With harvest coming to an end, grain farmers might want to take a little bit of time before knocking off for the holidays to inspect and sample stored grains for insect and fungal presence. (Better to find out about it now than to find out about it in March!)

This is a dangerous year for fungus, because fungal infections do better in wet conditions and this was a very wet year for most farmers. Fungi can infect grain while the crop is still in the field, or it can happen after the grain is in storage. Because fungi are microscopic organisms, it’s quite easy for there to be a low level of infection in storage areas or on equipment and buildings; if storage conditions are less than optimal, this small initial infection can quickly explode, using your hard-won crop as the feedstock.

Insects can get into grain bins through very small holes, and many species can survive from year to year by living off debris in the bin from last year’s harvest. Insects also get in from the field, coming along with newly-harvested grain. As with fungal infections, insects need water – so keeping grain bins dry can put a real crimp in their life cycle and expansion. Insects can also be slowed down or stopped by lowering the temperature in the silo – insects generally don’t feed or breed unless the temperature is 70 degrees Fahrenheit or higher. They tend to stop having any activity at all if temperature gets down to 50 degrees.

It’s a good idea to inspect for insect life and fungal infection regularly. Look at stored grain every one or two weeks if the weather is above 50 degrees Fahrenheit. If you know your grain is in good shape and the temperature is freezing outside, you can inspect every month or so while the cold weather lasts – it’s not likely for insect or fungal population to expand rapidly under those conditions.

Insects like to live near the surface of the grain where they can stay cool and comfortable when it’s warm out, but in the winter months or during cold winter, they’ll move deeper into the bins to stay warm. That can make it a little tricky to inspect thoroughly, unless you like swimming in wheat, but there are probe traps available that you can insert deep into the bin and leave in place for a week or so. The trap, when retrieved, will let you know what the insect activity level is down inside the bins.

As many of you know, I occasionally invite guest blog posts from agribusiness industry experts.  I like to do this to add a little variety to our topics and because let’s face it, agribusiness is a huge sector and no one can be an expert on every topic. I asked Erica Beck to give us a little perspective on a crop that you might not know much about.  She is the communications manager at the USA Dry Pea & Lentil Council. Here is what she had to say…

A Word from the Little Guys: Dry Peas, Lentils and Chickpeas

When the topic of agriculture comes up, most people think of corn, soybeans, wheat and the like. Most folks aren’t going to think of agriculture and immediately pipe up with dry peas, lentils and chickpeas. Such are the woes of being a minority crop, but those minority crops really have a lot to offer this world we live in. The national headquarters for this segment of the agricultural industry, the USA Dry Pea and Lentil Council (USADPLC), is dedicated to making these pulse crops become a household name.

The main focus of the USADPLC is quite simple: develop a market for dry peas, lentils and chickpeas in the U.S. as well as overseas and conduct research ranging from improved breeding to disease resistance to discovering better ways to produce these crops.

Perhaps one of the biggest hurdles is educating others about the benefits and uses of dry peas, lentils and chickpeas. Once people are in-the-know, pursuing new markets and generating research funds becomes one step easier.

One of the biggest advantages of pulse crops is the nutrients that are put back into the soil (nitrogen fixation) which helps prepare the ground for the next crop rotation. On the product end, eating dry peas, lentils and chickpeas and ingredients made from these sources has great nutritional and dietary benefits. Legumes are high in fiber and protein and have a low glycemic index. They have also been linked to the reduction of risks for cardiovascular disease and diabetes. In a society where health and nutrition are a very hot topic, these crops give a lot of answers to rising diet concerns.

Even with this little bit of background knowledge of the dry pea, lentil and chickpea industry, the immediate issue we’re facing is an issue everyone across the board can understand and relate to: the unsettled economy. Because of the shaky economy, the supply and demand has been skewed sharply and the recent rise of the U.S. dollar has been a big challenge for countries dealing in different currencies. Sellers don’t know where the prices are going to head; buyers can’t get the credit to make purchases. This is by no means an isolated concern for the pulse industry. Everyone is facing the same issue and wondering how it is all going to play out.

While things have slowed down from the processing end of the business, it really is an exciting time for the dry pea, lentil and chickpea industry. The future holds a lot of interesting possibilities, and it will definitely be worth it to keep an eye on the direction pulse crops take!

For more information about dry peas, lentils and chickpeas, please check out the USADPLC’s website at www.pea-lentil.com.

It’s no news to anyone reading my blog that the recent months have been disastrous for the stock market. Although the federal government’s actions seem to be having some effect in loosening credit markets and preventing a genuine economic meltdown of Great Depression proportions, it’s also clear that we’re heading into a slowdown. As I discussed last week, in my day job I run AGERCO LLC, a farmland investment company. One of my special areas of interest is in helping investors find secure and profitable farmland investments.

In the past, I’ve been very successful in steering investors to the right farm properties for their particular needs. I take pride in the track record I’ve built up of protecting my clients’ investments in bad times, and building their equity in good times. In fact, farmland is an ideal investment in difficult economic times, because it keeps its value even while other forms of equity are going into the tank. In fact, although the economic crunch is slowing the growth of farmland prices, farms are still profitable and land prices are still going up – just at a somewhat slower rate than in the past few years, which have seen good land valuations rising by more than 10 to 15 percent per year.

Now, let’s be honest – during boom times, stock market equities have more immediate profit potential than farmland does. No farm is going to be the next Google; some equities double or triple in value over the course of a year, or even more ridiculous multiples, and I would be dishonest if I said that would happen with farmland. But on the other hand, the price of a particular stock can go straight to zero – whereas even in the worst of times, farmland keeps its value and even gains a little bit. Many investors hedge their stock risk by buying “index funds” – that’s a fund that purchases a little bit of a large number of companies, so that gains and losses track the market as a whole rather than one particular stock. Well, how would that strategy have worked over the last few months?

Let’s hop in our time machine and go back to October 1, 2007, and let’s take a two million dollar investment scenario. We’ll put $1,000,000 in the stock market, buying an index fund tied to the Dow Jones average. We’ll put the other $1,000,000 into farmland, buying equal allotments of good quality land in the farm belt states of Illinois, Indiana, Iowa, Michigan, and Wisconsin. Then we’ll hop back in the time machine and jump ahead to October 1, 2008. (I picked that date for two reasons – one, that’s the day that the statistical period closed where I have data on farmland prices in those states, and two, it avoids the huge stock market crash of October – I’m not cherry picking my results, here.) How did our investments do?

The Dow Jones closed at 13,930.01 on October 1, 2007 – and it closed at 10,831.07 on October 1, 2008. (Remember, this is before the big crash – it’s around 8,400 today.) Our $1,000,000 investment has been turned into $777,534. Ouch.

Over the year from October 1, 2007 to October 1, 2008, our farmland investment appreciated by 13.6% (averaging the typical appreciation on good farmland in those five states, which actually ranged from 8% to 17%). Our million bucks turned into $1,360,000. Not only did we make money on the land appreciation, we also owned those farm(s) for a year and collected their income as well. But let’s assume that our farms only broke even in terms of operations, and all we got was the appreciation. We made enough on the farms to cover our losses on the stock market – and have more than a hundred large left over, too.

Now, if you visit that last link, you’ll see that during the last quarter of the period in question, our farmland didn’t appreciate at 13.6% a year – it gained only an average of 2.2%. As I noted, farmland appreciation has slowed with the economy. Over the same period, the Dow Jones lost 4.8% of its value – meaning that even as things were slowing down, farmland was appreciating in value, just at a slower rate, while stockholders were losing their shirt. Since October 1, the Dow has lost a staggering 22.4% - go to your wallet, take out every fourth bill, and set them on fire. Ouch. Land prices aren’t as easily measured as stock prices – but I work in the industry every day, and I can tell you that prices haven’t dropped; they’ve continued to climb, albeit at a slower rate.

Now, is the Dow going to turn around? Sure. It usually does. And when it does, it’ll eventually catch up to farmland – eventually. The stock market is a fine place to invest, for those who have great risk tolerance and who can afford to watch a third of their portfolio go up in smoke every time the Federal Reserve hiccups – but farmland is the place to invest for folks who just want their money to be worth more year after year.

Farmland investments are ideal for the long-term investor, and even better suited for those seeking a wealth preservation model.  (I am sure that some of investors out there wish they had more of their portfolio in farmland over the past few months) Farmland investments have historically provided investors with favorable risk-adjusted returns and diversification benefits when measured against other asset classes.  Let’s keep in mind that:

1. Farmland has a history of strong total returns, low total return variability and a stable income component.
2. Long term trends of increasing population, rising incomes, and improving diets in emerging nations will generate strong long term demand for U.S. agricultural exports.
3. Long term continued expansion of metropolitan areas has resulted in the gradual conversion of farmland near population centers into other uses. 
4. Farmland returns have historically shown a positive correlation with inflation, a negative correlation with both stocks and bonds, and a neutral correlation with commercial real estate.
5. Advancements in farming equipment technology have created new efficiencies by increasing yields and the amount of land a single operator can manage.
6. Advancements in bioengineering are producing and will likely continue to produce stronger, more tolerant, crops with higher yields than presently possible.
7. Alternative uses for agricultural products like corn-based ethanol are colliding with already strained supplies and driving up commodity prices in the agricultural section.
8. Historically, the U.S. government has vigorously protected the farming industry and has signaled long term future support of the industry through its Renewable Fuels Standard (RFS) legislation.

I would argue that investing in farmland today is as smart as it was 5 years ago, and 5 months ago.  The fundamentals are still in place and this is an ideal way to add diversification and risk mitigation to any portfolio.  Happy investing.