Farmers negotiate trickier balancing act
Illinois farmer Pete Tekampe
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KAI RYSSDAL: The corn crop's going to be down this year. Soybeans are going to be up, or at least that's the Department of Agriculture's best guess. The USDA Prospective Planting Report came out today. It's the government's official estimate of what's going to be grown and how much. The report's a big deal because supply helps determine, right, prices, which helps determine how much farmers will pocket come harvest time. As they're getting ready for the planting season, those farmers are trying to navigate some complicated finances.
From Chicago Public Radio, Adriene Hill reports.
ADRIENE HILL: Pete TeKampe farms in Lake County Illinois, north of Chicago. He's a big guy with a low laugh and a shiny red truck that he's pretty proud of.
PETE TEKAMPE: It's the new ethanol-burning truck that burns 85 percent ethanol and 15 percent gas, and that was last year's bean crop.
Last year was a good year for TeKampe. He had a big soybean harvest and an even bigger corn harvest, and prices for both were high. He's got big plans for this year, too. He wants to buy some new farm equipment, maybe a tractor, but that's down the road. Right now, he's thinking about planting. He's planning on 275 acres of corn and as many acres of soybeans. Corn costs more to grow and harvest, so he's cutting back a little on that crop this year. He's also got 60 acres of wheat in the ground that's just starting to peek out of the field, and he's trying to make heads or tails of the fluctuations in the market prices of all three. TeKampe says he's doing his best to hedge his bets. He's already pre-sold some of his 2008 corn and bean harvest.
TEKAMPE: You're really gambling. Hopefully we'll be able to plant it and get a crop. We're hoping, you know, and I'm probably at the max I would sell this early.
Pre-selling crops is one of the gambles farmers have to consider. If the price goes up, or if they can't deliver on the crop, it can hurt their bottom line. They've also got to think about what other farmers might grow. Too much of one thing means prices drop, too little means prices rise, and they need to consider the costs of seed, fertilizer and fuel in picking crops to grow. TeKampe says the costs for fertilizer and tractor fuel are way up.
TEKAMPE: Everyday I look at the fuel, or diesel fuel in the gas stations and I'm thinking, man I should have pulled that trigger six weeks ago. Nitrogen, I got that booked. Fertilizer's booked, booked and paid for in December, but I wasn't smart enough to do the fuel.
Greg Koeppen is the manager of the Lake County Farm Bureau. He says farmers have no choice but to shoulder the higher overhead costs.
GREG KOEPPEN: Those inputs go in whether it's going to be a good year or a bad year the inputs are going to be there. The price that they're going to get paid at the market is dependent on what's going to happen come harvest time.
Koeppen says farmers are pouring over complicated calculations and often making educated guesses to get just the right mix of crops.
KOEPPEN: You know it's up to the farmer. It's that crystal ball that they'd like to see. Where's the corn and bean going to mean the most to them in the end?
Farming's also about those things you can't calculate, like the geese that chomped TeKampe's wheat crop last year, and the weather. There are still piles of ice and snow on the ground in mid-March in Lake County. TeKampe says that'll set planting back a little.
TEKAMPE: Mother Nature can come and give us a nice hot summer and it'll catch up.
HILL: Do you like that, being dependent on the weather that way?
TEKAMPE: Well, I must, or I wouldn't be here, you know? Like I said, I started farming in 60. I've been doing it every year.
He says, in some ways, this year is like all the rest. You just have to wait and see.
I'm Adriene Hill for Marketplace.