Inputs Monitor Editor Davis Michaelsen adds his perspective into the happenings of the inputs markets.
Miles & Miles of Monitor -- Pork Rinds, Rupees & Natural Gas
Dec 21, 2012
As your Inputs Monitor proceeds along the Pro Farmer Profit Briefing trail, I found, once again, that growers had just as much to share with us, as we did with them. Our second swing found us in Tunica, Mississippi and Columbus, Ohio.
Tunica, Mississippi -
After sampling some terrific Memphis Barbeque and pork rinds, I was anxious to get serious and focus on the farm. Mississippi growers were glad to see us roll in again after not passing through for a few years, and we were equally as glad to speak with the good folks down south. The Inputs Monitor Index does not yet include the southland, but as we move forward, the next region we plan to add to the Monitor's coverage is the delta area. Given that, I was very interested to see what was on the minds of growers there -- turns out, it was corn.
A number of southern cotton-growing farmers are seen making a switch from cotton acres to corn. In fact, much of the cotton grown in Mississippi has moved eastward as corn acres replace acres of cotton. One grower lamented the decision saying, "these guys want to sell out of cotton and switch to corn, but if they change their minds, it's going to be expensive to switch back - real expensive."
What was most enlightening to me was the level of interest in international factors affecting inputs pricing here at home. I told the story of India's addiction to Urea where the nutrient has become something of a catch-all. The government of India subsidies Urea and that has made Urea the only nutrient farmers there can afford in any great measure. The Rupee continues to weaken in India, and with little relief in sight, the government there is stuck with a subsidy quandary that has them struggling.
It would seem that the government there can only afford to subsidize one nutrient at a time. So if the subsidy switches away from nitrogen, say in favor of Potash, the soil will be no better for it, as the profile would find itself lacking nitrogen within one growing cycle.
This will continue to pressure worldwide Urea stocks. Without a broad spectrum nutrient application profile, Indian yields will not improve, and farm revenues will continue to slide along with the rest of the Indian economy. And if much needed monsoon rains do not arrive, there will be no relief from the trouble on Indian farms.
Columbus, Ohio -
The good folks of Ohio turned out in good numbers to take part in the seminar series and the group was excited to hear from Chip Flory. After I presented my thoughts on the outlook for fertilizer and farm fuels in the short and long-term, a grower approached me, shook my hand and introduced himself.
He said, "I've got an idea you may not have thought of." Not only did my ears perk up, but so did a few others nearby. "I saved 60% on dryer costs last year by switching from LP to natural gas."
This is a great idea, and sources back at the home office agreed - conditionally. There would be an added expense for switching from the industry standard, LP to natural gas, and adjustments would have to be made over time to maximize efficiency. The other caveat is the availability of natural gas from local distributors.
A retail source close to home agreed saying, "...the savings are definitely there -- the problem is getting the natural gas to the dryer."
This is an idea out of Ohio that is worth looking into. A 60% reduction in dryer costs ain't peanuts, and with the inputs game quickly becoming one of strategy and piecemeal savings, this is one way that some producers might be able to save some money from year-to-year. (Read more here on making the switch.)
It was a real treat to visit growers in Mississippi and Ohio and your Inputs Monitor was glad that you all (that's - y'all - to our friends in Tunica) took the time to attend our Profit Briefing Seminar. We still have a few more stops to make this winter and we hope to see y'all there.