Crop specialist says farmers must watch input costs until prices rebound

BY BROOKS TAYLOR

Mt. Pleasant News

Virgil Schmitt does not see any improvement in corn prices in the foreseeable future.

And consequently, the Iowa State University Extension area crop specialist said farmers are going to have to keep a keen eye on ?inputs? until prices rebound.

The corn market?s fall from its lofty perch several years ago can be tied to one of the primary principles of economics ? supply and demand ? Schmitt said.

?We have had really good (corn) yields in all production parts of the world,? he began. ?When you have a lot of supply, the demand is down. But still, the demand side is not too bad, it?s the supply side that is haunting us.?

Barring a drought or unforeseen catastrophe, Schmitt sees the supply side continuing to haunt the corn market.

One way to reduce supply would be to plant less corn, but Schmitt doesn?t see that as a viable alternative. ?We may see some corn acres slide back into soybeans, but I don?t see a major shift. You really can?t do that much more with the land. Besides the other (commodity) markets don?t look that good either. There are no real alternatives.?

Although there may not be many options for the land, there are cost-cutting input measures, he said. ?Farmers can?t do a lot about the price they?re getting for their corn, but they can minimize input costs without affecting yields. They (farmers) are in a belt-tightening scenario. They have to look at how they are spending their money,? he said.

?For instance, if you are putting fertilizer on soil that has enough nutrients for the crop, you have to ask yourself why you are doing that,? he continued. ?You also have to be conscious of how many passes you make in a field. If that pass you are making costs you $30, are you getting $30 more profit from the crop? Basically, you have to look at every individual situation and ask if this is a good investment.?

Although times might not be brimming with profit for crop farmers, Schmitt doesn?t see any comparison with the farm crisis of the 1980s. The farm crisis was largely due to low crop and livestock prices and farmers over-extending themselves by purchasing more land than they could reasonably afford.

However, the crop specialist said producers are going to begin to see the impact of low corn prices on Main Street. John Deere and other farm implement manufacturers have already laid off workers. Schmitt said vehicle dealerships will be selling fewer pickups and machinery sales will also drop. ?I don?t think it is going to be as bad on Main Street as it was in the 1980s, though.?

For over a decade, land and cash-rent prices spiked in Iowa. In the past two years, farmland prices have dropped sharply. Schmitt expects that to continue unless markets come back and he doesn?t see that happening.

?It is really a Catch-22,? he said referring to cash-rent prices. ?Landowners want more rent money and people renting land don?t want to pay more rent because of the commodity prices.?

Compounding commodity prices is debt, Schmitt noted. ?Farmers who have a lot of debt against their land are the biggest concern. The second biggest concern is people who have debt against machinery.? Land and machinery are the largest overhead costs for farmers.?

Last year?s corn harvest in Henry County averaged around 175-185 bushels an acre, Schmitt remarked, which were slightly below 2014 when southeast Iowa led the state in corn yield.

Aside from prices, the elements are in place for a good start to the crop season, Schmitt commented. He said there is abundant soil moisture, so abundant that there is enough moisture in the soil now to carry crops through June.

In fact, the only moisture problem the crop specialist sees is too much moisture. ?Southeast Iowa generally has a problem with too much rain, and farmers sometimes struggle to get crops into the ground.?

A good barometer of subsoil moisture, he said, is a look at tile lines. If tile lines are running, like they currently are in southeast Iowa, the soil has all the moisture it can handle and anything more will be excess moisture.

Nothing today?s corn producer is experiencing is new territory, Schmitt said. ?This is where we will be for a while. Where we are now is more like normal. People who are good producers and marketers still can make money.?