By Jonathan Kuntson, Published March 08 2013
Preparing for planting
Now, with spring planting inching closer, the Lake Preston, S.D., farmer, like other area ag producers, wonders about obtaining enough seed, fuel and fertilizer. Some inputs could be in short supply during planting, and producers worry about the rising price of fuel.
But Casper, like others involved in Upper Midwest agriculture, is concerned mainly with something he can’t control.
“Moisture is the big thing. Our subsoil moisture is gone,” he says. “We’ll need rain this spring and summer.”
All of South Dakota and Minnesota is gripped by drought. So is southern Montana and most of North Dakota.
Precipitation is needed primarily to recharge fields. But it’s also needed to build up water levels in the Mississippi River, a vital transportation source for imported fertilizer, says Bob Zelenka, executive director of the Minnesota Grain and Feed Association.
“The river is important for barge traffic,” he says.
The United States imports about half of the nitrogen fertilizer it uses, with Trinidad (an island nation in the Caribbean) accounting for nearly half of imports. Normally, much of the imported nitrogen, a key fertilizer needed in almost all aspects of plant growth, comes up the Mississippi on low-cost barges. But the historic drought of 2012 reduced water levels, limiting the size and number of barges that can be sent up the Mississippi.
Barge, rail and trucks
Sufficient fertilizer should be available this spring, says Loran Thom, director of fertilizer for CHS’ northwest region, which consists of northern Minnesota, North Dakota, South Dakota, Montana, eastern Idaho and northern and western Wyoming.
“From what our sources tell us, we have an adequate supply of material either landed or en route,” he says.
The concern is, “The river (transportation) system is very fragile,” though it’s improved recently, he says.
CHS plans to get fertilizer by barge to St. Louis at least, and farther north if conditions allow. If barges can’t get past St. Louis, CHS will send the fertilizer by rail the rest of the way north, Thom says.
As planting nears, “dealers and growers need to communicate early and often,” he says. “Keep communicating nonstop.”
If CHS knows that planting will be delayed in one area and unusually advanced in another, the cooperative can send fertilizer where and when it’s needed most, he says.
Planting across most of the Upper Midwest began exceptionally early in 2011. Another early start this year would lead to “snugness” in the supply of trucks used to transport fertilizer relatively short distances, Thom says.
The price of urea nitrogen fertilizer is, at least so far, lower than a year ago, he notes.
‘A pretty fair price’
“I don’t think anybody is too worried about (the price of) fertilizer right now,” says Gregg Johnson, agronomy manager for Reynolds (N.D.) United Co-op. “It’s a pretty fair price.”
A ton of urea that last year cost about $580 costs about $560 now, he estimates.
Political problems in Egypt, another important urea producer, could push up prices in Europe, which could impact world prices, Johnson says.
The availability of fertilizer remains a concern, although less so than a few months ago, he says.
“We were really concerned last fall. But I think the river situation has been fixed to a certain extent. They’ve widened the channels, and they (barges) are getting at least up to St. Louis,” he says.
Johnson says, however, that some farmers in his area need to apply a lot of fertilizer this spring. Last fall’s weather wasn’t conducive to it.
“There will be a short window to apply fertilizer,” he says.
Fuel, seed concerns
The price of diesel has risen sharply this year.
Nationally, a gallon of diesel costs an average of $4.13 per gallon, up from $3.90 a month ago and $3.96 a year ago, according to AAA, which tracks fuel prices.
Casper says he wishes now that he would have locked in more diesel earlier at a lower price.
The average retail price per gallon of diesel is $4.12 in Minnesota, $4.08 in South Dakota, $4.21 in North Dakota and $3.93 in Montana.
The rising cost of crude oil has pushed up diesel prices, as has expectations that a strengthening global economy will increase demand for the fuel, says Gene LaDoucer, AAA representative for North Dakota.
His organization thinks that the rate of increase in diesel fuel prices will slow but that prices may continue to rise.
Potential shortages of some types of seed is another concern.
For example, the supply of oat and barley seed is short at Montana Seed, Grain and Chemical in Billings, says Justin Downs, whose family owns the business.
Last year’s drought hammered yields, reducing production of seed for this year’s crop, he says.
“We had some fields (last year) that didn’t get any rain after they were planted. You can’t believe how dry it was,” he says.
Demand is strong for forage mixes, and the supply of some mixes won’t be adequate, Downs says.
There also are concerns about supplies of the latest, most drought-resistant seed varieties, Casper says.
Seed company officials have said throughout the winter that seed supplies for corn and soybeans will be adequate, although producers may not always be able to secure their first choice.
Corn grown in South America is expected to provide more of the seed used by U.S. farmers this year.
Prices, expenses rise
A recent survey by the National Agricultural Statistics Service, an arm of the U.S. Department of Agriculture, found that farmers’ cost of doing business keeps rising.
The average production costs paid by U.S. farmers in January 2013 were 6.3 percent higher than in the same month a year earlier. Higher prices for chemicals, cash rent, taxes, seed and other services offset lower prices for fuel, interest and fertilizer.
Don’t read too much into the numbers. They reflect national averages, not conditions in the Upper Midwest, where cash rents are soaring. Also, the national numbers reflect only prices paid in January 2012 and 2013, and prices paid by farmers in other months could be higher
Even so, the NASS numbers do show that despite lower fertilizer prices, overall production costs continue to rise.
The same survey also found that the overall price received by farmers, on average, was 15.3 percent higher in January of this year than in the same month a year earlier.
Again, don’t read much into the number. It’s a national average and it reflects only the prices received in January 2012 and 2013.
The North Dakota State University Extension Service, in its 2013 projected crop budgets, estimates that most crops raised across the state will be profitable this year.
The projection uses average annual yields for the seven years from 2005 to 2011, dropping the highest and lowest year. The projected budget also uses crop price estimates by extension service economists.
Moisture matters most
The overwhelming concern for area ag producers is moisture.
“We need Mother Nature to help,” says Randy Englund, executive director of the South Dakota Wheat Commission.
That’s especially true for winter wheat producers in his state. More than half of South Dakota’s winter wheat crop is rated poor or very poor, and one-third is only fair, according to NASS.
Some producers are thinking about writing off their winter wheat crop and collecting insurance, he says.
It’s unclear if producers will need to make up their minds by March 15, the deadline for deciding which federal crop insurance program to use in 2013, Englund says.
He recommends that farmers concerned with the condition of their winter wheat talk with their crop insurance agent as soon as possible. Some parts of the Upper Midwest, particularly Minnesota, have gone backward on moisture since last fall.
“We went into the fall dry, and we’ve become drier. And our subsoil moisture is gone,” Zelenka says.
The shortage of moisture in South Dakota is troubling, with some already-dry parts of the state receiving almost no snow, he says
Modern drought-tolerant crop varieties can help offset moisture shortage, but precipitation is needed, he says.
Downs, with Montana Seed and Chemical, says there’s reason for optimism in his area. Wheat remains an agriculture cornerstone and rising interest in pulse crops is promising.
“So we’re staying positive,” he says.