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Young farmers focus on future, financials

By Staff | Feb 14, 2014

SIOUX CENTER – Young farmers throughout Northwest Iowa met in Sioux Center on Feb. 3 to gain insights into becoming more than average farmers.

The meeting was one of several held throughout Iowa offering them a network with each other, in partnership with the Iowa State University.

The Northwest group, consisting of 25 men and women, ages 18 to 35, who are focusing on the business and financial side of livestock operations, including facility tours.

Dr. Chad Hart, an ISU grain markets economist, reviewed the 2013 U.S. corn-growing season, specifically, the 18 states east of the Mississippi River with record corn yields, while states west of the river had below-trend yields.

“The demand for corn is growing,” Hart said, “but yet supply grew even faster.”

The 2013 U.S. yield, Hart said, moved up 28 bushels per acre from 2012 to 165 bushels per acre. He said 10 million acres were added to corn production in 2013.

Hart said he expected this trend to continue in 2014, especially among those states with record corn yields, possibly dropping corn prices further.

“Corn is not alone though,” Hart said. “Soybeans had the same issue, with record production in the south and the east, and Brazil’s crops are just beginning to get harvested now.”

Every place had increased its corn production in the world except South America, which tends to focus on bean production.

High corn prices drove global production.

“The cure for high prices,” Hart said, “is high prices.” Profits attract more production which creates an over-supply and prices slip down, he said.

“These acres will probably be used for corn and beans for at least one more year,” Hart said of the eastern states, “due to the fact there is nothing else as profitable as these particular crops, to produce at this time.”

Crops such as cotton and tobacco have been abandoned and corn raised in its place.

According to Hart, 10 million cotton gins disappeared last year. Growers won’t grow what they can’t market.

Health awareness has led to decreased tobacco use, he said.

It is in these southern states, Hart said, although their corn and bean numbers were nowhere near those in the Midwest, had previously not grown corn or soybeans.

“It is this kind of land we need to fall out of corn production to once again be able to see a profit,” he said.

Domestic demand

Demand for corn keeps increasing due to growth in the pork industry, which is expected to expand by 1.7 percent this year.

The growth rate would be even higher, but porcine epidemic diarrhea virus and worries about its spread have held growth back slightly.

The profitability of raising cattle is not really there at the moment either, Hart said, so the need for corn as feed is not a real boost.

Hart said export markets have created “quite a bit” of demand.

China has a huge demand for soybeans, more due to its way of eating and cooking.

Previously, there had been a high demand for corn because of the advancement and usage of ethanol.

However, technology advances, communication becoming easier and cheaper, online shopping, all contribute to less driving and reduced fuel consumption, he said.

Gas consumption was growing rapidly until 2008 when the recession hit and gas was $4 per gallon making it more of a luxury than a need.

Since then, there has been less demand and the price continues to drop in the U.S., although in other countries such as China, India and Africa it is growing rapidly.

Diesel continues to trend upwards, he said.

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