2017-07-23 / Insight

Local ag industry dealing with ‘market correction’

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LAPEER COUNTY — Agriculture accounts for as much as 22 percent of the state workforce and makes a significant contribution to the local economy, but a current “market correction” in commodities has farmers tightening their belts for the foreseeable future.

That’s according to experts who talked to The County Press about the economic impact of the local farming industry.

“Roughly 20 to 25 percent of our local employees are in some way, shape, or form involved in the local economy,” said David Ballman, regional vice president of sales and customer service, GreenStone Farm Credit Services in Caro, which provides financial services to the industry throughout the region.

“When people think of farming and the farm economy, they tend to think of the farmer, but they don’t think of all of the other related services that come along with it,” Ballman said. “You’ve got seed, fertilizer, chemical sales, feed consultants…you’ve got the truckers who are hauling the commodities, you’ve got veterinarians, you’ve got lenders like we are.

“We would all be unemployed without the farm economy,” Ballman added.

According to the 2012 USDA Ag Census, Lapeer County has 1,133 farms accounting for more than 175,000 acres.

“With so many farms in your local areas agriculture can touch the local economy in many ways,” said Kate Thiel, field crops and advisory specialist, Michigan Farm Bureau.

“Each operation will have a varied demand for additional employees, providing economic stimulus through job demand,” Thiel said. “Many farms will need not only employees to help with items like milking or feeding animals but the planting and harvesting of their crops, many farms employ additional people to help haul their products to local elevators or livestock sales.”

While there may not be a large processing facility in Lapeer County itself, Thiel said, these facilities exist in Michigan, providing the demand for additional product and creating many additional jobs, which may impact Lapeer County, too.

“Farms’ demand for input products and equipment also create economic benefit and a need for people with different skills to fill positions,” Thiel said.

“Not to mention the local produce that farmers raise to be either direct marketed or sold for broader consumption.” When it comes to top crops from the area, soybeans, corn, and forage lead the way, Thiel said.

The top commodities in terms of value of sales are: grains, oilseeds, dry beans, and dry peas; vegetables, melons, potatoes, and sweet potatoes; cattle and calves.

Thiel and Ballman said market conditions are less than ideal right now.

“Commodity markets are generally down across the board at the moment, corn and soybeans have seen small rallies in recent months but they’ve generally leveled back out,” Thiel said. “The United States and other countries have relatively large stocks carried over from last year of corn, soybeans and wheat, this impacts the commodity markets as well as the anticipated production this year.”

Thiel also noted that even though areas of the U.S. have experienced conditions that aren’t ideal for many crops, either through drought or flooding, the anticipated production from USDA NASS has remained relatively strong.

“As a result, we haven’t seen the upticks in prices that we’d like,” Thiel said. “When commodity prices are low across the board it makes the decisions farmers make daily more challenging, causing some to think about whether or not they can be profitable next year.”

Ballman said “this year is definitely tougher than the last few have been.”

“That’s just due to the commodity prices are really down this year,” Ballman said, adding that he would rate actual crop conditions as “fair to good.”

Corn prices are just one example. Prices hovered at more than $8 per bushel in 2012, but recently have been around $3.50. Commodity prices are determined by factors such as number of exports, Ballman said, and “just typical supply and demand.” He added it’s “kind of a market correction.”

“Commodity prices are below break-even for some farms so this will be a tough year, no doubt,” Ballman said.

How will the area feel that economically?

“Agriculture impacts a local community in many ways, many that aren’t always seen,” Thiel said.

“When crops aren’t performing well, whether prices are low or production is down, it impacts the farmer and their ability to be financially active in the community and to stimulate the local economy,” she added.

Among other things, that means farmers are buying less new equipment, only buying necessities, and generally “belt-tightening” when it comes to spending, Ballman said.

“Most of the local farms are well-situated to kind of muscle through this, but it’s not going to be easy,” Ballman said.

“We’ve got some people who are selling their personal assets — campers and cottages — because unfortunately, right now, if you look at the futures market they’re not looking like anything will improve anytime soon,” Ballman said.

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