I read the transcript of a very interesting speech given by Joseph Glauber, the Chief Economist for the USDA, at the USDA’s annual Agricultural Outlook Forum in late February. Glauber presented a great deal of material and it’s worth reading through his whole speech (it’s about eight pages).

Glauber’s team reports that commodity prices for most farm products have fallen as much as 50 percent since their mid-2008 peaks. However, net cash incomes for farmers, despite the commodity price crash, remain high by historical standards. (Not particularly comforting when you got used to the 2008 price levels, I know.) Volatility and uncertainty are major problems in the agricultural markets, particularly in light of the credit and banking problems.

The USDA projects world trade will decline by almost three percent in 2009, and developed countries are expected to have an actual decline in output of about two percent. The developing world is doing better, however, with growth in output of 3.3 percent. Despite the growth in developing economies, their imports are expected to fall 2.2 percent – a devastating reversal from the 14.5 and 10.4 percent growth rates in 2007 and 2008.

US agricultural exports will remain high (again by historical standards) – in fact, the 2009 export forecast is the second-highest figure on record, at $95.5 billion. Although this isn’t a bad number, it’s $20 billion less than the total for 2008 (the record year), indicating a severe slowing of the export market. About 60% of the decrease will come from reduced levels of wheat and corn exports, and from lower prices on those two key commodity crops. Soybeans account for another 20% of the decrease on lower prices, although soybean volumes should stay more or less steady. Cotton continues its decline, with a fall of $1.2 billion in cotton exports. Meat products will also fall, but prices should remain stable.

The USDA projects that the land area under cultivation in the United States will contract, as farmers plant less owing to lower net returns. Total planted area for major crops will drop 5.2 million acres from the 2008 level, with a total planted cropland of 247.6 million acres. Soy and corn areas will remain flat or grow slightly, thanks to increasing mandates for ethanol production. Wheat production is expected to dwindle thanks to last year’s excess production and declining prices.

I’ve only hit the high points here – for a complete rundown of all the USDA projections and predictions, check Glauber’s original speech. It’s worth keeping up on the global marketplace, particularly as you make plans for what to grow this year.

I know things seem a little crazy right now with low commodity prices, high input costs, and an US economy in shambles.   Yes shambles; the Dow closed in the 6600 range on Friday and unemployment just hit 8.2%. …But here is the good news.  As I have been proclaiming for the past several years, farmland investments, agribusiness, and ag / food play’s in general will be soon be viewed as the diamond in the rough.  We as ag professionals are well positioned to see a long rally from the current situation.  A rally based on real fundamentals, not just some bubble.  Don’t believe me? Then check out what investment guru Jim Rogers had to say on CNBC.  Be sure to watch the imbedded video too. 

Link: http://www.cnbc.com/id/29477080

Spring is on the way, and that means farmers are thinking about tilling the fields for the spring crops. Longtime readers know that despite my last name, I have been a strong advocate for no-till and strip-till systems of soil management. Strip till is a good compromise that gets the benefits both of conventional tillage (warming and drying the soil) and no-till (protection of soil quality). Here are some strip-tillage best practices that may come in handy when you hit the fields.

You probably will be applying anhydrous ammonia when you prepare your strips to provide an N boost – that should be limited to 100 pounds of actual N per acre at most in a strip till field. Since you’ll be planting along the tilled strip, wait about two weeks between your ammonia application and planting to prevent salt injury to your seeds and seedlings.

You can skip the ammonia and apply liquid N directly during your spring tillage, or you can use urea as an N source – if you use urea, separate it from the seed line by three or four inches. If you do use ammonia, place it about eight inches deep and use packer wheels to break up lumps in the soil and to reduce volatility. If you need more N, you can apply it via the irrigation pivot.

P and K applications are also commonly deployed while doing strip till passes. Place P and K between three and six inches deep to prevent erosion but still leave plenty of nutrients available for uptake. Starter fertilizer can also go into the strip till – put it about 2.5 inches deep and 2.5 inches away from the seed line to avoid fertilizer burning the seeds and seedlings.

Last year I asked renowned author and futurist speaker Tom Frey to share some of his thoughts on the future of agriculture with us.  He was kind enough to discuss with us is ideas on nano-particles and how they might be used in the agriculture.   Tom has taken another crack at what the future of agriculture might look like in his recent blog post called, The Future of Agriculture.  Much of what Tom discusses might seem far-fetched; but our great grandparents probably would have said that autopilot controlled tractors getting signals from space was a crazy idea too. 

While Tom’s article proposes several novel and thought provoking ideas, he also makes some statements that I respectfully disagree with. Specifically when he says that, “traditional greenhouses are expensive to build and inefficient to operate.”   I would argue that they are not inefficient to operate and I know many growers generating premium profits and returns from such indoor commercial farming ventures.  I would also argue that they are not as expensive as some suggest when you consider the 5X to 10X improvement on production given a similar traditional field footprint, the 12 month growing season, and the reduction in input requirements including pesticides and water. 

Regardless of the details that we disagree on, we can both agree that farming in the future will look drastically different than the farming of today.  In fact, I have begun work on a book for future farmers and young people that are considering farming as a career/lifestyle option.  The book will inform the reader about coming global and national trends in the farming world, explore the merits and realities of the farming life, provide an overview of the core business concepts that future farm managers can profit from, and talk about the many ways for farm owners and operators to diversify their business, reduce inherent risk, and secure their operations for the future.  I will be sure to share more about this project with you in the coming weeks.