Oats Prove Profitable in South Dakota

Oats Prove Profitable in South Dakota

By Evan Hendershot, The Daily Republic, Mitchell, S.D.

As crop production rises, value drops.

Analysis from the South Dakota Center for Farm and Ranch Management said value per bushel fell by roughly 15 to 25 percent in 2014. The Mitchell Technical Institute-based project looked at data from about 100 farms to complete the study.

"Despite the average return being positive, numerous fields actually lost money in 2014," said Will Walter, assistant director of farm ranch management at MTI, in a press release.

While oats make up a small portion of acreage in the farms participating in this study, oats were most profitable in 2014 due to straw production and aftermath grazing. Oat fields averaged 121 bushels per acre at an average price of $2.90 per bushel.

"Oats take a lot lower input cost and it does not require as much fertilizer and the seed cost is basically nil compared to the corn," said Walter in an interview.

Wayne Smith, executive director of South Dakota's Farm Bureau, said supply for oats is much lower than the demand. With more uses for oats being discovered and the supply low, Smith said it's likely more farmers add oats to their rotation on a smaller scale.

Aside from current cost advantages to growing oats, their short growing season benefits farmers. Smith said the short season for oats allows farmers to do work on their fields or spread manure.

Other crops did not fare as well. The supply for corn and soybeans far exceeded demand, lowering the profits for per bushel. Improved overall growing conditions led to an above average yield in 2014, but the large yield surpassed demand.

"It was dry in the spring," said Walter. "People weren't fighting mud to get planting."

With corn value falling, Walter advises farmers to be careful with input expenses.

"We need to curtail our extra input expenses that we got in the habit of doing when corn was $5 a bushel," said Walter.

Rivaled only by increasing oat profits, winter wheat performed well in 2014. Despite an average price $1.40 less than in 2013, winter wheat yielded a 35 percent increase and showed a net profit of $83 per acre. Walter said improved wheat production was the result of an improved stand through the winter, cooler weather and adequate moisture.

The SD Center for Farm and Ranch Management at MTI works with the state's agriculture producers to help them become better business managers. The program offers a training course for new farmers and and an individualized business management option for established farm operators.

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