July 23, 2024

Rainy years ahead: Despite challenges, farmers persevere

INDIANAPOLIS — Indiana Farm Bureau members continue to step up and make sure their voices are heard by making phone calls and sending texts to lawmakers, beamed INFB President Randy Kron at the organization’s annual state convention.

“Our members make things happen,” he said, also praising the INFB staff. “Working together, we do make a difference.”

Here is what Kron, who has been president of INFB since 2016, after serving 14 years as vice president, had to say during a talk moderated by broadcast news veteran Gerry Dick, creator and host of Inside INdiana Business.

As you look at a lot of the challenges out there, one of them is the cost of the crop. You were quoted in the Indianapolis Star as saying this was the most expensive crop you’ve seen in almost four decades.

Kron: When you’re in farming or a part of agriculture, you’re used to challenges. We’re flexible. We adjust. We’re used to that. I think the number of challenges this year, between inflation, high fertilizer prices, some diseases — we’re kind of off the chart on the challenges and having to adjust on the fly.

Fertilizer, that one just rocks your boat. I looked back on our ‘21 crop. Anhydrous ammonia, a nitrogen product that’s very important to a corn crop, we paid a little over $480 a ton. This past year we were $1,525.

Our farms run on a lot of diesel fuel. For the ‘21 crop, we were down at the low $2 mark. This past year we were $4, $4.50. So, the risk level has increased tremendously in agriculture.

We continue to hear about the supply chain, which has affected every business and consumer.

Kron: There’s all kinds of issues around that, especially with fertilizer. COVID, that hurt the supply chain, when people were out of production for a number of months. A hurricane came into the Gulf that actually damaged a facility there. They were shut down, repairs for multiple months.

A big one was when Russia invaded Ukraine. There’s a lot of fertilizer that comes out of Russia. The United States doesn’t buy a lot from Russia, but it’s a world market. It just shot prices up through the roof.

Equipment, obviously, is very important to the farm economy.

Kron: Most of us farmers drive by equipment lots and kind of drool, like “ooh, look at that.” Now we drive by and they’re empty. There’s just nothing there.

A young farmer that works for an implement company told me there’s some tractors scheduled to come in February — if they get here in February, it will be two years from the point when they were ordered.

The whole parts side of things is a real challenge, too. When we’re planting and harvesting, you want to keep equipment going. You used to be able to go to your implement dealer and get the parts you need. You’d have it and be back running. And if they didn’t have it, the companies would guarantee in 24 hours you’d have the part.

This year we had a little difficulty. Our dealer didn’t have it. So, you do the search. Where’s it at? Guess what, there wasn’t any part in the continental U.S. Luckily, our dealer did what I’ve heard multiple farmers tell me. They happened to have one combine sitting on their lot, so they took it off of there, kind of stole it.

Hey, you just do what you’ve got to do. That’s kind of the farming motto. You adjust and you do what you need to.

Farmers are the ultimate entrepreneurs, dealing with a challenging business environment, but there are so many things you can’t control, like Mother Nature.

Kron: This year we started out on the wet, cool side. Then when Mother Nature shut the spigot off it got hot and it got dry. Further west, they’re having major droughts. I feel for them.

The Mississippi River impacts us. About 50% of our grain that’s exported goes down to the Gulf. What happens on those barges, when it’s shallower you can’t put as much on there. That makes freight costs go up.

But it’s a double-whammy because they take grain down and bring fertilizer back. This is the time of year when our retailers would be stocking up, getting ready for the spring because they’d have their inventories built up.

There’s a lot of things going on that affect our pocketbook.

What’s the bottom line impact?

Kron: It’s been a challenging year. But we’re pretty fortunate this year. Crops were good. Most yields were good. We’re really benefiting from somebody’s misfortune — Ukraine.

When we went into the spring, most economists were looking at about breakeven at best with the high inputs costs. Ukraine’s misfortune brought prices up.

We’ve been profitable the last couple years. You don’t hardly hear farmers say that very often.

Are there any other disruptors?

Kron: We dodged a bullet with the rail strike. That would have devastated the whole country, but agriculture has a lot of products that move on rail, a lot of our inputs.

Disease is an issue with livestock.

And the governor of California decided we’re not going to have an internal combustible engine after 2035. You never know how many states are going to follow along. When you do that, fuel consumption starts to go down.

Here in Indiana, we have 14 ethanol plants, somewhere between 40% and 50% of our corn goes through ethanol plants and we blend 10% to 15% — most gas has ethanol in it — so when that starts going down, it could be a game-changer if we do this shift to electric cars or other things, a major impact on Indiana agriculture.

There’s some things on the horizon that will make us worry.

The Indiana farmer is the eternal optimist, right?

Kron: You have to be, or you wouldn’t be in this business. You get done every year and say next year will be better. I’ve done that for 39 years.

Why do you do it? Why do you farm?

Kron: We love it. It’s in our DNA. It’s a way of life. It’s hard to explain, but it’s who we are. It’s how we’re wired. It’s a great way to raise a family.

What can we expect in the farm economy in 2023?

Kron: Supply chain issues are still here, inflation, interest rates. Most economists are telling us we’re back to breakeven. When we have good years we save for those rainy days.

Hopefully, everybody has saved, because they’re forecasting a couple of rainy years as we move forward.

Is there one policy issue that Farm Bureau is really focused on heading into next year?

Kron: Trying to manage risk. So, the farm bill is going to be key. There are 260 members in Congress that are new since we’ve written the last farm bill.

It’s a part of national security. When we’re hungry, there’s a problem. So, we have to make sure we have a farm bill that puts a safety net underneath all the farmers, especially the next generation coming on.

There’s some action at the Supreme Court.

Kron: Prop 12 out of California and what we call WOTUS could change the face of agriculture. With Prop 12, boiling it down, basically you have one state telling the rest of the country how they have to raise their animals — and that’s not right.

In Supreme Court testimony, California even said it wasn’t about health and safety. It was just morally they don’t like the way the animals were raised.

All of a sudden you’ve got 50 states making all these rules and then you have to try to abide by them. It’s impossible for interstate commerce.

Waters of the U.S., that one boils down to the EPA and their control of waters. The Clean Water Act talked about navigable waters. Now when you say navigable waters, to me it means that you put a boat on it. Well, EPA has over years decided that it’s any water that gets to a navigable water.

So, that’s about 98% of this country eventually gets to navigable water. The water running off your yard at home gets to navigable water somewhere, so EPA has control over what you do there. It’s pretty broad-reaching.

Those are federal issues. What about at the state level?

Kron: We had a challenge last year that had to do with property rights — CO2 sequestration, pore space and who owned it. I want to give a shoutout to our members because they stopped that on third reading, which is almost unheard of.

We’re understanding that’s coming back again this year, so we’ll have to be on our toes.

James Henry

James Henry

Executive Editor