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Local agriculture: A balancing act

H&N photo by Andrew Mariman
A farmhand makes passes in a tractor to fertilize land south of Spring Lake Road Thursday morning. Basin farms are busy planting, plowing and fertilizing.

Commodity prices are rising, but so are costs

By DD Bixby, Herald and News May 2, 2008


Agriculture commodity prices are at record highs, but when it takes $400 to $500 to fill a tractor gas tank, it keeps things in perspective, says Klamath County farmer Mike Noonan.

He will get better prices for his crops this year, but any hike in profit margin will likely be eaten by increased costs.

Seed and fuel costs — which include fertilizer and chemicals along with tank prices — are up, he said, estimating that cost of doing business this year may be nearly double what it was last year.

Higher prices are partly caused by increasing global competition for commodities. In addition, corn planted for ethanol is driving up demand for other sources of food, in turn, raising prices, according to Klamath Basin Research and Extension Center director Willie Riggs.

With high prices, it’s easy to believe farmers will be getting rich while the national economy seems to be slipping, he said.

“It’s going to be a strong market. The potential is there to make some money,” Riggs said.

But the key is to look at the margin of return, he said, which won’t be available until after fall harvests. It comes down to management of the land, which varies from acre to acre, Riggs said.

“The people who know how to manage their land are going to manage it to their potential,” he said.

Noonan said farmers are trying to decrease their fuel costs without reducing harvest yields. He tries to make fewer tractor passes on a field by using no-till drilling and pulling multiple implements at the same time.

According to TJ Woodley, district manager of the Klamath Soil and Water Conservation District, no-till drilling saves between $1,600 and $4,800 on 100-acre planting costs, or about $16 to $48 per acre, depending on farm practices.

But farmers can only cut so many corners before they cut into their crops.

Malin farmer Bill Walker said he doesn’t cut back on fertilizer because the farm loses crop yields. He pre-bought chemicals and fertilizers for the year and expects to use all of it.

Both Noonan and Walker contracted some of their crops, ensuring a price at harvest.

Noonan said he does it where it makes sense for the operation. Walker has all of his potato crop contracted with various companies, but only has about 20 percent of the wheat crop sold.

At this time of year, Walker generally expects about 50 to 60 percent of the grain contracts to be sold, but record sale prices for wheat have his grain contractors dabbling in futures markets.

Rising feed costs

Klamath Basin Research and Extension Center agronomist Rich Roseburg said cattle producers aren’t seeing the same price increases as other sectors, and are getting stuck with rising feed costs without a rise in market price.

Gary Fensler of the Modoc County Agriculture Department said a big concern with the high prices is if the bottom falls out, producers will be left with high-cost investments and no returns.

The agriculture economy, said Harry Carlson, director of University of California’s Intermountain Research and Extension Center, took a leapfrog-like jump, and impacts of better prices are being seen before the effects of increased costs.

“I guess the two-edged sword is that prices have been pretty good for commodities, but probably balanced with increasing production costs of fuel and fertilizer and such,” he said.

Farmers just don’t know yet whether current prices will be sufficient to cover their costs.

“I think there’s some increased opportunity,” Noonan said. “Things look good, but the jury’s out. We’ve gotta wait and see what the fall brings.”


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