Alex Tiller's Blog on Agriculture & Farming

Local & Organic Food vs. Commercial Agriculture

There is a new film out called Food Fight that may be of interest to you. Regardless of your beliefs, if you are a farmer of any kind, you need to know what others are saying and doing as it relates to your business.  What are the trends?  What is the popular opinion? …and How does this relate to me?

Even if you are a Midwest farmer (as most of my readers are) that only grows commodity corn and beans, I think the concepts and ideals discussed in Food Fight are relevant.  Since World War II, we (US Farmers) have been moving to a mono-crop culture. This is because it is easier to only raise one or two crops.  -You only need so many pieces of expensive machinery; you only need to be a true expert on so many diseases and pests.  The ag dealers and vendors in the area only need to carry so many products. Your neighbors and friends grow the same crops so you can consult with them for expert advice. There are established markets for your products that provide understandable and somewhat predictable return expectations.  Simply put, mono-crop farming takes a lot of the guess work out of raising crops. 

But here’s the rub.  Everybody doing the same thing together doesn’t always work.  That just leaves all of us susceptible to outside forces corrupting ALL of our businesses.  –Low commodity prices, outrageously inflated fertilizer prices, or a massive drought/flood are just a few examples.

I’ve written a lot in this farm blog about how farmers need to get diversified.  Yes this entails some hard work, but I bet none of you would claim to be lazy.  What we are really talking about is re-allocating some of your time, energy, land, and investment capital.   

The movie Food Fight is focused on vegetables/food.  And I can already read some of your minds.  You might be saying, veggies come from California, require irrigation, lots of (hopefully) low cost manual labor, and need distribution centers that can get them to market. – All things you don’t have in your area. 

I would argue that this opinion is incorrect.  I have been exploring hydroponic growing operations lately that would allow farmers to produce secondary crops all year long, don’t take up much land at all, and provide your family farm with an alternative source of income that is not dependant on how much grain the country exported yesterday or what the people in China like to feed their cattle or hogs.  The best part is that most of the time you can pre-contract your specialty crop to local grocers and restaurants which mitigates the risk and means you don’t necessarily have to find and attend farmers markets.  –Even Wal-Mart is buying locally produced food these days in an attempt to be more environmentally conscious. 

We all know there is more than one way to skin a cat.  Family farms need stabilized returns on investment and the opportunity for growth.  I would encourage you to check out this movie, read books like The Omnivores Dilemma, and then ask yourself this…  “Is there a way for my farm operation to partially participate in other agriculture markets and make more money without adding significant risk?”  -Better yet, is there a way for you to make more money and reduce your overall risk?

I don’t think it’s a question of local or organic food versus commercial agriculture.  It’s a question of whether you can capitalize on BOTH to make your farm business better.

Below are some video trailers for the movie Food Fight

Combine VS Car Accident Picture

“Firefighters await a tow truck at the scene of an accident Monday afternoon in East Earl Township [Pennsylvania] after a car skidded under the front of a combine with an attached corn head on Ranck Road, just south of Reservoir Road.”

Credit: Vinny Tennis / Intelligencer Journal / LancasterOnline.com

Link to original article.

Farm Auction in Ohio I Attended Last Weekend

I attended a farm auction in Clark County Ohio last weekend for a client and thought I would share some of the details. 

The Elcamere Farm was a 1300-acre (mostly contiguous) farm in Harmony Township that has been in the same family for more than two centuries. A man named John Nicholson immigrated to the United States from Ireland in 1783, and eventually started Elcamere Farm in the newly-created state of Ohio in 1806. John’s son Andrew Nicholson actually bought and cleared the land for the farm. Elcamere Farm grew over the years, and stayed in the Nicholson family the entire time.

John Nicholson’s great-great-granddaughter, Ann Wilson, was the last family member to own the farm. She and her husband, Brooks Wilson, live in Sydney, Australia, and visited the farm each year; Ann grew up in nearby Springfield, Ohio, and spent her childhood on the farm, raising sheep and cattle. More than fifty years ago, Ann’s father hired Charles Penrose to run the farm, and Mr. Penrose, now 85, did so faithfully until this year, when he was no longer able to keep up the demands of running a large commercial farming operation. (Mr. Penrose’s family was given a portion of the land prior to the auction.)

Ann Wilson decided to sell the farm after Mr. Penrose was no longer able to run it, and the property attracted notice from all over the country. Local auctioneer/realtor Jeff Harvey had almost 300 buyers in person at the auction on November 2, (myself included) in addition to Internet buyers from as far away as Germany. –I also heard that there was some Venezuelan money floating around the room too.  They split the farm into 14 individual tracts.  In the end, the farm was divided into several block tracts, selling for a total of $5,052,000 – $3886 per acre!  This was mostly high quality dirt but there were some wet spots and trees.  (1135 tillable.) I can tell you that the buyers did very well and were lucky that commodity prices are so depressed and the economy is in bad shape because this farm should have brought $4250 to $4500 per acre in my opinion.   

The largest section of Elcamere Farm will remain in agricultural production; other sections will be used for housing development. Ann Wilson was pleased with the amount the farm brought, but admitted it was a bittersweet moment, telling local press that “It’s not just the farm, but it’s my whole childhood.”

There aren’t many farms like Elcamere around anymore; most large parcels in this area have already been split up and sectioned off long ago. Still, it was remarkable to be there for the end of an era in family farming.  I am also happy to let you know that all the buyers were local farmers and/or at least local residence of the area.

Water, Water Everywhere, …But not for California Ag

The Associated Press reports that California will be cutting its 2009 commitment for water deliveries to a near-record low of 15 percent of the amounts requested by local water agencies throughout the state. The last time the state Department of Water Resources scheduled deliveries at this low a level was 1993, and in that year heavy rains allowed the department to deliver full allotments despite the low quota; if this year’s schedule holds up it will be the lowest level of delivery since California began state water projects in 1962.

Farmers are already chafing under the low delivery provided in 2008, when the state delivered only 35 percent of the amounts requested by local boards. Central Valley farmers report they intend to leave many fields unplanted, with one fourth-generation Kern County farmer saying he will have no choice but to leave 1,000 acres of his 5,000 acre operation fallow in order to conserve water for permanent crops like cherry and almond trees.

California’s state water projects deliver irrigation water for 750,000 acres of farmland throughout the state. In recent years, deliveries have suffered even after heavy precipitation because of court orders restricting water pumping for environmental reasons. A wet winter could provide more waters directly to farmers, but will not impact the court orders in place, leaving farmers in quite a bind.

Governor Schwarzenegger has called for building more dams and finding ways to funnel water around the protected area to bypass the court-ordered restrictions, but has had little luck in securing legislative backing for his proposals. Local officials say that if the water problem continues, there could be substantial layoffs in the agricultural sector, with even long-term workers being forced to leave the agricultural regions of California in order to find work elsewhere.

Remember Farm Safety at Harvest Time

Harvest time is here – and with the peak of harvest season comes the annual peak of injuries and deaths of farmers and farm workers. People are stressed and rushed, equipment is in heavy use, and there seems to be no time to take safety issues into consideration. Remember, though, that it doesn’t do you any good to bring in a record crop if you kill yourself in the process. Here are some tips on keeping safety first as you bring in the fall crop.

• Examine your equipment for dangerous parts – pinch points, pull-in areas, freewheeling parts or sections, and other moving parts. Be familiar with all equipment and read the safety manuals – and make sure farmhands have read them, too.

• Stay well-rested. It’s difficult at harvest time, but fatigued brains make mistakes. Put other jobs off if necessary, and get the rest you need. A 20-minute nap after lunch can provide a much-needed vitality boost for the rest of the day.

• Shut down equipment and make sure all mechanized parts have stopped operating before climbing down.

• Inspect all your equipment thoroughly before starting work, particularly if the machine was put away in haste the day before.

• Keep charged and inspected fire extinguishers and first-aid kits on hand, and have emergency numbers posted on all equipment. Carry a cell phone – and make sure that you’ve registered your phone with 911 services in your county so that they know where your farm is geographically located.

• Check hydraulic equipment for leaks, and make sure tires are fully pressurized on all vehicles. Make sure lift cylinders on trucks and trailers are in good working condition before you put a load on them. Don’t raise or lower truck or trailer beds anywhere but on a firm, flat surface.

With these tips, some caution, and some common sense you can have a safe and productive harvest. Good luck and stay safe!

Credit Issues Starting to Impact Farm Business

I’ve mentioned AgWired here before – they’re a great source of breaking news from the world of farming, as well as some good analysis and opinion. There was a pretty disturbing post there the other day, though.

Richard Brown, chairman of the Association of Equipment Manufacturer’s Small Enterprise committee, testified before Congress this Tuesday, and had some bad news about how farmers are reacting to the credit crisis, and some more bad news about the equipment business. Brown told representatives of the House Committee on Small Business that equipment manufacturers and retailers are hitting serious snags in getting the lines of credit that they need in order to run their businesses.

Brown cited an example of a South Carolina equipment dealer who had a secured line of credit at his bank, collateralized from a stock portfolio. With the market crisis, the bank froze his credit line, and Brown says he is now spending much of his time trying to resolve that issue instead of pursuing new business. Brown also says that the crisis is becoming a problem for farmers, and that in turn is putting pressure on Main Street businesses, particularly in small towns, that depend on farmers for their livelihood. Brown said “We are now seeing farmers delay the purchase of these inputs from their “normal” pre-season purchasing patterns as they are having trouble accessing credit and are hesitant to pay such steep prices. The ripple effects of tightening credit markets at a time of increasing capital requirements for agriculture will lead to economic hardships for rural America. I can also say that I personally perceive a sense of anger among rural Americans about this situation. Generally speaking, they did not buy homes they could not afford or run up huge credit card debt, but now are forced to deal with the consequences of other people’s excesses and as a consequence are losing faith in the system.”

Now, in the big picture, and long term, agriculture as a sector can survive and even thrive in down economic times. People still eat – and even if they shift from high-end organic vegetables to corn, or from prime rib to hamburger, they still purchase the agricultural products that farmers create. So I don’t join up with the doomsayer crowd who think the sky is falling; there are farms today, there were farms yesterday, and there will be farms tomorrow.

But which farms will be here tomorrow, is not written in stone. Now, I always empathize with the farmer – too much soil under too many boots in my family for that not to be the case. We’ve all known farmers who fail because, to be excessively blunt, they just weren’t any good at it. Farming is hard. But this credit crunch, which doesn’t seem to be letting up despite the federal government’s intervention, seems set to ruin farmers who didn’t do anything wrong – who, as Brown said, didn’t take out stupid loans or run up crazy amounts of credit debt. They’re just men and women who rely on being able to get at least some credit each year in order to smooth out the cash flows of what is a very up-and-down business. Farmers who can’t float a loan to buy feed are going to be in a very bad way next year – and the government needs to be on the ball here and get this situation fixed.

Farmland Investment Fair

If you’re interested in farmland investing (whether as an investor or as someone with an operation that can be invested in), you might want to check out the 2009 Farmland Investment Fair. Put on each year by the Chicago Farmers, an agribusiness education group, the Farmland Investment Fair is an annual expo for farmers, investors, farm real estate brokers, agricultural marketing folks and pretty much anyone else with a connection to farmland and agriculture.

The 2009 Fair will be held at the Joliet Junior College Weitendorf Agriculture Education Center on Larawa Road in Joliet, Illinois, on February 7, 2009. Registration is $50 for attendees ($75 after January 28) and exhibitors can grab a booth for just $275.

For a one-day event, the Farmland Investment Fair has a pretty wide array of topics that they cover. There will be seminars on 1031 exchanges, farm land values, energy production in agriculture, opportunities with small farms, “green” farming, the 2008 farm bill, international farmland investing, recreational uses of farmland, organic farming, and how plant genetics relate to farm yields. Past fairs have seen a huge amount of business getting done, as farm owners meet farm buyers and strike deals right there on the convention floor.

I’m not sure whether I’ll be attending this year’s Fair, but it looks like it’s definitely worth attending for anyone interested in farmland investing, particularly given the central location and low cost.

Ethanol Subsidies, Good for Farmers and Tax Paying Americans

A lot of people are opposed to ethanol subsidies. Right now, the Federal government provides three basic supports to the American ethanol industry: a 51 cent per gallon produced direct subsidy to the ethanol manufacturers (which will be dropping down to 45 cents per gallon come January of 2009), fuel standards that require gasoline producers to blend in 10% ethanol, and a 54 cent per gallon tariff on imported ethanol.

Free marketers and global traders hate these ethanol subsidies, particularly the tariff and the direct subsidy. Most farmers, of course, love ‘em – because the subsidies push demand for corn up, up, up. Regardless of opinion, though, nearly all economists agreed that such subsidies – however justifiable on environmental or other grounds - were overall bad for the market because they distort the price of things.

New research from Iowa State University, however, contradicts the conventional wisdom. The researchers say that their model demonstrates that not only do ethanol subsidies not hurt the market, they actually created a net gain for the economy of about $2.65 billion in 2007. The reason? High corn prices, driven in part by the biofuel subsidy, have drastically cut loan-deficiency payments to farmers! That’s right; farmers who have grown corn have seen their loan-deficiency payments cratering, because the strong corn market has made corn farming downright profitable. The subsidies cost the government about $1.3 billion in 2007- but payments dropped $3.45 billion. Adding in the additional profits to refiners and farmers, the net gain is $2.65 billion.

Now, free marketers will tell you that this doesn’t mean ethanol subsidies are a good idea – it just means that two mistakes are canceling each other out. Regardless of your views on that, we know that deficiency payments aren’t going away anytime soon – and if ethanol subsidies are cutting the costs of those payments, creating a net gain for the economy, and alleviating a portion of our dependence on foreign oil, that’s good news to all of us.

Corn, cows, and poop. Smells like...profit

You know how much residue is left on the field after you harvest a corn crop (you can probably look out the window and get a good idea), but did you know that the residue amounts to about half of the total crop weight? That’s right, 50% of the biomass you grew is still sitting on the field after harvest.

That corn residue can be used as a winter feed source for beef cattle, squeezing another use out of the crop and greatly cutting winter feed costs for combined operations. One acre of corn residue is about two months of feed for a 1,000 pound animal. Getting the most value out of the residue requires a little planning and some awareness of what can go wrong, however. It doesn’t save you any money if you end up with a beef herd with nitrate poisoning, or if the vet bills for foundered cows exceeds what you saved in feed.

To get the most out of the nutrition left on the field, animals should be allowed to graze immediately after harvest, as wind and rain quickly break down the nutritional quality of the residue. Cows can get about 65% total digestible nutrients, and about 7% of crude protein, from corn residue. Depending on the age and breed of the animals, you might need mineral supplementation to keep them healthy while they’re foraging on your corn fields.

Over the course of that 60-day feeding window, the cows will only eat about 20% of the residue – and you thought your kids were picky eaters! That’s actually good news, as it means that erosion and soil compaction will be greatly limited by the large amount of biomass that will be left on the ground. Compaction caused by hooves is usually limited – but just as with a tractor, wet soils will compact more and you might want to bring the herd back inside if the soil is damp, especially if you already have soil compaction issues on that field. Frozen ground is generally well-protected against compaction by animal hooves.

If you had a dry year, then the lower stalks (which comprise a large percentage of your residue biomass) are likely to be high in nitrates. That can cause nitrate poisoning in animals that feed on them – be careful about grazing on fields that suffered drought. Nitrate levels will break down over time, though, so you don’t usually need to worry about what happened in prior years. In addition, if there is grain on the field as well as corn, be sure that your cows get hay or other feed before they get at the grain to prevent foundering.

Not only does residue foraging save you money on feed costs, it also cuts your fertilizer bill for the next season. Cows like to eat, and eating has a natural consequence – and that 1,000 pound cow is going to drop about 63 pounds of “natural consequence” on your field every day. Be sure to take that additional fertilizer into consideration when designing your fertilizer strategy for next year.

Weather Information For Ag

Farmers are always on the lookout for better information about the weather – there’s nothing that has a greater impact on growing crops than what Mother Nature has in store each day. Weather trends, projections, and forecasts are one of the most important tools on a farmer’s belt. That’s why I was extremely pleased to discover StormWire, a news site that focuses not just on the weather, but on its impact on business and investment. Not everything on StormWire is farm-related, but there are a lot of great stories that are extremely relevant to farmers, as well as a wealth of material that is 100% agricultural in focus.

One recent story caught my eye; there have been high hopes for near-record corn harvests this year, but it looks like bad weather in Kansas is putting the kibosh on that. The latest federal projection is for the harvest to be 7% below last year’s level. These are still relatively high production levels, just not the record-setters that many of us had hoped for. The late rains are good for wheat farmers whose crops are still growing, however, and the wheat harvest is expected to get a boost.

I was about to embark on an epic research journey to find other great weather sites that would be helpful for my farm readers, but – this being the Internet – I was very pleased to discover that someone else had already done it for me. The good folks at IlliniWeather have built a fairly comprehensive index of agriculturally-oriented weather sites. There are great sites that aren’t on that list, but every site on that list is great. Happy forecasting!

USDA Rice Numbers May Be 20% Off

The US Rice Producers Association (USRPA) has created a survey-based production estimate to produce statistics on the annual rice crop, citing fears that the USDA’s crop production estimates are inaccurate. Apparently a wide range of people in the rice market, from farmers to rice warehousers, are concerned that the USDA’s forecast are much too optimistic.

It hasn’t been a good year for rice farming. A series of hurricanes, a cold growing season, and heavy rains in the spring that delayed planting have all combined to push yields down, according to the folks out in the fields. The USDA projects that the rice crop will be more than 204 million hundredweights. Conducting extensive research and surveys of rice farmers, and drawing on the analytical talents of agricultural extension staffers in rice-growing states, USRPA forecasts a total crop of around 170 million hundredweights – a significant variance from the government figure. (34 million hundredweights difference, or 20% lower than USDA expectations) Rice industry figures are concerned that the government’s projection will push down prices, as futures markets expect a much larger crop than will actually materialize.

USRAPA predicts that there will be significant competition between the domestic market and export buyers later this year because of the reduced harvest. They also say they intend to work closely with the USDA to improve the government’s forecasts. Government statistics play a huge role in the agricultural marketplace, as futures traders, farmers, commodities buyers, investors, and others all rely on that data in making plans and pricing commodities. We will have better figures in a month or so, and that should give us an idea of whether USRPA’s critique is correct, or whether the USDA got it right.

So the thought of the day comes from a Chinese proverb that says, “Without rice, even the cleverest housewife cannot cook.”

2009 Farming and Agriculture Conference

I’m not sure yet if I’ll be able to attend this year’s DTN/Progressive Farmer agriculture summit in Chicago, but it looks like a terrific program. This is the second year that DTN has hosted this conference for farmers; this year’s program will be held at the Chicago Marriott Downtown Magnificent Mile from December 7 to December 9. The title of the program this year is “Brave New Worlds: Your Map for Managing Ag Risk” and the main focus of the conference will be looking at the volatile commodity markets and helping farmers plan their strategy for 2009.

DTN chief executive Robert Gordon notes that “Today’s producers are faced with more market swings and agricultural policy changes than ever before,” and says that the summit will provide agriculture professionals information to meet these challenges. Events will include farmer panels, sessions on dealing with lenders and landlords, and panels on handling revenue risk, crop insurance, and the growing problem of input cost inflation. DTN has lined up an impressive group of speakers and event coordinators for the program, including Blairo Borges Maggi, the governor of the Brazilian state of Mato Grosso and the largest soybean farmer in the world, Mark Palmquist, executive vice president of CHS, the nation’s largest grain and farm supply cooperative, former USDA undersecretary J.B. Penn (now the chief economist at Deere & Company), Allen Lash, president of AgriSolutions, and Mike Rahm, a vice president at Mosaic, among many others.

The registration fee for the summit is $445 ($395 before November 8) and includes food and program materials. Full information on the program and instructions on registration are available at the DTN website, http://www.dtnpf.com/promo/2008agsummit, or you can call them toll-free at 1-888-576-9881.

More on Soil Testing

Every farmer knows that one of the most important elements in developing a farm’s productivity is monitoring soil quality. There is a lot that can be done to amend bad soil, and a lot that has to be done to keep good soil producing – but it all begins with knowing what the quality is to begin with. Otherwise you’re chasing black cats in the dark – a lot of exercise, but you’ll only get results by luck. Every farmer also knows that luck isn’t something to be relied on. Soil testing is the farmer’s tool that turns on the lights and makes it possible to get scientific about soil management. Here are some tips on testing your soil this year.

The best time to collect samples, obviously enough, is when the field is idle and you’re not frantically trying to bring in a harvest. Don’t try to squeeze testing in between other farm tasks; wait until you have some downtime. Late fall offers a pretty good window for many farmers, once the harvest is in. You should test no less often than every four years – more often if you’re pursuing an aggressive soil amendment strategy.

The most important element in taking your samples is the variability of your fields. A field that has been manure-spread or had banded fertilization is going to be a lot more variable than a field that’s only had broadcast fertilizer application. Geography and soil type changes across a field can also play into variability – so break down your land into sections that are as internally consistent as possible. If there used to be a fence on the property, use that fence line as one of your boundaries – odds are good that the historical use on each side of the fence varied, and so the soil won’t be the same. Each section should be no more than 20 acres. A map of your sections will be very helpful when you get out into the field to take the samples.

The number of cores to take in each section will depend on your estimation of the section’s internal variability. For manure or banded fertilizer areas, or sections that have inconsistent soil types, take 15 or 20 samples. In a more uniform section, you can get by with 10 to 15. Take your samples along diagonals, not in straight lines, and randomize your site selections to avoid getting too much of one area. Don’t take samples near gravel roads – contamination from the gravel can throw your results way off. Take cores six to seven inches deep, and make sure the soil is moist when you sample – if it’s too dry, some of the soil will come off your auger and you won’t be getting proper cores.

Put the cores from each section into a bucket, and break up the cores thoroughly. Don’t use a metal bucket – they will contaminate your sample with mineral micronutrients and give you worthless results. Mix the soil as well as you possibly can – you want absolute uniformity in each section’s sample. From the bucket, take about 1.5 cups of soil into a sample bag or box – and mark it so that you know which section it came from! (You might think you’ll remember, but if you’re like me, you won’t.)

Now you’ve got good samples from each section of your land, and you can send them off to the private lab or your local ag university’s test lab. Each lab will have its own soil information sheet, which you will need to fill in as accurately as possible – they use the information you provide about field history and your local geography to do the calculations for the recommendations they’ll make.

Soil testing is a science these days – if you give the lab boys a proper sample and the right information, the information they will return to you will be of great use in planning your soil amendment efforts into the future.