This Week in Ag #53

“They’re not making any more of it” has long been a popular response among farmers justifying a land purchase (or in the case of retirees or heirs, for holding on to it). But now it seems, they’re making less of it. A lot less. Like 20 million acres less. That’s about the size of Maine. To put that into cropping perspective, it amounts to over half of all wheat acres, and twice the cotton acres US farmers plant each year. According to a USDA study, the amount of US farmland dipped from 900 million to 880 million acres from 2017-2022. This number will continue to shrink, perhaps even more rapidly. Urban sprawl is a usual suspect. But there are other culprits, some of which may be lined with good intentions, but come with consequences. Take solar farms. To achieve the current administration’s emissions goals, the Department of Energy projects 10 million more acres are required to host solar farms. And we’re not talking just about desert space (no offense, Arizona friends). Just last week my mother was contacted by a solar developer interested in renting a 40-acre field on our home farm. Their starting offer was an annual cash rent payment 30x the amount we receive for cash rent. Of course, they wanted flat land, which contains deep fertile soil. Estimates show 83% of future solar farms will need to be built on productive agricultural land. Such ventures artificially drive up land values and make it very difficult for young farmers, or any farmer for that matter, to compete for land, whether it’s to purchase or rent. The total number of US farms has now dipped to below 2 million. That’s a 142,000 reduction over the past five years. In the past 40 years, we’ve lost over a half million farms. The average age of the US farmer is now up to 58 years old. But what’s more alarming is that less than 20% of farmers are younger than 45. These stats clearly point to a future state of farming that’s vastly different than what I’ve experienced.

Wednesday is George Washington’s birthday. He’s not only the father of our country, but in many respects, the father of modern agriculture. Washington grew tobacco, and later corn, on his Mount Vernon, Virginia, farm before diversifying into several crops, driven by his belief that the colonists were being taken advantage of by British tobacco traders and that monocropping was ruining his soil. His words more than 250 years ago echo today’s regenerative agriculture voices, “Every soil will sink under the growth of corn, from the exhausting quality of it or the manner of tillage.” He introduced other crops as part of a 7-year rotation system and planted cover crops (what’s old is new, right?), using crimson clover to enrich the soil with nutrients, reduce erosion, suppress weeds and attract pollinators. He was among the first to use compost and manure to further nourish his crops. He became one of the first large-scale wheat farmers, growing 3,000 acres of those amber waves of grain. Perhaps his greatest ag innovation was his 16-sided threshing barn, which in many respects, became predecessor to the modern-day combine. At the time, farmers laid wheat on the ground in a circle and threshed the grain by leading a horse around on the grain to stomp out the chaff, then gather it and haul it to the mill. Washington gave this process an architectural bend with his polygonal barn: the top floor consisted of a circular treading floor with gaps (like sieves on a combine) in the wooden floor. Wheat stalks were laid in the circular track and horses were trained to trot or walk around the circle. Once the wheat was literally separated from the chaff, the grain fell between the floorboards into the granary below. From there, the grain was sent to his own gist mill, which grounded flour that was used by the colonies, reducing their dependence on England. Of course, Washington would later go on to permanently reduce our dependence on England.

Valentines weren’t the only red farmers saw last week. Commodity prices continued their downward spiral. Cash bids for corn are now trading below $4 in inland markets, wheat is below $6 and soybeans are in the low $11s. Meanwhile, farmers are now paying 3x more in interest rates than they have at any time during the past 15 years. It’s no wonder that farmer sentiment nosedived last month based on the Purdue Ag Economy Barometer. “Lower crop prices” is now tied with “Higher Input Costs” as their biggest concerns. The gap was 14 points one year ago. While USDA projects farm income to drop 27% this year, the pessimist outlook was confirmed by perhaps a better source. John Deere, renowned for their ability to predict and manage both up and down cycles, just cut the profit outlook they made in November (from $7.75-8.25B down to 7.5-7.75B) based on 15% lower sales projections. We may be at a point where it’s not a matter of if commodity crop farmers will lose money in 2024, but how much. And last year’s spring crop insurance price of $5.91 for corn may seem like a pipe dream when new prices are released at month’s end.