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Acreage Shuffle

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

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.

Gary Schnitkey, University of Illinois farm management specialist, says there has been a shift away from corn in his state. "That’s to be expected based on the trouble we’ve had with corn-on-corn yields," he explains.

USDA predicts Illinois farmers will plant 9.4 million acres of soybeans, a level that could make the state the No. 1 producer. If planting delays continue this spring, that number could become even larger, Schnitkey adds.

Grain sorghum is gaining popularity this year. USDA predicts 7.62 million acres will be planted to sorghum, a 22% increase from 2012. Of the 14 major sorghum-producing states, nine plan to increase acres. Missouri leads the country with a 69% increase in sorghum acreage for a total of 110,000.

Brent Myers, University of Missouri cereal crops agronomist, says sorghum offers an additional crop option for many Midwestern farmers. "Sorghum has lower nitrogen demands, can be planted later and can handle drought conditions better," he says.

From drought to delays. Even though beneficial snow and rain has recently replenished soil profiles in some areas, drought conditions persist from Texas to Minnesota and in much of the West.

USDA’s Prospective Plantings report is released in late March but is based on surveys completed earlier in the month. Brian Grete, Pro Farmer senior market analyst, says weather challenges are already rewriting acreage plans.

"We’re seeing corn planting delays in the northern Great Plains," Grete notes. "They aren’t going to get all their corn acres planted; that’s pretty clear." Also, the crop insurance final planting date for some southern states is at the end of April. Grete believes those states won’t reach their intended corn acres either.

In the heart of the Corn Belt, Grete believes intended corn acres will get planted. Overall, he expects corn acres will shrink from USDA’s March estimate, while soybean acres will grow.
Weskan, Kan., farmer John Miller is dealing with drought conditions for the third straight year. "My last really good crop was in 2010," he says. "Since then, my crops have been severely
affected by the lack of rainfall."

Typically Miller plants corn, winter wheat, sorghum and sunflowers on his 800 acres. However, he didn’t plant any wheat in 2012 because it was so dry. This spring, he plans to plant sorghum, and if it rains, sunflowers.

To help manage drought conditions, Miller attempted to plant cover crops. "I wanted to get the ground covered to protect from wind erosion, but it was a futile attempt," he says.

Even with a bleak weather outlook, Miller says he will still plant sorghum because at least it will provide ground cover. "I’m 60, and someone else will be farming my land 20 years from now," he says. "It’s important to do things that will leave the land in the condition that’s best for them."

You can e-mail Sara Schafer at sschafer@farmjournal.com.

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

 
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