By Ted Carter/Mississippi Business Journal
JACKSON – Mississippi agriculture economists say 2012 crop winners should be soybeans, corn and – to a lesser degree – cotton.
But don’t expect farmers are sleeping all that well as March arrives and planting choices must be made, said John Michael Riley, an agriculture economist with the Agricultural Extension Service at Mississippi State University.
Corn, soybeans and cattle stand out, Riley said, because each is seeing “the most limited supply.”
“They are doing better than most years,” he said.
Even so, rising production costs have muted the cheering that normally accompanies rising prices, said Riley.
“You think things are great” but “the margin is not a whole lot different from what you’ve worked with in the past.”
Without the strong price levels, the state’s farming sector would possibly have casualties, the MSU farm economist said.
“It is great we do have these strong output prices because they have got to be higher than the input prices to keep folks viable.”
Contemplating that balance between inputs and outputs could well be keeping growers awake at night, Riley said.
“I’m looking at this tremendous amount of risk out there on the price side and production side,” he said. “There is a lot of tossing and turning taking place.”
So what would Riley do if he had crop land?
“I’d just rent it out,” he said, settling for the safe money.
He said there are many factors that go into deciding whether to plant and what to plant, given your crop rotation timetable.
If your commodity is largely for export, Riley said a farmer’s got to predict the stability of your market and price amid a global economy that keeps sending out distress signals.
And no one can say where energy prices are headed.
In this instance, the best a farmer can do is try to accurately gauge how fast your costs will rise relative to the price you’re getting at market, said Magid Dagher, Alcorn State University agriculture economist and director of the Mississippi Small Farm Development Center based at Alcorn.
Positive factors are nonetheless out there, Dagher and Riley said.
“The market is saying we need the corn and we need the soybeans,” Riley said. “We need the production in the U.S. – prices are pointing to continued growth in corn and soybean acreage.”
“Prices have been doing fairly well,” Dagher said. “I do not see the rising costs causing a lot of problems for farmers since prices have been going up also.”
But a hedge that involves lowering your production costs would be wise, Dagher said. With buyers at home and abroad under stress, it becomes “absolutely essential that the producer reduce the costs of producing,” he said, citing technology and irrigation as obvious choices.
Such investments not only get the farmers’ costs down today, it positions growers to reap higher margins when prices go up significantly, such as during a drought when supplies tighten, Dagher said.
Meanwhile, Dagher and Riley see farm land prices rising at least some in 2012.
For much of the recent past and into the present, there’s been pressure to convert crop land to hunting preserves or even casinos and recreation areas, Dagher said.
That should keep prices steady and, in most cases, keep them trending upward, he said.
Like Dagher, Riley said the urban incursions, and added of land prices: “There has been a steady increase and we expect that to continue.”
More immediately, farmers in the Delta are dealing with fields still saturated from last spring’s floods and susceptible to a loss of grazing acreage.
“The ground is pretty wet right now,” Riley said. “It is having an impact on livestock production. Farmers getting in and out of the fields with their equipment are going to be messing the fields up pretty good and causing them to lose forage.”