Economists Look Ahead, Make Plans for Crop Producers
By Katie Nichols
AUBURN UNIVERSITY, Ala. – An unstable commodity market, combined with low market prices, may make this growing season more difficult than usual for Alabama crop producers.
Max Runge, an Alabama Extension economist, said agricultural producers across the country are facing a troubling and uncertain future.
“When I started in this position more than 25 years ago, I remember farmers were told to do more with less,” Runge said. “This message hasn’t changed. The farmers that are still in business have continuously done more with less and are beginning to wonder what else to cut back on.”
While Extension also offers specific crop budgets, this information—geared toward estimating variable and fixed costs—from the team may help farmers make better decisions as they manage their inputs.
Jessica Kelton, leader of the farm and agribusiness team, said it will be extremely difficult for producers to break even this year, regardless of the crop they choose to plant.
“This means growers are going to have to manage their inputs even more closely than they have in past years,” Kelton said. “Producers definitely need to aim to for profit, rather than managing for higher yield, which will unfortunately cost more.”
Commodities versus Coronavirus
Runge said people expect row crop producers across the U.S. to see receipts fall by $11.85 billion dollars.
According to Kelton, who is also a regional crops agent in the Wiregrass, the commodity prices were not good going into the pandemic. The crisis has definitely pushed prices downward—and in a hurry.
“It’s going to be difficult to know how fast prices will start to recover,” she said “It may be different for each crop. Food or feed crops may rebound more quickly. Cotton may take much longer to recover since we have to eat, but fiber demand will suffer until the economy starts to recover.”
Runge encourages farmers to remember the basics. Soil testing, timely planting and input applications, scouting early and often and considering variable costs are important reminders for producers in any production year but especially now.
“Unfortunately, U.S. farm income had just risen above the 2000 to 2018 average in 2019,” Runge said. “There are so many unknowns at this point that make the recovery uncertain. People need the rebuilding of the U.S. economy and other economies around the world to stabilize our food production system.”
Resources for Producers
Runge and Kelton developed Alabama Row Crops: Break-Even Prices, a tip sheet for producers who are managing crop inputs closely. It includes a comparison of break-even prices for Alabama row crops based on target yields for irrigated and non-irrigated production.
Kelton said the cost will vary from producer to producer and even by field. Producers need to be aware of their cost of production more than ever. The development of break-even projections may help producers make the best of this growing season.
Within the projections, the variable costs reflect the average production costs included in the 2020 Alabama Major Row Crop budgets. They also reflect an average land rent cost for irrigated or non-irrigated farmland. Specific crop budgets are on the Alabama Extension website under the Farm Management section.
Runge pointed out that producers are not the only ones suffering. All agribusinesses associated with the agricultural industry are feeling the effects of market uncertainty.
William Birdsong, an Alabama Extension regional agent in the Wiregrass, said low commodity prices bring on tough times. Cotton is currently trading below $.60 per pound. He is confident prices will go back up, but the question is when.
Birdsong encourages developing a strategy to improve opportunities for higher yields and profitability.
“Choose cotton varieties that consistently show good to excellent yields,” Birdsong said. “No variety will win every test, but it is important to look for varieties that yield in the upper third of university variety trials.”
Birdsong also encourages producers to utilize a soil test and update and calibrate planters for precise, accurate seeding. He also encourages producers to avoid poorly producing fields and evaluate every input.
More information from Birdsong can be found in the Alabama Cotton Shorts newsletter issue from March 20.
Steve Li, an Alabama Extension weed scientist, is also working to provide cost-effective guidelines for weed control in the field.
Li said it is not a bad thing to reduce crop inputs related to weed control. However, he warns against a highly reduced weed control plan that could present problems in the future.
“Weeds are persistent problems and cannot walk or fly away from a field or farm,” Li said. “One year of sloppy management can result in significant clean-up expenses for the next three to five years.”
Find Li’s complete recommendations in the content pieces Minimum Peanut Weed Control Programs and “Dirt Cheap” Weed Control.
While these uncertain times loom, Alabama Extension professionals are working ahead to help producers make tough choices. As the growing season progresses, professionals will continue to provide growers with best management practices in relation to the current market prices. More information on crop inputs and production is on the Crop Production section of the Extension website.