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Growing Soybeans For Profit
May Be On Way Out
| Basically, I'm a nice guy. Yes, I have heard for years the proverbial phrase, "nice guys finish last". After three decades in this profession, I have drawn at least one conclusion: county agents of the future need to be robots. There is a great need in my profession for agricultural extension agents to be void of any feelings. We must "tell it like it is" and let the chips fall where-they-may. I had an extension agent tell me that unless farmers were mad at me, I wasn't doing my job. At the Ohio Corn and Soybean Conference in December, one of the speakers made the following statement: "If you stand still you will be passed by or run over". Change in agriculture is all around us. Whether we like it or not, agriculture is constantly changing. There is no place for a "contented cow" in agriculture except in the milking parlor.
This article is about grain farming. Grain farming is a "sacred cow" in agriculture. It is the last frontier for independent producers. The corn and soybean rotation is being threatened in the U.S. I'm not the only one who believes that the U.S. may not be producing soybeans for a profit in the future. In fact, we are on the verge of losing our total soybean export market to Brazil. Exports account for 33% of all beans produced in the U.S. Think I'm nuts? Two outstanding grain producers, one in Iowa and one in Ohio, agree with me. Can you envision farming in Ohio without soybeans? I grew up in the 1950's and 60's in Brown County. I never saw a soybean plant until I was in high school. The cash crop in Brown County was tobacco. Everything else grown on the farm was fed to livestock. In Clark County, in 1964, 80% of all income from the farm was from livestock and livestock products. Crops were truly marketed through livestock, making livestock a value-added product. In three decades, the Ohio farming sector shifted from livestock to crops as the main source of income. Hog farms in Clark County went from 1000 to 30. Dad told us "never put all your eggs in one basket" and suddenly it's all grain. Now 80% of all producers in Clark County raise only grain. Soybeans are the number one crop planted in Ohio. Today, there is no market for soybeans. My definition of a market is one that covers, at least, cost of production. No one can produce soybeans for $4.50 per bushel except Brazil and Argentina. In a recent study of cost of production, the best Iowa farms were producing soybeans for $5.68 per bushel. In Brazil, they can grow soybeans for $2.98 per bushel. Who's going to win this game? Alan Thompson, Clark County farmer, is considered by his peers to be one of the best. His marketing skills are probably second to no one. He is a member of Top Farmers of Ohio and his business continues to grow. In a recent conversation with Alan, he told me he sees corn as his future in grain farming. He sees the strong competitive advantage Brazil has in soybeans. Tim Burrock is an Iowa farmer who went to Brazil to check out the competition. On his return from South America, he spoke to the soybean association in Iowa about what he had witnessed. When he finished his slide show and the applause died down, there were a lot of silent and wondering soybean farmers. Not many questions…the audience essentially was too overwhelmed to figure out what to ask! He said compared to Brazil, we're not even in the global game. They're doing what your great-grandfather did: clearing land and making it productive, then exporting it out of the region. They now have storage for their crop; most being underground to keep beans cool. Their topsoil is 150 feet deep! An American from Indiana now owns 26,000 acres. They can store in the ground because it is porous and water drains away. One farmer he visited had six new IH 2688 combines. Full time employees work for $200 per month. Mr. Burrock met with a farmer who was the world's largest soybean grower until his cousin topped his 400,000 acres. He met a farmer who started with 11 acres and now averages 51 bushels per acre on 160,000 acres. One field is 60,000 acres - the total soybean acreage for Clark County and not a weed in sight! He spent $7 million to dam up the river. Can you imagine doing that in Ohio? Taxes are $2.00 per acre. This man's neighbor only owns 7000 acres and had to pay $4.00 per acre for it. Bottom line: cost of production is $2.98. My purpose is not to scare you. My purpose is for you to position yourself to change when economics dictate or opportunities arise. We must spend more time searching for new profitable enterprises or marketing niches. Change brings about new opportunities and we must be in a position to seize them. Farming without soybeans? Maybe. Farming without change? Not anymore. Keith L. Smith, Associate Vice President for Ag. Admin. and Director, OSU Extension TDD No. 800-589-8292 (Ohio only) or 614-292-1868 Updated: August 2001 |