The saying “it’s hard to get the big picture when you have such a small screen” arguably could apply to producers, especially this year, as they focus on all the challenges associated with the prolonged drought and other issues, says one economist.
Even so, these challenges should not detract farmers from looking ahead to the next big challenge: their fall and spring planting decisions, which could prove even more critical because of the lingering effects of this summer’s drought.
Precisely because of the drought, farmers may be dealing with seed shortages during the next few growing seasons — all the more reason why they should take special care with fall and spring planting decisions, says Max Runge, an Alabama Cooperative Extension System economist.
While there are no hard-and-fast rules associated with planting decisions, Runge says there are some rules of thumb farmers should employ as they look ahead to the next two seasons.
At the top of the list: cropping and rotation systems, which can alleviate producers of much of the strain associated with making decisions on the fly.
“It certainly helps if you have a cropping system or crop rotation,” he says. “Some of the best farmers I know have these in place, and most of them aren’t swayed by price fluctuations.
“They’re committed to these decisions on a long-term basis.”
Of equal value to producers are calculating production costs and paying special attention to anything that could enhance profitability.
“This conceivably could be anything — adopting some facet of precision farming technology or an irrigation system or implementing a new management practice,” Runge says.
“Whatever these prove to be, gaining a clear picture of how your operating costs will stack up against prices is a critical concern.”
“Of course, you’re not going to know when a drought is going to end or what prices are going to be, but you will have a pretty good idea.”
On the drought issue, Runge says growers should pay especially close attention to how this summer’s drought conditions will affect corn planting decisions and, ultimately, the long-term price outlook.
“A year ago, we were seeing high prices for corn and this led to a tremendous amount of corn acreage opening up,” Runge says.
Now, following the drought, supplies have been cut and prices have risen.
“Consequently, next spring, when planting decisions come out, you can expect these higher prices — or, at least, the expectations for higher prices —will bring in a lot more acreage, and this will mean that prices will again be pushed down.”
As Runge describes it, these prices are prone to seasonal fluctuations, and the best producers are aware of these and base their planting decisions accordingly.
In the end, he says, it all goes back to a word he has used a time or two before in discussing the importance of the big farming picture: nuance, working out an intricately detailed picture of next year’s decisions.
In addition to the lingering agronomic effects of drought, Runge says producers should also play special attention to how larger economic trends will play out over the next few months.
“Producers don’t make decisions in a vacuum,” he says. “As the political pundits like to say, ‘It’s the economy, stupid.’”
Runge projects that the drought will affect a lot of things next year and there will likely be across-the-board rises in all commodities, especially beef, and related products such as cheese and milk.
As consumer demand for these commodities decline, so will the demand for corn, he says.
“This trend will likely play out not only in the United States but worldwide,” Runge says. “We’re dealing with a questionable economy, unrest, and weather-related issues, and it’s having an effect on commodity prices at home.”
For this reason, he says it may not be a bad idea to price a small part of the 2013 corn crop.