The old adage of “the cure for high prices is high prices” seems to be settling in now. We would love to have profitable prices so that the need for the government to help out would be unnecessary, but a safety net is surely needed.
Production agriculture has been the only bright spot in the economy the last two years, but how long will it last? Here we are working on a new Farm Bill and an election right around the corner, which is generally not a good political scenario.
The Super Committee has failed, so where do we go from here? In spite of current prices, we need good farm policy for the long-term. But should we change courses or stay the course?
The Southeast has done well with the existing Farm Bill, and I’m sure most producers would tell you it has worked, and it doesn’t need changing. However, because of budget pressures and the WTO Brazil case, the cotton industry has proposed a new direction for the effective revenue risk management – the Stacked Income Protection Program. This is a new approach using a crop insurance product that covers revenue.
Big Changes For The Future
Looking out to the future, it can be unsettling because going back to low commodity prices will hurt as rent, equipment and input prices have risen dramatically. These trends don’t always seem to follow prices back down nearly as rapidly as they did going up.
So how do we prepare for 2012?
Farmers are always the most optimistic people in January, and the most pessimistic people in the fall. As for my area here in southwest Georgia, there were some excellent yields with corn, peanuts and cotton. Irrigation played a major role in our yields. Our gin was hurt badly by the extremely dry spring, and many dryland farmers did not get a stand.
We had many acres destroyed, so our bales will be down in relation to the acres planted. Producers in the Southeast will have to pay attention to peanut prices when planning what to plant this spring.
It all ties back to cotton prices. We can plant dryland cotton or peanuts but not corn. With the price coming down for cotton, it is also bringing down peanut prices. The peanut shellers have said they need about 30 percent more acres to get their production back up – so this will be a big factor in spring decisions.
Decisions Must Be Made
Producers who tried corn three years ago and didn’t have infrastructure have gone back to cotton because of no “corn module” to keep the combine running. Some have put in dryers and bins and are geared up for corn, and these are all irrigated acres.
These producers right now may increase corn acres because today it looks better than cotton, but we will have to see what happens when the bidding for acres starts.
Somehow, it all goes back to the Farm Bill. We must maintain a good safety net to provide food and fiber. Whether you are a Republican or a Democrat, we still need support from Washington to keep rural America healthy and farms profitable.
Contact producer Jimmy Webb in Leary, Ga., at email@example.com or (229) 835-2627.