AGRICULTURE: Prices a plus

LARIMORE, N.D. On Monday, the Pioneer seed dealer served a free dinner for local farmers in the Larimore Legion.

"The mood there was night-and-day compared to a year ago," grower Paul Hofer said. "There were lots of smiles instead of frowns."

The mood change wasn't about the quality of the prime rib. "It was about good crops and even better prices," Hofer said.

And much, much, much better results than anticipated midsummer. For profitability, Grand Forks County Extension Agent Willie Huot classifies this as an average to slightly above average year for growers in the Red River Valley. But that's a major bonus, considering that growers feared a disaster in midsummer's heat and drought.

Valley crops survived despite the moisture shortage, surprising even veteran growers such as Bill Farrell of Larimore.

"We ended up with twice the crop that we thought we'd have in July," he said.

Farrell ranked this year among the top-five most profitable in his 34 years of farming. The yields were good, the quality was excellent, and the prices "are the best we've seen since the early 1990s."

Hofer and Farrell are neighbors, working land that can tolerate drought much better than heavy rains. So, they've suffered multiple times since the wet cycle began in 1993. Last year was particularly troublesome; Farrell ranked it the worst of his career. With more than a third of their land unable to be planted because of saturated ground, disaster programs saved them.

That moisture surplus proved to be a plus when rainfall was short across the region. The shortfalls were of disastrous proportions to the southwest, tolerated throughout much of the valley and downright welcomed near Larimore. For Farrell, the conditions provided the following benefits over his 6,000 acres:

-- The first year in many with virtually every acre planted.

-- The first year since the early 1990s without disease in wheat.

-- The first year ever with no disease in sunflowers.

-- One of the few years with no rain disrupting harvest.

-- "Maybe the first year without any mosquitoes" year-round, he said.

Varying results

Except for being mosquito-free, not all farmers fared as well. To the southwest was severe drought. And there were pockets not far from Larimore where scant rainfall and/or sandy soils meant short crops, said Roger Thompson, manager of the AGP Grain elevator in Larimore.

"For some, it's a struggle again," said Bob Sobolik, president/market manager of the Bremer Bank in Larimore. "Virtually everyone is covering their operating expenses. But about 40 percent aren't meeting their term payments, so we'll have to do some restructuring."

Thompson said that his region didn't fare as well in the growing season as those in the heart of the valley, further south and east. One reason is that sugar beet acres mostly end just east of here, eliminated because of the economics of hauling the long distance to East Grand Forks.

"Generally around here, wheat, corn and sunflowers were (moneymakers), and the rest broke even," he said. "East of here where they grow sugar beets, soybeans and wheat, they hit on all three."

Sugar beets were a record crop, so much so that 8 percent of the acreage was destroyed because the factories couldn't handle it all. With its record tonnage, its high sugar content and a price similar to past years, the average beet grower would gross $1,000 per acre. The growers' payments from American Crystal Sugar won't be determined for months, largely dependent upon sugar price. But it figures to be a bonanza.

Price over

production

Overall, valley growers' success is more a result of prices than production. Valley yields, other than sugar beets, were mostly close to average. However, corn prices are almost double what they were a year ago. Wheat and barley prices are $1 a bushel higher. Also higher are prices for soybeans, edible beans and sunflowers.

"Corn is the driver, and everything else is riding along," Thompson said.

Thompson means that demand for corn has driven up the price for all commodities. That demand comes from the explosive growth of ethanol. Further driving the price is the involvement of fund investors in ethanol. The fuel's potential is the big reason for optimism.

"If we can keep ethanol live, it will be a huge economic engine," said Ken Carlson, agronomist at AGP Grain. "Think of the multiplier effect. Instead of sending money to Iraq, it will stay in this economy. This will be new wealth, like oil."

While good farming years filter down to local economy, continued strength for ethanol could stabilize it. "Like the saying goes, a rising tide lifts all boats," Carlson said. "We would export grain and import money."

Even at harvest, when prices typically drop, they're holding strong. Even better than the current price is the prospect for future prices.

"When you look at the futures' market, corn looks like it will be a cash cow for a few more years," Hofer said. "Corn is being contracted out to 2009 with good prices, and I don't ever remember that happening in my years of farming."

Hofer, who started farming in 1985, is ready to jump on the corn bandwagon. He recently ordered corn seed for the first time, shying away from the crop in the past because of the complications of harvest, the drying needed and high labor costs.

"But when corn is $3, it looks attractive," he said.

So are the other prices, resulting in Hofer selling more in the fall than ever before.

"It's hard not to sell," he said. "You don't see that every year where you can haul it to the elevator right off the combine."

Two concerns

Growers have two concerns:

-- The high input costs because of the price of oil.

-- A shortage of ground moisture heading into winter.

The input costs are 25 percent to 30 percent higher than last year.

"It will be an average year rather than a boom year because expenses were so much higher," Hofer said. "Almost all our input costs are related to crude fuel, fertilizer and chemicals."

In 2005, the net income was $49 an acre for soybeans, $34 an acre for corn, $36 an acre for navy beans and a minus-$30 an acre for wheat.

Sugar beet growers will prosper, Huot said, but the jury is out on everyone else until the valleywide net income figures are posted in April.

"When we look at those figures, I'm guessing there will be a huge disparity between the least profitable and most profitable farms," Huot said. "It's probably an average year. But the state of mind of valley growers, for the most part, is that they are pleased with the outcome."

They are less pleased with the prospect for soil moisture conditions in the spring, which figure to be opposite of this year.

"It looks good for getting the 2007 crop in, but on the other side, we might need weekly rains to keep it going," said Dennis McCoy, a Larimore grower and seed salesman.

Then there's the annual uncertainty. "One thing about farming you never know what you're going to end up with," Farrell said.

Hesitant smiles

Farmers typically are reluctant to share their good fortune, especially when their congressional delegation is working to pass a disaster program. They're typically private about their finances and shy to boast. But, mostly, they're quiet because publicity about prosperous years may drive up land rent.

"It tough for them to smile when they walk in here, because smiling is like admitting that they made money," joked Thompson, the AGP Grain elevator.

But, between bites of prime rib at the Larimore Legion Monday, for at least one day, smiles prevailed.

Bakken reports on local news and writes a column. Reach him at 780-1125; (800) 477-6572, ext. 125; or rbakken@gfherald.com .