Farmers cut back on expenses
ON THE FARM
When we have years like last year and the predictions for 2017, local farmers do everything they can to pinch pennies or stretch their dollars. When crop or dairy farmers realize prices may not be good enough to meet their costs, they know that spending fewer dollars is essential.
Low farm prices also affect other businesses. For example, recently I had a chance to visit with a local implement dealer. I asked him how business had been for him this past winter. His answer was, “Slow.”
He did add that February had been better than expected when he sold two large round-hay balers. They were sold, he said, to small, part-time farmers who had income from sources other than farming.
Sales of small equipment such as lawn mowers and chain saws had also been slow but he expected those to pick up when the weather warmed up and spring arrived.
Other businesses were also affected in various ways. Some farmers have reduced fertilizer costs but were careful to not limit crop production. Some lime applications were delayed waiting for better crop and milk prices.
Farm Journal, a popular farm publication, did a March 2017 survey of 500 farmers across the country to see how they are planning to reduce expenses and economize this year. The top response was to reduce farm equipment purchases. About 67 percent said they did not plan to make any major purchases of equipment in the coming year.
That requires careful maintenance and more repairs of what they already have to use on their farms. Putting off buying new equipment eventually can catch up with them because equipment just plain wears out.
Another 46 percent said they were going to delay non-equipment capital or large purchases — most anything that can cost them large expenses.
Since farmers, when they have the income, tend to put most of it back into the business, reducing equipment and other major purchases will hurt the area economy. Any business selling those items that go into raising crops or producing milk will be hurt.
A third way the survey said farmers were going to reduce expenses was to use no-till or low-till farm practices. Forty percent said they would use that practice. Locally many farmers are and have been using these tillage practices for several years.
When it came to buying seed, 26 percent of those responding said they were going to buy less expensive seed with fewer of the genetic traits that can reduce corn borer and other insect problems. While this can mean more trips over the field to get crops planted and more pesticides to eliminate insect damage, farmers apparently saw it as a way to reduce planting costs.
Other ways they said they were going to reduce expenses were to use variable rates of fertilizer application and insecticides, negotiating lower rents, switching to other crops and cutting back on the use of outside consultants such as crop advisors or feed nutritionists.
Every farm is different so the approach to reducing expenses will be different for each one. The impact to the surrounding communities can be the same. With less money to spend, lower farm prices will impact area communities.
Many of us don’t realize the importance of farm income to local economies.
Parker is an independent agricultural writer for Farm Bureau.