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2012: Another good year ahead

By Staff | Nov 25, 2011

Chad Hart, an ISU grain marketing specialist, shows how expenses are following income upward. Marginsare being trimmed, althouygh still profitable.

By CLAYTON RYE

Farm News staff writer

MASON CITY – Once harvest season has ended and before planting season begins, there is a time to take a look back over the growing season, compare it to previous years, and then look to next year and what it may bring.

Iowa State University Extension held an annual Pro-Ag Outlook Meeting at the 4-H Learning Center on the North Iowa Fairgrounds at Mason City on Nov. 17.

Under the theme of “Management Options for Lenders and Agribusiness,” ISU presenters included economist David Swenson, grain marketing specialist Chad Hart and livestock economist Shane Ellis.

Swenson, who identified himself as an analyst, outlined rural Iowa’s economic and demographic challenges.

Swenson said that technically, the recession ended in June 2009, but the United States is “suffering from a hangover” from it and recovery has been slow.

“This isn’t your father’s recession,” said Swenson. “We haven’t seen anything like this since the (Great) Depression.”

Swenson saw that a recovery in employment numbers could happen in early 2013 at the soonest.

Swenson foresees rural areas continuing to lose population with larger population centers such as Des Moines and Cedar Rapids having the best chances for growth.

Prospects for growth in rural areas will be hampered by the lack of young adults.

As of 2010, Swenson’s figures showed there was half the number of farmers as there was in 1980.

The ag census of 2007 showed Iowa’s farms had a total sales of $20.42 billion with 20.3 percent of Iowa’s farms producing 82.5 percent of that total, or $892,730 average for each of 18,877 farms.

The remaining 73,979 farms sold $3.5 billion for an average of $46,730.

Swenson expects the Iowa economy to grow, but at a slower rate than nationally. Iowa will recover somewhat sooner, he said, but will not recover to the extent the nation will.

Swenson foresees reduction in state government services and a corresponding reduction in local government services, too.

While returns to agriculture are good, it does not benefit the other non-farming parts of the state.

As an exporter of agricultural and manufacturing goods, Iowa’s job growth will depend of the state of health of national and international economies.

To stabilize the population and retain young adults, Iowa will need to enhance its banking and insurance services, health care and high value businesses, Swenson said.

Crop outlook good

In his crop outlook for next year and the following years, Chad Hart saw another good year for 2012.

Hart expressed concern for 2013 when higher expenses, combined with demand, will either stabilize or possibly reduce.

Ethanol demand will level off at 5 billion bushels of corn and the higher-priced corn has livestock feeders looking at cheaper feed sources, including wheat.

Demand for soybeans has been driven by China, he said, and China will be shifting its purchases to South America. As the U.S. is dominant in corn growing, South America will be dominant in soybean production.

Hart said the only place where soybean demand is growing is in biodiesel.

The current dry conditions could be a problem for next year as Iowa is short of moisture by 3-9 inches.

Shane Ellis spoke on livestock numbers and said that it will be 2015 before there will be additional cows in the cattle inventory.

Profitability for 2011 was accomplished by locking in feed costs said Ellis.

For 2012, profitability will be increased by taking advantage of prices.

Ellis saw pork profit margins being squeezed in the last third of 2011.

Beef and pork exports are strong and will be important to livestock producers in the future.

With strong prices and stable to increasing demand, livestock will be profitable said Shane Ellis.

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