Ohio Farmers Prepare For More Volatility For Crops.
The federal Department of Agriculture predicts that farm income will fall 20 percent this year. But such a decline comes after big gains in 2008. And Farm income has been a bright spot during the past six to nine months while other sectors of the economy faltered. In Madison County, west of Columbus, farmers, equipment dealers and bankers prepare for economic uncertainty.
Every year Madison County is home to one of the biggest agricultural showcases in the country; the Farm Science Review. The review's Chuck Gamble likens the recent turns in the farm economy to an amusement park ride.
"We've been on a roller coaster ride," Gamble says. "We've seen the highest prices ever paid in the last year. And that's probably the best way that I can describe ag, in the last year to year-and-a-half, it's been very volatile."
While Gamble keeps track of the big picture, farmer Roger Stockwell works to keep his family farm enterprise intact while riding out the ups and downs.
"That air's still coming out of the east isn't it? Northeast it's cold "
Stockwell's family has farmed this land near the Madison County, Fayette County line for almost 70 years
"Mom and Dad and my brother and sister and I, we moved here in 1941," Stockwell says.
Today the Stockwell family farms about 1,300 acres.
"This field will go into corn, it was in beans last year. And this field is in wheat, it'll go in corn," Stockwell says.
Stockwell has coffee every morning at the local truck stop. There he reminisces about the bountiful crop his family and many other Ohio farmers had in 2008.
"Last year was the most profitable year I ever had in farming," Stockwell says.
During harvest last year, Stockwell and other farmers were paid record high prices for corn, soy beans and wheat. Soy beans, for example, topped out at $16 a bushel. But this year farmers face higher production costs while crop prices have fallen by about a third. Soy bean prices are now down around $10 per bushel.
"This is uncharted waters for us as far as farmers," Stockwell says. "We've never seen the prices we had last year. Now we're down about half of what we were."
"Seed costs are higher," Stockwell says. "Last year we paid $150, $160 for a bag of seed corn; this year it's going to be almost $200. Soy bean seed is higher also. But our expenses are definitely going to be higher than they were last year."
And that will undoubtedly affect farm related businesses. In London, the county seat, about 20 miles north of Stockwell's farm, Ted Miller sells John Deere tractors and farm equipment. Miller says his dealership is still benefiting from last year's robust farm economy
"We aren't seeing brand new orders coming in but we're seeing the effects of last year's early orders and that products coming through our shops now so the lull or dip we really haven't seen quite yet in machinery," Miller says.
But Miller says this year's orders will be the telltale sign of how well farmers are doing. During last year's agricultural boom, pieces of equipment costing hundreds of thousands of dollars were selling well, but this year's outlook makes farmers more cautious.
"You're walking under the largest combine that John Deere makes, the 9870 STS Combine. It takes up to a 35-foot flex head for beans and 12-row corn heads."
Across from the courthouse downtown, Steve Adams works as an agricultural loan officer at Advantage Bank. He, too, keeps an eye on grain and livestock prices.
"One of the biggest concerns we've all got is whether the prices will stabilize and if we have a drop in prices with the cost of inputs being a lot higher this year than in previous years you could see some farmers taking a loss," Adams says. "Those with working capital can weather the storm, they're used to it - I mean, farming's up and down anyway but the biggest difference this year is what the market does and what the market bears and how much they can gross."
As Adams considers loan applications in London, Roger Stockwell keeps close track of financial margins.
"I think we're going to have to be very careful about what we spend our money on," Stockwell says. "As well as I can I'm not going to participate in the recession as such. We haven't seen the bottom yet I don't think."