Technology, world marketing, government support will be critical SUCCESS FOR America's farmers depends on rapid adoption of new technology, recognition of the need to compete in an increasingly competitive global market, and continued support from the U.S. government.
"This is the biggest change we've ever faced in agriculture," says Al McQuinn, CEO and chairman of the board for Ag Chem Equipment Company, Minnetonka, Minn.
McQuinn was the keynote speaker recently at the annual Agricultural Technology Conference hosted by Texas A&M University, Commerce.
"American farmers must compete in a global economy," McQuinn said. "Competition from other nations will intensify. And we most likely will not be able to compete without solid government support. Rapid adoption of new production methods and technology also will be crucial."
McQuinn said U.S. farmers must become the low-cost producers to compete. That's a tough challenge considering labor and land costs for established and emerging competitors.
"We have advantages in transportation, grain handling capability, proximity to markets, regional processing facilities, large grain consumption from livestock and poultry, and farmer know-how and ingenuity," McQuinn said.
"Other markets are not backward and are quick to grasp new technology."
They also have distinct advantages in land costs. McQuinn says cornbelt land values run as high as $1,350 per acre. Land rent may go as high as $135 per acre for fields that produce 150 bushels of corn per acre.
Compare that to Poland, Ukraine and Brazil, among other competing countries, where farmland values may not exceed $100 per acre.
"We have to use better business sense on land and equipment use," McQuinn said. "Over-equipping has been a weakness on many farms. With a capital investment of $800,00 for equipment, we pay out $1,169,867 over seven years at 10 percent interest. If that equipment is used on 800 acres, per acre cost per year is $208.
Improving efficiency to make the same equipment take care of 1600 acres, drops annual per acre cost to $104 per acre. At 3200 acres, the cost is just $54 per acre.
"We have to balance equipment investments with acreage to reach an economy of scale," McQuinn said.
Technology will help, and McQuinn believes site-specific agriculture will provide the vehicle to lower production costs.
"I'm prejudiced in favor of site-specific agriculture," he said. "I've invested a lot of my company's time and money over the past 10 years to develop it and believe the technology is key to the future of agriculture in this country. Variable rate nutrient application will be a key.
"We have to develop controllers that analyze data that helps technology perform. Software and programming will be keys. We must have products that are reliable and provide economic solutions for farmers. For instance, we must learn to put fertilizer just where it's needed and not waste it where it's not."
Yield monitors, cropping histories and other data also will help farmers make more informed business decisions and help them lower costs, he said.
McQuinn said higher prices and availability of fertilizer may make site-specific technology even more appealing. Increases in natural gas prices last fall pushed the cost of producing nitrogen fertilizers up so far that some companies could not manufacture products economically. Several plants closed; others cut back on production.
"We also had an early winter," McQuinn said. "That kept many farmers from applying fertilizer in the fall. That chore will be delayed until spring, and many will not get as much fertilizer applied as usual. They'll use less, because they have less time and because prices will be much higher."
A nutrient shortage and high prices will make farmers more aware of efficiency. But McQuinn also believes less fertilization will mean reduced yields for many farmers this year. "Consequently, we could see some price increase. Maybe commodities will reach a point where farmers can afford to use higher priced-fertilizers."
Still, they must learn to produce more efficiently, he said.
Even as farmers adopt technology to reduce costs, McQuinn says the U.S. government must continue to play a role in agriculture. "I don't think our government understands that farmers rely on government payments. That's where their profits come from and profits encourage stewardship and efficiency.
"And it's not just farmers at risk. Rural America depends on government support to survive."
McQuinn says U.S. farmers must have a government support program that's "clear, consistent, dependable and fair to all rural America, not just small farmers.
"We must support all producers, regardless of size. Supporting only small farms equals a welfare program and fails to produce the proper balance that's required in a fair farm program.
"We also must stop using U.S. commodities as political weapons in foreign diplomacy. Embargoes send a message that we are not a dependable supplier and that creates an environment for competitors to come in a fill the gaps."
He said production controls also create shortages that encourage competitors to expand.
He says for the last 50 years the U.S. Government has allowed farm support to escalate into higher land values without putting money into farmers' pockets. "The recent shift that encourages government to back off agricultural support is unfair," he said.
"U.S. farm policy should leave farmers free to make the best management decisions possible. It should establish long-term support to stabilize U.S. agriculture and fund support for research into variable rate nutrient management and water quality."
He also recommends increased funds for university research, especially into ways to add value to agricultural commodities.
Noting less than survival is the issue, McQuinn said. "Farmers no longer exert much political force, so the few must become more vociferous to voice their needs for a more viable agriculture. The farm sector is largely misunderstood in Washington and we must reverse that trend.