How farmers can make smart decisions in an uncertain time

DENVER — Uncertainty in both commodity prices and input prices is making farmers’ already tough job even more difficult.

“We’re definitely in a time of uncertainty and very, very much concerned about where commodity prices are. We’ve seen a decline of 30%-plus in commodity prices in the last year, while we’ve had an increase of 30% or more in input prices,” said J.R. Roesner to AgriNews in a one-on-one interview at the Commodity Classic in Denver.

“So, it’s making it very difficult for the family farmer to pencil out a profit within that to support his family, to support the rural community,” said Roesner, who farms with his brother, William, in southwest Indiana.

“We’ve definitely had trouble finding ways to reduce cost, finding the best market for our crops and trying to make all that work to where we can make a profit and support our family.”

Special financing, including zero-interest deals, now being provided by seed companies and other agricultural businesses offers some help.

“It just depends on the companies you work with and the products that you need for your farm, but a lot of companies are helping with zero-percent financing and giving interest rates that really help,” Roesner said.

“Sometimes cash flow is a concern in low commodity prices, where we’re kind of holding out for potential rallies and trying to find the best way to market that crop.”

Niche markets, such as dry milling for corn flour and chips, may provide a little bit of extra value, but those opportunities are not widespread and do not work for everyone, said the co-chair of the National Corn Growers Association’s Commodity Classic Management Committee.

In turn, Roesner said, farmers today must be creative in sourcing their inputs and making sure they have a sound marketing plan.

“We’ve definitely had to watch our purchases. We’re seeing that in the ag equipment sector now — kind of the pinch on the American farmer and how that is not letting them have the ability to upgrade their equipment to improve their technology and to be more efficient,” he said.

“It’s definitely putting a strain on the spending that the American farmer can do to purchase those new pieces of equipment that will help make their farm more efficient.”

That penny-pinching, he added, includes delaying improvements to farmland — for example, holding off on plans to install drainage tile.

But as farmers look for ways to reduce their costs, they cannot sacrifice their crop yield, Roesner said.

“The last thing we want to do is not apply a certain product that will affect our yield in the end,” he said. “Impacting yield will definitely impact the return we have on our investment.”

Hoosier farmers are fortunate that a lot of the crop grown in the state is sold and processed in the state, said the chair of the Indiana Corn Marketing Council’s Market Development Committee.

“We definitely have a robust demand sector within Indiana, whether that be ethanol, which consumes 45% of our crop, or the livestock industry that is vital to the row-crop farmer in Indiana,” he said.

“We also have the ability in areas to hit river markets and export markets, so we’ve got some grain to go there. But, yeah, I feel very fortunate in Indiana that we have those demand locations within our state that pull so much of our crop in and allow us to market that grain at a good price.”

Fair trade is vital — both coming and going, for buying and for selling, Roesner said.

“The American farmer needs fair trade to be able to get our crops to the locations that desire it. And we need to be able to source those goods that we may need, but we need it to be at a fair level,” he said.

“We’ve had some issues with certain countries in the past levying unfair tariffs on some of our products and then their products coming into the U.S. are given a little bit better rate. So, you know, farmers want fair trade, we want market growth and we want to be able to get our crop to the proper destination and to be able to fulfill the needs of the consumers around the world.”

While Mexico and Canada are the largest trading partners for farmers, Southeast Asia, India and Africa could be significant markets in the future, Roesner said.

“There’s a lot of potential out there for U.S. corn,” he said, also citing meat and ethanol produced from corn.

The biofuels market — particularly gasoline blended with 15% ethanol — is also crucial to corn growers, Roesner said.

“We’re definitely encouraged with President Donald Trump’s waiver for summer sales of E15. We’ve got some work to do to make it a permanent fix and we’re pushing hard and have some good supporters within Congress to kind of push that effort forward.

“It’s definitely been an important issue to us and just to have that certainty that the Americans consumer can get this low-cost fuel that’s better for the environment and then helps out the ag industry is very important to us.”

Roesner said he is also grateful for the Trump administration’s continued support to fund conservation programs.

“The American farmer is a steward of the land and has done a tremendous job over the years in reducing erosion and making farming more sustainable,” he said.

“To see the U.S. Department of Agriculture has released these funds, allowing producers that want to participate, that want to build these structures or do whatever practices help with sustainability, that environmental effort, is great.”