Ag commissioner: 2016 outlook ‘pretty dismal’ for farmers

Doug Goehring may be North Dakota’s agriculture commissioner, but at the end of the day, he’s still a farmer.

Like any farmer, he has to deal with the low commodity prices that have producers from southwest North Dakota to the Red River Valley concerned and apprehensive about what the 2016 growing season will bring.

“It’s pretty dismal,” Goehring said of the state’s ag outlook. “… At this point, my understanding visiting with farmers — and even on our own farm — is there’s some hard decisions to make.”

Goehring admitted he’s even thinking about giving up a piece of rented land that may not pencil out as profitable this year.

He said he’s heard the same story throughout the state as farmers weigh their input costs with commodity prices that are lower than they’ve been in several years and are causing them to see red on the bottom lines of their projected yearly balance sheets.

“Farmers don’t see any black anywhere they look,” he said. “Then it’s a matter of trying to assess, ‘Where can you lose the least amount of money at?’”

Ron Haugen, a farm management specialist with the North Dakota State University Extension Service in Fargo, is part of a group that releases an annual report meant to aid producers in planning for the upcoming growing season.

“This has been some of the lowest prices we’ve had in several years,” he said.

North Dakota farmers are planning for their worst spring wheat prices in at least six years — nearly $2.50 a bushel lower than recent averages — with durum wheat at its lowest since 2011, according to the Extension Service’s data.

Corn prices, for the past two years, have been about $1.50 a bushel lower than recent averages and are nearly half the price of what they were in the 2012-13 marketing season.

Oil sunflowers are $8.35 per hundred weight lower than average and down nearly $5 since last year. Soybeans and canola are both at their lowest point in the past five years and well below recent averages.

“To have tight margins is actually more the norm,” Haugen said. “The last five years have seen extraordinarily high prices. This is getting back to more normal, where things are tighter.”

Despite the benefit of farmers and ranchers having the lowest fuel prices than they’ve had in several years, the gains there don’t stack up with low commodity prices.

Greg Fitterer, with Helena Chemical in New England, has been in the fertilizer and bulk fuel sale business much of his life.

He said farmers know little to nothing is going to pencil out positive at current commodity prices. Fertilizer prices aren’t much more expensive than they were five years ago, either, and he said the producers his company works with aren’t likely to back off on how much fertilizer they put on, unless spring becomes unusually dry, because they feel it’ll help keep their yields higher.

“Everything goes in cycles,” he said. “You have your ups and your downs. I’d say most guys’ goals this year is to break even. To not lose equity. It’s sad, but you’re basically not trying to strike out and hit a single.”

Goehring said he’d still like to see the chemical and fertilizer business — especially when it comes to nitrogen fertilizer and anhydrous ammonia — settle into more reasonable price in line with ag and energy commodities.

“There’s things way out of whack,” he said. “It’s gotten to a point where the industry is charging what it’ll bear and they need to come down a little bit. They’ve been squeezing too much out of the farmer, and taking advantage of the opportunity — when commodity prices are high, we’re going to get more from the farmer.”

Goehring said most farmers are looking at “bare bones minimum” spending plans to try and get through 2016 with the hope that better years and higher commodity prices — along with a better world economy, which greatly dictates those commodity prices — are around the corner.

“They’re trying to figure out everything that they can do to make that balance sheet work so they can buy another day, buy another year, another season to farm,” Goehring said. “Because chances are, a year and a half from now, things are going to be a little bit better.”

Author: Dustin Monke

Former newspaper editor. Now I market the best baked goods and donuts in America. But every once in a while, I write a cool story too.

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