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Illinois Farm Bureau Organization to Put Together Task Force

Posted on: Thursday, 12 January 2006, 21:00 CST

By Christine Des Garennes, The News-Gazette, Champaign-Urbana, Ill.

Jan. 12--Here's the situation: It costs more to grow corn and soybeans, but the prices farmers receive for their grain have not gotten any higher.

Enter the Illinois Farm Bureau, a statewide farmer organization. The association plans to organize a task force to investigate what's going on and what to do about it.

"The goal is to find out how in the world are Illinois farmers going to cope with lower grain prices and higher input costs," said John Hawkins, farm bureau spokesman.

The idea for such a task force came about this fall when cash grain prices declined as river transportation of grain dwindled after Hurricane Katrina struck the Gulf Coast and fuel and fertilizer costs skyrocketed.

It's a topic on the minds of many, if not all, farmers.

"The profit margin per acre is getting slimmer," said 45-year-old Joe Burke, who farms by Thomasboro.

It costs more to buy the seed to put in the ground. It costs more to buy the diesel fuel to run the tractor and combine, more to buy and apply fertilizer, more to buy and apply pesticides. And it costs more to dry and store grain.

"If you put all your money into the crop and Mother Nature turns against you, if we had a drought, are we going to be able to buy the insurance products to cover us?" Burke asked.

Looming over all these cost issues is the 2002 farm bill and its expiration in 2007. Discussions on the next bill are expected to kick into high gear this year.

University of Illinois farm management specialist Gary Schnitkey has been researching the topic of profitability for years.

Using 2002 as a benchmark, the cost of growing one acre of corn has increased by $50 and the cost of growing one acre of soybeans has risen $20, Schnitkey said.

"That is a big deal," he said.

Where are those increases coming from? Fertilizer, seed, pesticides, drying and storing grain, Schnitkey said. The two big ones have been fertilizer and seed. Fertilizer, such as anhydrous ammonia, is comprised of natural gas, which, as anyone who has seen a heating bill recently knows, is more expensive these days.

"The cost increases are going to hit everyone the same. The farms that will likely hurt more are those that have more income from farming," Schnitkey said. Those who rely on off-farm income from another job will be able to alleviate some financial stress.

"I don't see we're under a lot of financial stress yet," Schnitkey said. Last year was not the greatest, with the drought, low grain prices and high costs, but farmers are in a pretty solid financial position, he said. Those who may be most vulnerable are farmers who rent a lot of farmland and who are facing increases in their cash rent payments.

"Since the margin per acre has been getting slimmer, you see the bigger farmers getting bigger. For young guys, it's a lot tougher to get started," Burke said.

Among the task force challenges will be coming up with ways to cut costs, Schnitkey said.

"The one place where we think farmers could see a lot of savings is if they pool resources on combines," Schnitkey said.

That would entail farmers selling their current harvesting equipment, then splitting the cost of a new combine that they could share.

Another option is to re-evaluate how often and how deep they till the ground, Schnitkey said. Every time a farmer plows the ground, it costs money to run that tractor and haul that plow.

Finally, marketing is going to be more of an issue, said Burke, who runs the Champaign County Corn and Soybean Marketing Club.

The club invites economists, farm management specialists and commodity market analysts to talk about buying and selling on the futures markets and to tackle financial issues farmers are facing. Most of its members are about 50 years old or older, Burke said.

"So what does that say about who will be farming in the future?" he asked.

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Copyright (c) 2006, The News-Gazette, Champaign-Urbana, Ill.

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Source: The News-Gazette

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