Lincoln, NE—The future of American agriculture may include a return to the days when most row crop farmers also raised livestock, according to featured speakers at the annual stakeholders meeting of the Alliance for the Future of Agriculture in Nebraska (A-FAN) in Lincoln.
In his opening remarks, Nebraska Department of Agriculture Director Greg Ibach said that one of his department’s areas of focus is to help build strong local communities by “layering, 1950s’ style. Then, everybody had a few acres of row crops and also raised livestock, kept dairy cows, or finished pigs,” he said.
The other areas of focus for his department include a vision for agriculture “that allows our sons and daughters to return to the family farm with promise of a successful career,” he said. “That means we need to figure out how to let those farms grow, and how we let the industries in those communities grow to support those families coming back to the farm. This ties in with A-FAN’s goal of building strong community economies through animal agriculture. This is where the “layering” comes in, he says. “The scale will be different, but that will create opportunities in those communities.”
Keynote speaker Dr. Chris Hurt, extension agronomist and agricultural economist at Purdue University, West Lafayette, Indiana, agrees that “layering” may be in the cards for American farmers as a way to create added value to their operations. While row crops may run in the $3.00 per bushel range, feeding that grain to livestock on the same farm can bump the value of that bushel of corn to $5 or $6 or more in the future. The key is finding the balance between crops and animal sectors of agriculture, he said.
“We are interested in the balance between crops and animal sectors of agriculture,” Hurt said. “Going back to about 2006, it turns out crop and animal receipts are pretty much in balance. There are times when we get a surge in grain prices and then in livestock prices. But in the long run things tend to balance out.”
The 2012 drought reduced crop supply, for example, “leading to increased prices in the feed market, in turn causing increased consumer prices at the meat case,” he said. But he sees a leveling off on the horizon. “After a period of a sharp up factor for the crop sector, we’re going to go through a period of moderation.
The reasons he sees moderation coming are three-fold:
• One of the big drivers is corn ethanol, he said. “This has given the illusion that corn is in short supply.
The 2006-2010 period was the time of the big boom for ethanol. But we should expect just modest growth going forward. While the 2013 yield will be just slightly below trend, it is rebounding back toward normal.”
• The rising income level in foreign countries, in China primarily.
“Together, these two drivers (ethanol and Chinese soybean demand) create a big demand for corn and soybeans,” he said, “amounting to 30 million new acres of cropland demand needed. Under these conditions, supply won’t catch up to demand, leading to my third driver, under-investment in agricultural production in developing countries.”
• Under-investment in agricultural production in developing countries has been caused by the low prices of U.S.-produced corn during the 1998-2005 time period, the $2.00 per bushel era, he said. “Why would these countries want to raise crops when the U.S was raising them at such low costs?”
According to Hurt, the world is anxious to raise crops. “With rising income levels worldwide, demand will continue to grow and U.S. agriculture is not going to be able to keep up in a sustainable way. That growth will go to South America, where they can bring more land into production,” he said.
Hurt said the best way to add value to your corn is to also raise livestock. This is where “layering” reenters the conversation.
“Livestock has always been the historical value-adding system,” he said. This makes livestock people and crop people happy. If you have feed priced in the $5-6 range, both crop and livestock producers are going to be happy, keeping both sectors in balance.”
Price trends shift over time based on supply and demand in the marketplace, according to Hurt, but over the long run they achieve a balance. Consumer prices for poultry and pork will lower in the next year or so, with beef prices lowering in 2016.
The marketplace trends toward moderation, he said.