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Latest crop: Worry Spiraling gas price pinching farmers, too
By RYAN REYNOLDS and JUDY DAVIS
Farmers can get most anything they need at Bernie Buening’s co-op business in Dale, Ind. Unfortunately, Buening said Tuesday, a lot of them have been leaving with the same product they carried in: Worry.
Almost all are troubled by a rise in the price of natural gas, a substance farmers use in several phases of producing a crop, from fertilizing fields to drying out corn harvests.
“Oh my, yes, they’re concerned,” Buening said. “This is gonna drive up input costs at least $20 an acre, maybe more, this year.”
The Food and Agricultural Policy Research Institute reported to Congress on Tuesday that net farm income is likely to drop 20 percent, or $9 billion, over the next two years unless a new wave of federal aid comes through.
The main culprit is the price of natural gas.
The price of natural gas, a main component in the production of the fertilizing agent anhydrous ammonia, jumped 31 percent last year.
That increase shows up in the bill for fertilizer.
Some farmers are taking the bad news in stride.
“We don’t have any profit to start with,” said Leon Meyer, who farms near Midway in Spencer County, Ind., the area where Rockport, Chrisney and Richland all come together.
“I’m still watching it,” Meyer said of the upward-spiraling price of nitrogen.
“I haven’t made up my mind what I’m going to do.”
Terry Keeneth, agriculture educator for the Purdue Extension office in Gibson County, said farmers will pay about $430 a ton for anhydrous ammonia, as compared to $200 last year.
“Lately, that’s the hot topic around here,” Keeneth said. “A lot of them say they’re going to cut back about 10 percent on their (fertilizer).”
Keeneth said the plan should work, unless Mother Nature causes problems.
“If we don’t have an unusual stress year, it won’t affect them. But if we have a drought or a lot of rain, it’s going to be a problem,” he said.
Farmers also use natural gas in the process of drying out their corn crop at harvest time. Pervis Ellis, 40, said he uses natural gas to fuel the dryers after he harvests the white corn from his 2,000-plus acre Harrodsburg, Ill., farm.
Ellis said he’s one of the lucky ones.
“We were able to secure a good price on prepaid last fall,” Ellis said. “We were just in the right place at the right time,” he added, declining to give the price.
Corn needs nitrogen, a lot of it, to grow. Soybeans manufacture the nitrogen they need.
“I’d hate to plant all beans. I plant to keep with the rotation, but if I can’t get nitrogen there’s no need to plant corn,” Meyer said.
“With the anticipation of people switching to soybeans, as well as the 25 million bushel soybean carry-over (from a crop report released last week), soybean prices took a hit,” said Gary Michel of the Warrick County, Ind., Extension Office.
“The crops aren’t in the ground yet, but if people do switch from corn to beans, the price of beans is going to drop, too.”
G. Allen Ullom, Perry County, Ind., agricultural educator, said wheat acres in the Western states are being switched to beans, and “that’s going to cause problems, too.”
Nobody is sure what farmers will do this spring planting season, including some of the farmers.
“I’m getting mixed signals,” said Darrell Lovell, a commodities broker at Union Brokerage in Henderson, Ky.
“We did a survey. Some told us they plan to plant more corn, some said more beans, some said they were going to stay in rotation and some told us they didn’t know yet.
“A speaker from USDA said a national survey indicated a 1.9 million acre reduction in corn and a 1 million acre increase in beans. Those are very preliminary numbers. Those are the numbers the trade is looking at right now.”
Switching to beans isn’t the cure for input cost woes, though. Farmers rotate their crops for a reason.
“Following beans with beans is not a good way to go,” Ullom said. “You can have problems, diseases and insects and so forth.”
Compounding the problem further is a potential shortage of the already-expensive anhydrous ammonia fertilizer.
Buening said big-time anhydrous producers such as Terra, Farmland and CF shut their plants down when production costs got too high.
Though the plants have recently reopened, it could take a while to catch up to demand.
“What’s happened is that the pipelines aren’t going to be full going into the spring season,” Buening said.
“If this all breaks across the Midwest, we could be sitting a few days without product,” Buening said. “Every dealer has their warehouse as stocked as they can get right now, but when that runs out, it’s going to get a little tight.
“I think the liquid nitrogen is the No. 1 thing we’ll be short on. Anhydrous we’ll be short on, too,” Buening said.
Gary Taylor, branch manager of the Gibson County, Ind., Co-op’s Patoka branch, said it could come to rationing the product.
Buening said he hopes it doesn’t get to that point.
“You don’t want to cry wolf, but I’ve been doing this since 1977, and this is the first time it’s jumped up and hit me in the face like this,” he said.
-- Martin Thompson (firstname.lastname@example.org), February 15, 2001