The next few years look to be challenging for Indiana farmers who grow corn, but Purdue University’s Dr. Chris Hurt told a crowd gathered at the state fairgrounds Wednesday that practicing moderation should help get them through a period of lower commodity prices.
“I like us to be able to make these adjustments, tighten our belts, cut back here and there, find a way that most people can get through this and make the adjustments. I think if we do that over the next 2 or 3 years we can adjust, $4.50 corn, $11.00 beans, $6.00 wheat. Margins are going to be very tight so we’re telling producers to get your cost of production down to $4.50 or less. Purdue says it’s about $5.00 costs, so push that down any way you can.”
Exactly where can costs be reduced? Fertilizer costs are already down about 20 percent. Hurt says there are other areas of cost cutting opportunities.
“Some of the micro nutrients or foliar feeding, or some fungicides or some other applications, that they may cut back on some of that application. Then we think that there’s some opportunity probably on the seed side to try to negotiate maybe a little bit better prices there. It looks like fuel could be down a bit but that’s not a big cost item. Crop insurance looks like it will be down. You put all that together, and fertilizer is the big down, but then these others are little and not enough down for us to be raising this corn for $4.25 or $4.50 a bushel.”
Then there’s cash rent. Hurt says it may be a difficult sell, but attempting to renegotiate lower rents might be necessary, especially so if there isn’t relief from higher prices by 2015. The Purdue Extension agricultural economist was the featured speaker at the HAT seminar at the Indiana-Illinois Farm Equipment Show. Marketing strategies for the coming year will be shared at the show Thursday at 11 AM by Jim Riley of Riley Trading.