Minnesota Farmers Union

(February 11, 2011) - As we write this column, March 2011 corn futures closed at $6.87/bu., wheat at $8.53.bu., soybeans at $14.33/bu., rice at $15.80/cwt., and cotton at $1.67/lb. Compared to February 2006 those prices are stratospheric. What we are seeing is a second wave of a general price increase for commodities that began in late 2006 and saw its first peak in 2008 followed by a retrenchment.

In this column, as elsewhere, parallels have been drawn to the situation in the early 1970s when prices began to rise as the result the Soviet Union entering the international grain market after a crop failure. The subsequent increase in prices produced a wave of optimism in the farm community.

The positive outlook was bolstered when the US Secretary of Agriculture told farmers to plant fencerow to fencerow. In 1974, the World Food Conference was held in Rome at a time when over 800 million people around the world were undernourished. The conference delegates established a goal of eliminating hunger within a decade. Farmers were being told that demand for food would exceed production for the next quarter century so the statement by the Secretary seemed reasonable. It appeared that farm prices had reached a new plateau.

(December 25, 2009) - This past year has been a challenge as farmers have had to continue to make production and marketing decisions in the turbulence of an economic crisis that burst into view in the last half of 2008 and damaged or destroyed a number of pillars of the US economy. By the first part of 2009, what had been a domestic economic crisis created repercussions in economies around the world

While farmland has maintained its value relative to other sections of the real estate market, farmers who have diversified their holdings to include stocks have seen their net worth fall. Likewise, farm households have not been immune to issues of unemployment among parents and their children.

Added to the dynamics of the economy as a whole, farm households have been subject to their unique set of stressors.

The crop prices that seemed like they were on an ever-rising elevator in mid-2008 have remained well below their peak during the last twelve months. Still, they are well above the prices of the last ten years. At the same time, marked increases in input prices, a rain delayed spring planting, slow crop development, and wet fields at harvest have tested the management skills and patience of most operators.

(March 23, 2009) - Every spring brings its own risks for what is undeniably a risky profession. That being said, it seems to us that the challenges farmers face this year are greater than normal.

The first challenge is fertilizer. With fertilizer prices headed to the sky last summer, some farmers decided to protect themselves against even higher prices by contracting ahead for this summer's prices. As we all know, prices went south and what might have been a wise decision leaves some farmers facing unusually high input costs. For those farmers it will take ideal weather and extraordinarily high yields to take some of the sting off those high costs.

But, farmers weren't the only ones last summer who booked 2009 fertilizer orders at high prices. Lots of fertilizer distributorships are now holding large quantities of expensive fertilizer. With prices substantially lower, we are watching a stare-down contest between farmers who want lower priced fertilizer and dealers who want to minimize the financial blood-bath that is awaiting them. Each side is waiting for the other to blink first.