.

Bottom line is farmers are “taking it in the shorts,” as Rosenau put it.

Comments

Use the comment form below to begin a discussion about this content.

Sign in to comment