Cautiously optimistic message presented at Farm Outlook

MARSHALL – More than 100 farmers and agriculture professionals gathered at the 29th annual Farm Outlook Seminar on Wednesday at Southwest Minnesota State University to hear a message of cautious optimism. Or as optimistic as a message based on tentative predictions of weather and market can be.

As Vincent Malanga pointed out at the beginning of the seminar, though the economic downturn of the past few years was partly based on known factors such as legislative uncertainty, at least some of it was because of sheer bad luck such as the Japanese tsunami.

But there have been some good things in the past couple of years as well. Malanga, president and CEO of the financial consulting firm LaSalle Economics Inc., cited the Budget Control Act of 2011, which capped federal non-discretionary spending, budget items outside of military and entitlement spending and the bipartisan committee which created the so-called sequestration, leading to a slowdown in the rate of federal spending.

“As we look forward, there is some reason for hope,” Malanga said.

South Dakota State Climatologist Dennis Todey presented lessons learned from the drought of 2012, which was the seventh warmest and 28th driest season in Minnesota over the past 118 years of record-keeping.

“Dust Bowl droughts can still happen and can be widespread,” Todey said. “Variability has and will exist; drought will occur.”

According to Todey, farmers should have no trouble getting the seed into the ground because of the dryness of the soil, but like every year, the crop outlook will depend on timely rains. And farmers will still have to deal with soil moisture issues for the foreseeable future.

“Even if we get near normal precipitation, I don’t see a way to fill the soil profile,” Todey said. “I’m reasonably confident you’ll do OK, I’m not calling for another bad year. I’m saying we’re going to be very dependent on what’s going on. We are going to recover this year, it’s just not going to be enough.”

Paradoxically, an average crop could result in lower prices, according to Jerry Gulke, founder of the Gulke Group Inc., a research and information analysis firm that provides marketing strategies for agribusiness.

According to Gulke, high prices for corn have encouraged a worldwide boom in corn and soybean production in countries such as Brazil and Ukraine, leading to a possible glut on world markets.

“There is a lot more being produced in the world because of high prices,” Gulke said. “We now have more competitors. The bad news is, we may have a decent crop, and what are we going to do with it?””

Still, Gulke remains optimistic for the long term.

“The long-term prospect is pretty sound,” Gulke said. “It’s probably going to be volatile, but the trend is upward.”

Commodity Analyst Roger Wallace pointed out that while the U.S. per capital meat supplies have dropped 10 percent over the past five years, hog production has been consistently level for years. And dairy, a significant user of corn, has remained fairly steady.