Douglas County Agriculture update March 2020
By Larry W. Dallas, Douglas County Farm Bureau President
March brought a lot of uncertainty to Douglas County farmers. An early spring doesn’t appear to be in the cards. Some areas of western Illinois did limited fieldwork early in the month but the ground is pretty well soaked up around here, with the forecast of more rain. The drain tile and surface streams have good flow.
The worldwide coronavirus outbreak has become what people call a black swan event, an unexpected circumstance with tremendous effects. The perception of slowing economic activity is causing lower demand for agricultural products and prices have fallen hard. This happened just as a lot of us need money for spring supplies and obligations. Most of the market advisors tell us that the demand is there because people still have to eat and prices will recover. We have seen over and over that commodities sell-off easily and move back up with difficulty.
Some countries have gone into a near-complete shutdown to slow the virus spread. That is of huge concern to us as we get ready to plant our spring crops. We need the free movement of our inputs for planting. There is a huge amount of fertilizer and herbicide to apply across the Corn Belt. The seed has to be moved to the farmer and fuel delivered to use in our tractors. Any quarantine that limits this movement will cause an immediate problem.
On the other end, we also need the shippers and processors of our commodities to continue those activities. The livestock sector is the biggest concern at the start of this. Most dairies can’t store more than a couple days of milk production. They need for the processors to keep picking up their milk and moving it to be bottled or converted to other products. At least one state governor has decreed that large companies can only work half of their employees at a time. That would cut production drastically at a milk bottler or cheese factory.
Likewise, a finished animal needs to move to the processor. Hogs and cattle don’t store like corn or beans. They continue to grow but that gain is less efficient and requires more feed. On many farms, the space that finished animal occupies is needed for the next group to be fed out. Both the Illinois Farm Bureau and the American Farm Bureau Federation have made these concerns known to the Secretary of Agriculture. There are a lot of steps to turn a pig on the farm into bacon in the store and any disruption along the way hurts the farmer almost immediately.
Crude oil prices have plunged in the last couple of weeks due to world politics and to lower perceived demand since people aren’t driving as much. This has hurt the profitability of ethanol plants in this country as the price of ethanol is down as well. Some plants are slowing production and some are taking breaks for maintenance or upgrades. Areas with ethanol plants are seeing big changes in the local corn market.
Corn prices have adjusted accordingly as demand is down. In the last two weeks, we have lost about thirty-five cents in the Chicago price of nearby corn. On top of that, the spread or basis between the Chicago price and the local price has widened out twelve cents. Corn that was worth 3.86 March 1 is worth 3.32 on March 19. That is a big hit to take on the unsold bushels we have in storage.
The soybean market has performed in about the same way. The coronavirus scare has taken about sixty cents out of the bean bid. The markets for our production look at the supply of that commodity, the demand for that commodity, or the products made from that commodity. What our cost of production was does not enter into that equation. Mostly we are holding our breath hoping the markets come back.
Most of the things we produce have checkoffs, deductions when we sell, to be used for research and market development. Most of the commodities have paid membership organizations for the same purpose. The groups have been having their annual meetings over that past few weeks and giving us the results of the year’s activities. The corn paid membership group, Illinois Corn Growers, sent a pamphlet detailing how they used funds in the last year and what issues they tried to influence. Transportation and ethanol use were two of their priorities.
The corn checkoff group, the Illinois Corn Marketing Board, sent us a letter with strips enclosed to test tile water for nitrates. If the farmer tests a water sample from one of their drain tiles and sends that result to the ICMB, they will give the FFA of the farmer’s choice a donation. Besides the concern for water quality, the ICMB works to expand exports and transportation concerns. With both groups, transportation concerns mean bridges and the locks and dams on the river system.
These groups have paid staff but they are guided by farmer boards. These men and women take time from their busy schedules to direct the commodity groups for the benefit of the farmer members and agriculture as a whole. I know several of the board members of the commodity groups. They devote a lot of time to guiding the commodity organizations. All of them have websites if you are interested in looking at the scope of their efforts.
After a week of good weather in early March, we have settled back into the cycle we had the rest of the winter with frequent precipitation and little good drying weather. We need to move our fall equipment to the back of the shed and shuffle the spring equipment to the front to go over the things we will use this planting season. The weather and ground conditions have not been good for that. We would prefer not to cut the yard all up.
Our biggest tractor needs a new tire. That is a major investment but I guess we are glad it only needs one. We have the oil and filters changed on most of the tractors. We left the planter units off at a local farmer’s shop to be run on a test stand to see that they will plant accurately and space the seed evenly. The mood is not that good in the country but a week or ten days of sunny windy weather would help with that.
When we are not doing something else we are working on a tractor my uncle bought in 1950. It needs paint, tires, and a little mechanical repair. It was his main tractor for several years and I am guessing that he paid less for it than we will for the single tire I spoke of earlier. Agriculture has changed immensely in seventy years but we still put the seed in the ground and hope for the best like they did in 1950. Thank you for reading about Douglas County Agriculture this month.
