Dakota Farmer, SD
11-27-07
Best Of Times Now; Better Times Coming
Lon Tonneson ltonneson@farmprogress.com
If you thought 2007 was a great year for growing corn and soybeans, just wait
until you see what’s coming."
That’s advice from Steve Johnson, Iowa State University farm and ag
business management specialist who is barnstorming across South Dakota
this week talking to corn growers. Johnson is keynoting the "Growing Forward"
seminars sponsored by Farm Credit Services and the South Dakota Corn
Growers Association in Sioux Falls, Watertown, Aberdeen, Huron and Yankton.
"When was the best year ever for net farm income in American agriculture?" he
asked more than 200 farmers who turned out for the meeting in Watertown
Monday night. "It was 2007. We had record net farm income. You are living the
best year ever in agriculture."
Johnson sees good times ahead – especially for row crop producers – despite a
sharp rise in costs.
Crop input cost have soared, but so has income potential, he says.
You stand to make $100 per acre from corn and $60 per acre from soybeans in
2008 – even after paying more for fertilizer, seed, land and all other inputs.
"If you focus on costs alone, you are going to be depressed," he says. But
market prices have risen so much that it is possible to put even bigger profits in
the bank in the future.
As new ethanol plants come on line, demand for corn is going to rise – especially
beginning in 2009 through 2012.
"2007 was just a practice year [for increasing corn acreage]," he says.
Demand for biodiesel is rising, too, particularly in Europe where most autos run
on diesel.
Corn and soybean prices are closely linked to oil and gold prices. They are all
rising together. They will likely fall together, too.
According to Johnson, the keys to making a profit in the next few years are to:
• Manage costs. You’ll have decide crop rotations early, buy inputs early and pay
cash for what you need to lock in your costs.
• Lay off risk. You’ll have to buy insurance and use marketing tools to reduce risk.
• Focus on producing bushels. You’ll need to generate as much gross income per
acre as possible. With your costs locked in, you’ll increase your profit margin with
every extra dollar of income you can generate.
"It is going to be an exciting year," Johnson concludes.
He will be back in South Dakota in February for a second round of Growing
Forward seminars.