Grain prices up, but livestock farmers struggle
STEWARTVILLE — Plenty of rain combined with high commodity prices gave a boost to grain farming in southeastern Minnesota in 2011.
Olmsted/South Wabasha Corn and Soybean Grower Association board member Lori Feltis said corn yields were down 5 percent to 15 percent from the year before, but yields were still above average.
"Soybean yields in this area were also good this year where crop diseases were at a minimum," Feltis said. "The 2010 growing season allowed soybeans to mature naturally and the crop was harvested dry, hence leaving us with excellent grain quality."
Feltis and her husband, Clifton, raise corn, soybeans, oats and alfalfa on their farm near Stewartville. Their sons raise beef cattle and are active in their family farming operation.
Feltis is involved in several farm organizations, including the Olmsted County Farm Service Agency, the Olmsted Farm Bureau, Minnesota Corn Research and Promotion Council and the United State Grain Council.
The old saying, "rain makes grain" held true this past growing season. With the timely precipitation, alfalfa fields yielded well, but the rain often made it a challenge to put up dry hay.
Farmers in Minnesota fared well compared to other states in the Heartland. Iowa, Illinois and Indiana were too wet and were hit by severe storms that damaged crops.
"Most farmers (in Minnesota) had timely plantings, adequate rainfall, warm weather, a full growing season and not too much hail or damaging winds," Feltis said.
Currently, corn and soybean prices are up because of high demand and low supply.
It's unclear if prices will continue to rise. They rose to record highs in 2008 but abruptly fell in 2009.
Adverse weather, a weaker U.S. dollar, increased exports, higher crude-oil prices and heavy commodity contract buying by speculative investor funds, all have an effect on prices.
Feltis said that just because farmers are receiving higher prices for their crops doesn't mean they'll make huge profits.
"It seems everybody wants their share of the market," Feltis said. "Fertilizer prices have significantly increased over the past three years. Seed corn companies, farm implements sales people, and chemical dealers are more aggressive to gain our business."
She said increased commodity prices support higher land prices and rental rates.
"When all is said and done, the farmer’s profit margin remains the same to, perhaps, slightly higher," Feltis said.
When profits are made, many farmers opt to pay off debt that was accrued when times weren't as good. And if debt isn't an issue, Feltis said farmers will most likely invest the money back into their operation to enhance environmental practices, improve equipment or update technology to improve productivity.
While grain producers are sitting fine right now, farmers that raise livestock are struggling.
Earlier this month, fat cattle were selling at $1.10 a hundredweight. Feltis said that doesn't leave much of a profit margin for producers to make a living.
"The current $52 per hundredweight live weight on hogs is not profitable at all when corn is $6 per bushel," Feltis said.
Conditions improved for dairy producers last year, but now some producers are losing money because of the commodity prices.
"Even though dairy cattle are fed mainly forages, the ground that the forages are produced on can be more profitable if grain were produced," Feltis said. "I would not be surprised to see a decrease in livestock numbers over the next couple years."