A Hard Year for Farming
“It’s been a hard year.” That’s a quote which its seems like I hear farmers say every year. This year though, it was true. If predictions are correct, 2015, will mark the second year in a row that net farm incomes have dropped nationally. Net farm income in the United States is projected to plummet from $90.4 billion in 2014, to $55.9 billion in 2015, a 38% reduction. That would be the largest one-year reduction since 1983 according to the U.S. Department of Agriculture. Compare that to the record setting year of 2013 which saw farm incomes top $123 billion, and it would be a 55% reduction since just two years ago. If the prediction is correct, 2015 would be the lowest net farm income nationally since 2002. What that all boils down to is that the bottom line for many farmers right here in Lee County is likely to be in the red this year.
Many factors were at play in making this such a tough year. Commodity prices have been trying to rise slowly over the past couple of weeks, but still remain low. With prices where they are now, and in a good growing season, an acre of soybeans would be worth around $300 dollars, but that’s before production cost, which NC State estimates to be close to $284, leaving a profit margin of on $16 and acre. The average farm size in Lee County is 133 acres. Let’s say that farmer only planted soybeans this year, he would be looking at a profit of only $2,128 for an entire summers worth of work. Hopefully no one made the mistake of planting only soybeans. This is why our farmers plant a diverse variety of crops. Still, it is easy to see though that earning a living in farming with commodity prices like they are now would have been difficult even in an ideal growing season. This was not an ideal growing season.
A wet spring delayed planting from the start. That was followed by a hot dry summer, which roasted much of the tobacco crop in the field. Tobacco prices were low this year too, and since tobacco prices are adjusted depending on quality, that damage resulted in even lower prices at the market. The rain didn’t return until the fall. By then it wasn’t only too late, it was too much! Grains which were ready to harvest began to sprout in the field, lowering both quality and yield. An early frost in October put an end to any tobacco which was still in the field. As for those soybeans, the more than 17 inches of rain we have received since late September has made it difficult, almost impossible, to get equipment in the field to harvest.
It isn’t just the farmers that are affected by all this. Agriculture is a big part of our economy nationally and here at home. Businesses both locally and national are affected. Nationally, John Deere is seeing some of the lowest equipment sales in the past 10 years. Locally, farm service providers are feeling the crunch.
What all this really means though is that farmers will have to do what they have done for years, continue on with business. Farmers are no stranger to tough times. As mentioned before, similar drops in farm income have occurred in the past, but farmers have survived. Farming is an industry which regularly sees these kinds of ups and downs in the markets. Often just as quickly as the markets fall, they can rise again to record highs. Farmers have to be smart with money, so that the good years, like 2013 and last year’s tobacco crop, can help them to ride out the bad years. Farming is a high risk business, so a profitable farmer also has to be a smart investor.
It is hard to predict when the market will take a turn. This is a fall when many farmers are staying away from winter wheat due to low prices, but NCSU specialist Dr. Ron Heiniger thinks that wheat may be a good investment. Last year, prices were low at planting, around the 4 dollar a bushel mark, but he predicted that there would be opportunities in the summer to sell wheat for 6 dollars a bushel. While farmers had to look for them, he was right and those opportunities were there. This created a much needed cash flow for the summer months. He predicts they will be there again this year, as a result of the limited grain yields this fall caused by the wet weather, which will lead to increased demand for animal feed next summer. If he is right, a farmer who took that risk may have it pay off.
No matter how tough it gets, there are always lessons to be learned in agriculture. Sometimes the tough years can offer the greatest lessons. I will never loose my optimism that farmers will find a way to survive, and even prosper. Despite it’s tough times, agriculture truly is the greatest industry in the world.
Zack Taylor is the Agriculture Agent – Field Crops and Livestock for North Carolina Cooperative Extension in Lee County.