Producers give insight on their plans

Given an outlook for higher energy costs this next growing season, will you plant more acreage of some crops and scale back on others? Will you adopt new practices or farm any differently? What are you hearing others will do in your neighborhood? Here’s what some crop producers in the Northern Plains are saying:

I expect my cost per acre to go up about 40%, and that includes drying costs, freight, inputs, direct and indirect costs, and a wider basis. My cost for wheat could be up around $15 to $18 an acre, and corn by $20 to $25 an acre. I usually plant about a third of my acreage to corn, a third to wheat, and a third to soybeans. This year I plan to grow half as many corn acres, and plant that into soybeans. Hopefully the prices will peak and come down into spring. Good yields helped the cash flow situation last year, and we’ll hope for that again this year.---Tom Anderson, Barnesville, MN

I am looking at planting about 200 acres of peas and 80 acres of wheat. Peas can be successfully produced with no N and a single spraying of Assure II.---Grower from central ND

The impact on urea fertilizer would be $8.40 per acre verses 2000. The fuel impact would be about 20 to 25 cents per gallon of usage. Generally, I figure nothing less than $10 to possibly $20 per acre impact for costs that can be directly calculated, not to mention if and when some of these inputs are not in short supply at planting. ---Michael Bruer, Alberta, MN

Maybe more soybeans with little nitrogen. But with less acres in winter wheat and the quality of that crop in the air and with less nitrogen talked about for the spring wheat crop, I may spend more on my wheat. I might plant higher protein varieties of hard red spring with more nitrogen hoping to capture higher protein premiums that might materialize this fall. ---Tim Dufault, Crookston, MN

As far as fuel is concerned we have locked in gallons to match what our storage capacity is. And that should get us through to the end of September. We did that in Dec. 2000 for $1.00 per gallon. Now compare that to what we bought in Sept. 2000 for $1.19. Our first fill in 2000 was in May for $1.02, and the fill before that was in the 80-cent range in Oct 99. And the previous winter we bought at 46 cents. So in the last two years fuel has gotten to be a major item. We decided to lock in December because of the uncertainty of price. Kept hearing fuel could be 1.50 to 2.00 per gallon by spring, and decided that was too big a risk to take. I know that even at 1.00 per gallon that is too high. Hopefully it will come down but again you never know.

Now for the fertilizer side of the equation. We applied about 60% of our nitrogen in the fall of 2000, with the majority of it in the form of NH3. We paid $265 per ton. We locked in the rest of our needs in Dec. 2000 for $310 per ton. In the spring of 2000 we paid $215. And the fall before that I believe it was $190. Again, substantial price increases when the price of the commodities we are selling remains flat. The only bright spot is the price of the blends, which have actually come down. Figure that one.

What we hear in town: If NH3 stays at that $400 range, it could just as well be $800, because there won’t be any used. There is no way anything will pencil out at that price. March 15 again will be an important date. If these prices hold till then everybody will pay particular attention to what crop insurance has to offer.

Our cropping plans are not going to change any. Like I said before, our N is locked in at a price I can live with. We have changed crops and crop rotations the last couple of years because of the continuing wet conditions. For example, we no longer seed sunflowers but we have started raising pinto beans. In 2001 it doesn’t look like we are going to plant any barley, but it is for other reasons than high energy or fertilizer prices. Around here the talk is there will be more soybeans planted and the reason being fertilizer price. And preventive plant may be a big thing depending how the spring plays out. I will be planting wheat, canola, pinto beans and maybe a little durum. ---Brian Aanstad, Hampden, ND

My partner and I are planning to do some notill planting of soybeans to save at least two trips across the fields.  Other comments I hear are less corn and more soybeans because of fertilizer costs, plus in our area a guarantee of $5.10 loan rate for beans. I am also hearing that soybeans are testing low in germination because of their low moisture content at harvest in this area. ---Butch Buschette, Renville, MN

Many farmers are in a wait and see mode. I would imagine that fertilizer usage will be cut a little, if possible, although we all get more optimistic when the spring fever takes over. It’s tough to let land lay idle when the weather says to go.---Art Brandli, Warroad, MN

I locked in 100% of my nitrogen prices with only a 38% increase. That sounds like a lot, but when you put it on a per bushel basis it comes in at only 7 cents per bushel increase on corn (our highest nitrogen user). Some timely marketing can more that make that up. Also, our yields were not as high in 2000 as in the past so we have some extra residual nitrogen already in the soil.

I believe your average farmer would be better off lowering family living expense (by not buying that late model SUV) than switching from a nitrogen-use crop (corn, wheat) to more soybeans. The last two years I have been able to combine good LDP payments in the fall and price the corn during rallies to average more than 50 cents better than loan price. But beans are much harder to do that with.

I have a strong customer relationship with my local Cenex, who has always been my supplier of chemicals and fertilizer, Last September, they offered a pricing structure. That was 10% cash down in September, with the remaining dollars to be paid at the end of December or early January. I locked in 40% of my N needs then. People in the industry were already talking shortage of natural gas then.

In December I locked the remaining 60% of needs under the same pricing structure. I almost always book 100% of my nitrogen needs before Jan. 10 of each year. Over the last 7 years the price has gone up, or up enough to equal the cost of money. Thus, I always prepay. My local supplier always fills the shed in Oct-Dec time frame. This is the first year that they have ever sold 100% of their shed. There is no NH3 in this area. It is all urea that’s left.---Chet Edinger, Mitchell, SD

Due to crop rotation practices, significant shifts most likely will not be seen in crop acreages. The most affected crop appears to be corn, where inputs costs are much higher than other crops that could go on the same land. Corn acres may be displaced with soybeans and in some areas, barley. Soybeans would be the most likely replacement for corn if the rotation and land allow for it. The economics of the oilseed loan program, coupled with the low commodity values and the nitrogen needs of corn and wheat, also provide additional incentive for an increase in the acres of soybeans to be planted this spring. The availability of fertilizer will have as much impact as the price. Those planning on applying nitrogen may be limited in their ability due to the lack of availability throughout the industry.

As for changing farming practices, we are not hearing any significant changes being planned. There most likely will be the desire and need to reduce the rate of nitrogen applied due to the increased costs and limited supply which could ultimately negatively impact yields, and specific to wheat, protein content.---Mike Hardy, merchandising manager, Spring Wheat Bakers, Fargo, ND