Category: Business

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.”

Editorial: Slowdown allows time to weigh environmental impacts

The oil slowdown is here. Is it long lasting? Will prices bounce back by the end of 2015? Or, will North Dakota’s Oil Patch cities suffer long-lasting economic impacts?

No one can answer those questions because no one can predict the future. History has shown, however, that oil prices don’t go down and stay down. They ebb and fl ow. Just as quickly as prices reach lows, they can quickly rocket to all-time highs.

Because of this ongoing fluctuation and uncertainty in the world market, the oil industry in western North Dakota is changing. The boom days are over. The days of a more moderated and economical approach are here as the industry in western North Dakota tries to catch up in all areas, from infrastructure to adapting their business to keep up with new prices. Companies are cutting jobs. Others aren’t doing anything.

As the industry slows to a more manageable pace, one area we encourage North Dakota legislators to openly talk about this session is the environment, and how even a Republican-dominated state can properly balance the oil industry with proper environmental management.

This past month, there were two major spills into bodies of water. One was an oil leak into the Yellowstone River, one of the Midwest’s greatest rivers and a source of drinking water for some Montana communities. Another was a brine water leak into a small creek that eventually worked its way to the Missouri River.

There are also issues relating to rule changes regarding the ongoing regulation of technologically enhanced naturally occurring radioactive material, or TENORM. In the December issue, we wrote stories about northern Oil Patch farmers upset about saltwater disposal well breeches into their fields.

We know Republicans aren’t the party most likely to broach the subject of environmental legislation and regulation, but the proof is on the surface. There are issues that need to be addressed during this session, and now is the perfect time to do it.

Shoring up environmental regulations for the energy industry and increasing fi nes for those found to have made mistakes is not going to chase the industry out of the state.

Oil isn’t a reckless industry. It can’t afford to be.

The overwhelming majority of oil industry companies do everything right and by the book. But that doesn’t mean mistakes can’t happen.

If more regulation means protecting farmer’s fields and pastures, and drinking water sources, then we say, do it. It’s the right time to institute better policy when it comes to regulating radioactive material, brine and produced water, pipelines and responsibilities for spills — especially those involving water.

‘A lot of memories. A lot of hamburgers’: McDonalds building torn down

McDonald’s owner Mike Kelley talks to bystanders Thursday as an excavator from Tooz Construction works on tearing down the site of the old restaurant on Museum Drive. A new McDonald’s building was built right next to the old one, which is being tore down to create a parking lot, Kelley said.

Mike Kelley couldn’t help but become emotional Thursday morning as he watched construction crews tear down the McDonalds restaurant he built four decades ago.

“This is really something,” he said to other onlookers as Tooz Construction crews razed the front of the structure along Museum Drive in Dickinson.

Kelley, a Dickinson area rancher and businessman, has owned McDonalds since it was built in 1976. The fast-food chain restaurant quickly became a staple of the community.

Walking through the old McDonalds building one last time, Kelley summed up what the restaurant — often the busiest eating place in Dickinson — has meant to the community.

“A lot of memories. A lot of hamburgers,” he said with a smile.

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