Advice to farmers: Get creative in 2009
Nov 26, 2008 9:06 AM,
By Jim Langcuster
Auburn University
Farmers are typically thought of as classic left-brainers realists who bring cold, hard logic to bear on tough marketing and planting decisions.
But as they look ahead to what may prove to be one of the most challenging crop years in 2009, they may have every incentive to complement their left-brain thinking with some right-brain out-of-the-box creativity.
No other facet of farming will require a bigger investment of creative thinking than finding ways to contain production costs.
"It's always been important to know your cost of production," says Max Runge, an Alabama Cooperative Extension System economist.
"But with the economic situation we're facing now, it's more critical than ever."
But its one thing to know there's a problem, quite another to solve it. And that's where out-of-the-box thinking may prove especially useful.
One creative solution to spiking production costs may be fallowing, according to Jim Novak, an Extension economist and Auburn University professor of agricultural economics.
Under the current farm bill, direct payments are decoupled from production. One advantage to this approach is that farmers can leave base acreage fallow and still collect payments on it.
"No crop, no production costs that's the obvious advantage of fallowing, if a farmer is likely to be especially hard hit by costs or by the need to borrow heavily to make a crop," Novak says.
Even so, decisions such as these shouldn't be made lightly, he says.
On the other hand, producers, especially high-cost producers, may decide this approach offers the best solution, he says.
"However, producers should carefully consider the effects on crop insurance and future disaster assistance under the new law," he says.
Since payments are decoupled, producing crops other than the base crop on base acres is allowed with some exceptions.
"Farmers should look at their base acres and determine what other crops will possibly be most profitable," Novak says. "But they should remember that fruits, vegetables and tree nuts are not allowed to be produced on base acres, with exceptions of farms that have a history of such production."
Novak urges farmers to check with the U.S. Department of Agriculture's Farm Service Agency for information on the exceptions.
"It really is something to consider," Novak says, adding that there is likely to be a counter-cyclical payment for cotton next year.
"That, along with the direct payment, could provide some needed liquidity to the farm operation," he says.
Other creative solutions shouldn't be ruled out as part of a broad strategy to contain costs, Novak says.
In fact, he and other economist s and experts from a variety of fields already are developing ways to deliver climate forecasts and related information to farmers, foresters and water resource managers.
"Farmers especially could benefit from this data," says Novak, who encourages them to visit AgroClimate.org, a Web site operated by the Southern Climate Consortium.
"This site has a county-by-county prediction of yields under different climate conditions for selected crops for three southeastern states," he says.
Farmers can use the climate data and predictions posted on the site to assess the risks of crop production in the coming year and to assist in identifying possible insurance needs.
"The whole idea behind Agroclimate is to help farmers make more informed crop planting decisions," he says.
(New Course)
(New Course)
