Corn farmers eye big year
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BY ART HOVEY / Lincoln Journal Star
Three months before the start of planting season, Nebraska corn farmers are stockpiling the seed that could easily result in the biggest crop and most profitable year in their lives.
Big padlocks and big guard dogs might be good security precautions for a seed supply that could get down to slim pickings as corn prices rise and producers supplement seed orders that typically start arriving in January.
Amid expectations for a multi-billion dollar impact on the state’s economy, Pioneer and other giants of seed production are boosting their winter production in places as far off as South America, Australia and South Africa.
If Nebraska corn farmers deliver on their end of private-sector projections of a double-digit increase in national corn acres in 2007, it would be a major historical landmark:
* Not since 1984, when the federal government abandoned a major supply management strategy called Payment-In-Kind, has the state increased corn production by that much in a single year. Fluctuations of 2-3 percent are much more common.
* Not since 1936 has Nebraska planted a corn crop as large as the 9.1 million acres that would result from a 12 percent increase in last year’s total planting. In the pre-irrigation era and in the midst of a major drought, the average yield in 1936 was 5.5 bushels per acre. Only about 20 percent of those acres were harvested for grain.
Source: Nebraska Field Office, National Agricultural Statistics Service.
And they’re pulling still-viable bags of seed from several years of cold storage to respond to a boom in corn-based ethanol production.
Meanwhile, Friend farmer Bob Milton and five family partners are trying to decide how well an unprecedented run-up in the prices for their next crop is going to hold together.
So far, Milton said, “we’ve ordered more than we normally do ... but not a lot more. We haven’t decided yet.”
Holding off on a bigger order is done at the risk of seed warehouses starting to look like grocery stores in the path of a major hurricane. The temptation to commit to more corn is rising almost daily with the price.
At the Brainard-based Frontier Cooperative, cash corn was worth $1.76 a bushel a year ago Thursday. Ninety days ago, it was at $2.84. Thirty days ago, it was $3.27.
A price range on the business pages of the Journal Star this morning puts the average cash prices in the Lincoln area at $3.72-3.75.
Among those who will be trying to cash in on higher corn prices is 34-year-old Ryan Peterson of Stromsburg. He’s leaving the job he’s had at the Pioneer seed corn plant near York since 1993 in March.
“My dad and uncle farm about 2,400 acres or so,” Peterson said. “And we grow seed corn, actually for Pioneer. And with everything the way it is, they can afford to have me come back now and help them out.”
He’s wanted to go back to the farm since his college years. “It just never worked out until now.”
The typical Nebraska crop of more than a billion bushels would add up to several billion dollars for the state’s economy at today’s price, but it all starts with planting decisions farmers are making right now.
“It’s a tough one to figure out,” Milton said. “We’re used to seeing the market swing a quarter of a cent to 3-4 cents a day. And now it’s swinging a full 20 cents.”
He conceded concerns about the best corn hybrids flying off the shelves.
“But we think we can still get more seed corn if we want it.”
If lots of farmers switch from soybeans to corn, that could mean a big and sustained flurry in soybean prices.
“We’ve weighed a lot of things out here and we just have to see what everybody decides,” Milton said. “We’ve got another month and a half to see what happens, to see if the price changes or not.”
Andy LaVigne, president of the American Seed Trade Association in Alexandria, Va., said its 850 members are trying to find the new balancing point between how much they can raise and how much they can sell.
“It’s probably going to be somewhat tight,” LaVigne said of seed supplies this year. “But I think there was anticipation that there would be stronger demand as we saw the growth, over the last couple years, of the ethanol issue.”
Jerry Harrington, a sales and marketing spokesman for Pioneer in the Des Moines suburb of Johnston, Iowa, said the world’s largest seller of seed corn finds itself in a pivotal spot.
“For those growing corn, this sounds like a pretty good next couple years,” he said. “And we’re real optimistic about the corn market.”
Optimism is on display in Chile and Argentina, where it’s summer and Pioneer’s seed-corn acres are at near-record levels. And it’s likely to be on display in Nebraska, where irrigation provides ample insurance against crop failure.
Pioneer and other companies don’t release information on total acres at either the state or national levels, but Harrington was willing to speak in general terms.
“I’d say, in 2007, we’re going to substantially increase the number of acres we’re going to be contracting across North America.”
At Hooper, headquarters for Nebraska’s last independent seed-corn company, Stephan Becerra of Hoegemeyer Hybrids offered the same bullish outlook.
Company officials are meeting this week with their farmer-growers in the Fremont area. Hoegemeyer President Becerra also was cautious about giving out any numbers, but said, “I would project our acres to be up 25 percent, something like that.”
Friend farmer Milton said making the planting decisions that go with potentially high profitability is “a lot better problem” than usual for grain producers.
“I tell you what, though. It can change so fast.”
Reach Art Hovey at (402) 523-4949 or ahovey@alltel.net.
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