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Acreage Shuffle

April 27, 2013
By: Sara Schafer, Farm Journal Media Business and Crops Editor

Weather and prices rewrite 2013 crop mix decisions

Gene Roney’s neighbors had written him off as crazy. Six years ago, when corn topped $4 per bushel, the Vienna, Ga., farmer switched some of his family’s peanut and cotton acres—which had been planted to the Southern heritage crops for decades—to corn.

In the years following, the Roneys continued to shuffle their crop mix, and in 2012, they sold their cotton equipment and planted the majority of their 2,800 acres in corn, soybeans and wheat. "Now we have a little bit of Illinois in Dooly County, Ga.," he says.

"Cotton is still king in our county, but corn has invaded our kingdom," Roney adds. "We are set up to grow and handle cotton, but if corn stays at $4 or $5, I think we’ll see more grain grown in Georgia."

USDA’s March Prospective Plantings report supports Roney’s assumption. The report predicts Georgia’s corn acres to reach 495,000 this year, a 43% increase from 2012 and the largest corn acreage increase of any state.

U.S. corn acres have risen steadily for the past five years. This year, USDA expects 97.3 million acres to be planted in corn, a slight increase compared with 2012 and possibly the highest planted acreage in 80 years. Several states, including Arizona, Nevada, Oregon, Idaho, North Dakota and Minnesota are predicting record-high corn acreage this year.

Farm Journal Economist Bob Utterback says the historically high corn prices of the past year persuaded many farmers to keep corn heavy in their crop mix. "The ultimate driver for the farmer is: How much money can I make, with what level of risk?" he says. "Corn has been a good investment for the risk versus return."

Matt and Ashley Leavitt farm in Grano, N.D., an area that is starting to look a lot more like the Corn Belt.

Five years ago, North Dakota led the country in barley, durum wheat, spring wheat, sunflower and canola acres and was the second-leading producer of oats. In 2013, the state is handing over a few of those titles in favor of planting more corn. North Dakota farmers have nearly doubled their corn acres in the past five years to 4.1 million.

On their 11,000 acres, the Leavitts plan to increase corn acres this year, reduce winter wheat acres and not plant an acre of barley. "Obviously, market price plays a huge role in decisions," Matt says. "If something isn’t profitable, we aren’t going to plant it."

Ashley says she weighs the return on investment for each crop. "Corn and wheat have the same input costs, aside from seed," she says. "As such, you can’t justify planting much wheat at current prices."

In addition to prices, Matt says crop insurance options are at play. "Our decision to raise corn this year was purely based on crop insurance," he says. "Last year was the first year we had coverage, and this year is the first year we have established yields."

Keith Coble, ag economist at Mississippi State University and crop insurance expert, says as farmers start shifting to different crop mixes, crop insurance options need to come into play. Even though there are crop insurance programs for all major crops, not all programs are available in all areas. "Be sure to confirm there is a crop insurance product for the crop in your county," Coble encourages.

(click to enlarge)

2013 Crop Hot Spots

Soybeans and sorghum. Compared with corn, soybean acres have been stable this past five years. Prior to the Prospective Plantings report, many traders and even USDA expected soybeans to gain ground. But the report shows 77.1 million acres will be dedicated to soybeans, slightly down from 2012. Planted area is down in many areas of the Great Plains, but the Corn Belt states hit hardest by drought are increasing soybeans acres.

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FEATURED IN: Farm Journal - Late Spring 2013
RELATED TOPICS: USDA, Risk Management, Water, Production

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