Summing up the major crop production trends in the Northern Plains going into the 2004 growing season takes only five words: More soybeans, higher fertilizer costs.
Offshore natural gas supplies have become a huge factor in the price of nitrogen fertilizer. Cheaper offshore natural gas has squeezed domestic fertilizer manufacturers. Offshore nitrogen producers enjoy a price advantage of $3 to $5 per mmbtu in natural gas costs, according to Ron Schroeder, head of the Great Plains fertilizer division for Heartland/Agriliance of the Twin Cities.
Mr. Schroeder
says that older, smaller and higher-cost plants of domestic manufacturers
are finding it especially difficult to compete. The result is less fertilizer
in the pipeline, spot shortages and volatile prices. To help manage higher
fertilizer costs, Mr. Schroeder sees a trend over the long-term toward
more storage of dry
and liquid nitrogen and more large-hub fertilizer plants with unit train
capacity, similar to grain. In the short term, growers will try to
manage the higher fertilizer
costs by prepaying, buying in volume, applying fertilizer more precisely
and devoting more acreage to crops that require less fertilizer. And
for many, that
means soybeans.
To be sure, there are many dynamics affecting northern-grown crops. One is how much less summer fallow there is now in North Dakota compared to the early 1990s. Instead of fallow, more farmers today are growing crops on no-till ground, enabled in part by better no-till seeding equipment and greater knowledge of the practice compared to 10 years ago. No-till offers the same soil moisture recharge as fallow, with the additional benefits of better protection against soil erosion and fewer trips across the field, thus saving fuel costs. Plus, you’re getting a crop return on a field that would otherwise had been idle and nonproductive as fallow.
It can be argued that bigger strides have been made with corn R&D (mostly private industry) in the past 10 years than any other crop, including genetic herbicide tolerance, genetic resistance to certain insects (corn borer and corn rootworm Bt corn), shorter maturity and better yields. The technology is reflected in the seed cost, which for some of your more “whiz-bang” corn hybrids is approaching $200 a bag.
Nevertheless, corn (grown and harvested for grain, not silage) continues to creep into non-traditional growing areas, stretching into western North Dakota and up to the Canadian border. Despite higher fertilizer prices, good return potential (market price x bushels) should result in Northern Plains corn acreage holding steady to higher in 2004. The U.S. Department of Agriculture releases its initial U.S. prospective plantings report for ’04 on March 31.
Weather conditions were darn near perfect for spring wheat last year, with many growers saying it was their best crop ever. There is an increased interest in the concept of “Intensive Wheat Management,” managing inputs such as fertilizer and seed more strategically to boost yields. Cash prices aren’t bad right now, in the upper $3 range, but it’s still going to take prices higher than that to prompt growers to boost their wheat acres. Thus, barring any run-up in the markets by the time Old Man Winter leaves town, expect spring wheat acres to hold close to last year in the Northern Plains.
Last year saw a renewed interest in growing malting barley, and the same guys who had success with the crop last year will probably get production contracts again this year. Barley acres will probably be close to last year, as should durum, another crop that is now grown more in western and north central North Dakota, with negligible durum acreage in the Red River Valley.
The price potential of dry edible beans is promising, but it remains largely a niche crop given its roller-coaster market history and the fact that the crop can be tough on harvesting equipment. Your combine will “eat” a lot of dirt along with the beans, unless you invest in expensive bean-harvesting equipment.
The bottom-line trend, however, will still be beans, beans, beans. It’s not a crop without its production problems, which can include iron chlorosis, cyst nematode and soybean aphids. That still won’t faze many northern soybean growers. Market prices are high, now with a cash price over $8 that could go higher, since global demand remains high while supply is low.
You don’t have the nitrogen fertilizer cost with soybeans, and Roundup-Ready technology makes them easy to grow and manage. Growers have a wide window to control weeds with the genetic glyphosate resistance in soybeans, and more free time to go fishing with the family.
By the way, we’re now at the point where genetically engineered soybeans should be called “conventional” beans instead of the other way around, where conventional is used to refer to non-GMO beans. According to the USDA, farmers in the U.S. planted about 80 percent of their soybean crop to GMO varieties. This compares to 68 percent in 2001 and just 17 percent in 1997.
Like it or not, GMO soybeans are here to stay. So are soybeans in the Northern Plains. The soybean establishment in the more traditional soybean growing areas such as Iowa, Indiana and Illinois are just going to have to get used to Cass County of North Dakota being the top soybean-producing county in the nation. The crown has been in place for several years now and will not likely be relinquished soon.