U.S. Farm Report Mailbag
U.S. Farm Report
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A Fertilizer Checkoff???
Oct 23, 2008
This is ironic but true. The board price at the local elevators for corn and beans is almost a cent-for-cent mirror to the board prices at the local elevators at this time last year. With these current prices, last year after harvest most farmers were enthused with their profits but even more important there was a new found excitement about the future of farming. You could hear it in the way farmers talked but more evident was the upgrading of assets from buildings and bins to tractors and combines, to the point where there was actually a shortage of new equipment to be found. This year, same prices for grain, and the excitement is gone.
Many farms in our area have experienced lower yields than anticipated, however this does not seem to be the contributing factor to the lack of enthusiasm that just one year ago was so evident. Input costs are the culprit, mainly fertilizer. I have heard everything from "we'll use just enough to get by" to "I won't be planting any corn" to "I can more afford to let my ground lay idle than to risk everything to break even". This is a big, big concern.
Two weeks ago in a front page story about fertilizer told by the fertilizer industry in ag paper, Agrinews, a page and a half of print was used justifying the high price of fertilizer. In a nutshell they blame it on supply and demand. Apparently they can charge these astronomical prices because at this time there is more demand than there is supply or the capacity for supply. They claim that for years there was no money made and now they are using the profit taking to build new and more efficient fertilizer plants to meet the high worldwide demand for fertilizer.
On the other side my neighbor has left about 200 acres of corn to shell. He has been contacted twice in the past week, one by a large North American grain operation that operates an elevator nearby and two by an ethanol plant just opened about 70 miles away, both operations wanting his corn. The writing is on the wall that corn supplies are short this year. So why doesn't the supply and demand theory work here? Seems as if they want the corn, Mister Farmer should be able to dictate the price. However everyone knows it doesn't work this way. The truth is that the price of grain is fixed and Mister Farmer can't do a whole lot about it. That being accepted, the price of fertilizer has to fluctuate accordingly to what grain is worth at any given time in order to pencil out. It just won't work having the same price for grain with fertilizer tripled and in some cases quadrupled in price. Won't work.
I think it is time for a fertilizer check off much the same as the soybean check off. If all the farmers in America would contribute a penny a bushel to a "farmer owned" fertilizer operation in America then this price gouging would be curtailed. A giant American Co-op. Up and running, competition would bring the already existing fertilizer industry back to reality. This would bring under control one aspect of farming that currently the farmer at this time has almost little or no control.
St. Joe, IN