High Plains farmers often deal with drought.
Few farmers have lived through tougher times than what we have experienced the last several years. Some have experienced as few as 6 years – others more than 10 years – of drought. Many don’t seem to realize that in droughts, farmers don’t make money, especially in a time of limited farm safety net.
Much of the last year on my southwest Kansas farm was spent scratching my head, studying machinery operating and repair cost, production expenses and commodity price trends, attempting to find a way to profitability during the worst drought that I have experienced in my nearly five decades on the farm.
I learned that while I was doing a decent job determining individual operating and equipment expenses and was doing a decent job of marketing my grain, with terrible yields the last five years, I had lost over $90 an acre a year. It didn’t take long to determine that it was my leased ground that was pulling us down. Paying for most of the expenses while giving away a third of our really poor crops was eliminating any chance at profit.
Crop insurance has become our main safety net during difficult weather conditions. Farmers know that crop insurance pays based on yield history. We pay a premium to get protection from bad weather and get an insurance guarantee for our chosen percentage of our average yields.
During the last several years, we have expanded our leased ground mainly because other farmers have walked away, tired of fighting with the blowing dust and impossible conditions.
Unfortunately, even though we have excellent average yields on our owned land, this new land received county-based yields, which provided insufficient protection against our devastating drought. The insurance coverage paid for less than half of the expenses.
These difficult facts lead us to attempt to renegotiate all of our crop share leases. Over 70 percent of our landlords agreed to more favorable terms, which will begin with the next crop, but the one whose land we took over that cost us the most money and put us in this predicament wouldn’t even consider new terms. His was land that we took over while it was blowing away. We had spent three years planting crops, providing extra field operations to stop the fields from blowing away.
After we finally got the fields back on track, we let them go because current commodity prices, insurance guarantees, production expenses and our crop-share lease provided us no opportunity to recover our lost expenses.
I have said all of this really to bring out this fact. Often, landlords have no idea what it takes to farm today. Some of my landlords thought my calculations for expenses were incredulous and just plain wrong. The fact is, by many ways of determining operating expenses, my calculations are low.
What I want to share in this article isn’t the difficult times of farming dryland fields in a drought, but instead I want to share our 2015 summer operations with landowners and non-farmers so that they might better understand what it takes to farm.
Each year, farmers kill weeds, fertilize, plant crops, kill more weeds and harvest. Each operation requires an unbelievable amount of labor, inputs and machinery. I want to share two of the busiest times on our farm, planting grain sorghum and harvesting wheat.
This year we planted over 3,500 acres of grain sorghum. To be successful in areas of limited rainfall, timing is everything.
This year, planting was delayed because of wet weather by two weeks. Having farmed here all of our lives, my family knows that we will have a limited amount of time to get the crop in the ground before it is too dry.
This year, since weather delayed planting, we were also behind killing weeds. To accomplish our operations we utilized 4 tractors, 2 v-blade sweeps, 2 – 16 row planters equipped with fertilizer application disks and pull-behind liquid fertilizer trailers, one 110’ sprayer, semi with tanker, service truck, diesel tank, several pickups and 10 employees. The equipment overall cost was $1.3 million (new it would be $2 million).
During this time the operation worked like a fine-tuned watch. We planted all acres averaging nearly 400 acres per day, tilled 3,148 acres averaging 315 acres per day, sprayed 4,123 acres averaging 412 per day. Even at this very efficient rate, the last field planted was too dry to get a full stand of grain sorghum established. Had we been less efficient, more crop would have been delayed or lost.
Fortunately, rain returned in early July, bringing the last field planted up to an acceptable grain sorghum population.
Given the expenses, commodity price forecast, equipment and labor necessary to plant this crop, based on average yields, our return on investment (only considering yearly input costs, not land or equipment costs) is expected to be less than 10 percent on owned ground and -29 percent return on rented ground with a third crop share lease.
These figures do not include any recovery for previous losses or any allowance for equipment replacement. Given the drought and lack of crop residue in the fields, we had to plant all of these fields to sorghum to stop the fields from blowing dust. Wind erosion causes us to be out of compliance with our conservation plan, which is a requirement to be eligible for our farm safety net tools, crop insurance and the farm program. Otherwise, we would have chosen not to plant the leased ground to grain sorghum.
Thankfully today, it appears we will beat our average yields on this crop and will have a better chance for profit. We are hopeful that the leased ground will make money.
Even with the higher-than-average yields, the low commodity prices and high expenses will likely cause this ground to once again lose money.
Shortly after completing grain sorghum planting on our farm, we began wheat harvest. We harvested over 4,500 acres of wheat in 11 days, averaging 420 acres per day.
Wheat harvest is always a race to beat the hailstorms that are all too common. Hail will take away any chance of profit in just a few minutes, so we always push hard to complete harvest before bad weather takes a toll.
To complete this operation and stop the weeds as soon as the fields were harvested, we utilized 3 combines, 1 tractor, 1 grain cart, 4 semis with grain trailers, one 110’ sprayer, our grain/seed storage facility, a service truck, numerous vehicles (for parts, evening meals and service), and 13 employees. The equipment used cost $2.4 million ($4.8 million if replaced).
We harvested 69,000 bushels – a very poor 15 bushel-an-acre average.
Pushing hard to complete harvest was necessary this year, as we had a bad hailstorm just 3 hours after completing the last field.
Given the expenses for labor, repairs, service, fuel, herbicides, seed, machinery operation and repair, etc., given current commodity prices, this crop, including insurance coverage, profited around -7 percent on our owned ground and -19 percent on rented ground per acre.
Commodity prices have fallen dramatically in the past year, but our input costs remain near record levels.
Fertilizer, herbicide and equipment prices have remained extremely high, making it difficult, if not impossible, to profit given average yields and poor commodity prices.
Thankfully, rain seems to have returned to our area, giving us hope that profits will soon return to our farm.
Farming is a very expensive, risky business, one that is not suited for those unwilling to take a lot of stress. Since I began farming, everything from equipment and fertilizer to seed, land and labor prices have increased exponentially.
Commodity prices have seen some increases but have not kept up with the increased costs.
Farmers are eternal optimists or we couldn’t do what we do. We are always looking forward to adequate rain, no hail, good yields and high commodity prices so that next year we will make a profit and continue to feed the world’s growing population.
Jim Sipes received a master’s degree in agronomy from Kansas State University and returned home to Stanton County. He is the fourth generation to work the ground alongside his uncle and father. Sipes also represents the Kansas Farm Bureau’s Ninth District on the state board of directors.