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20 March 24, 2016
2016 Logan County Farm Outlook Magazine
Lincoln Daily
News.comT
he January 15, 2016 edition of the Des Moines
register said that many Iowa farmers are not
expecting the agricultural economy to improve
anytime soon, with a majority of those surveyed at the
recent American Farm Bureau Federation conference
preparing for a drop in income this year and many are
taking steps to conserve cash.
A season of conservatism is also the opinion of our
local ag community. As grain prices continue to
hover in the “no profit zone,” the input sector of the
ag industry continues to take the heat along with
producers. One local source said that it is as quiet as
a mortuary at equipment dealers, and “you don’t buy
ahead at the local fertilizer dealer.”
Bankers are taking a stern look at the books for 2016
and will be likely to continue to extend credit for one
year amidst this price downturn, but are unlikely to
go two years. “Bankers are going to be looking very
closely at [debt to asset] ratios,” says Matt Bennett of
Bennett Consulting. “We’re going to have to be better
businessmen than we’ve been.”
Adjustments need to be made. The pencil needs to
be sharpened. In a recent Farm Journal Media Pulse
poll, 1,500 farmers were asked which expenses they
were going to cut first in 2016. Thirty percent (30%)
said they were going to cut every input category.
Thirty eight percent (38%) said they were going to
trim machinery expenses first. Nine percent (9%) said
they were going to trim fertilizer expenses, six percent
(6%) said they were going to trim seed costs, and
two percent (2%) said they were going to trim crop
chemical costs. A surprising 15% said they weren’t
going to trim any costs.
Bennett encourages younger producers to seek wise
council from older generations for guidance on
surviving tough times like the 1970s and 1980s. “We
need to understand what it’s going to take to be able to
get through what will probably be the toughest time in
a lot of our careers,” he says.
Trimming costs will be a key element to approaching
profitability. These cuts will affect the entire ag
industry and each sector will respond with price cuts
of their own, plans to deploy crops at a lower cost, and
all will struggle through this together. Not everyone
will survive. Some producers and some input
dealers will fail during this price downturn and seek
bankruptcy protection. Some of your favorite people
Input sector continues to take a hit
Troy Bauer,
manager at Hartsburg Grain Company: “This year it is going to be Economics
101…supply and demand. Farmers and the elevator were going to have to watch their
expenses this next year. A lot of farmers are sitting on their grain because the price is so
low.”
Les Rohlfs
, owner of Rohlfs Implement in Hartsburg: “The ag industry had a couple of
good years not long ago. Farmers bought some new equipment and now they don’t need
equipment or repairs. We are down the food chain because they need seed and fertilizer.
You have to plan for this type of swing. We are lucky to be a small company with a loyal
following.”
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