My road warrior travels last week took me to Wyffels Hybrids Corn Strategies 2014 Conference, a unique event held in the middle of a cornfield in Illinois. After struggles with my Hertz rental car’s GPS, which could not understand why I would want to trek into a cornfield off Interstate 74, I was finally guided to the event by Rob, the host of Wild Rose Farm. Over 500 producers and agribusiness persons along with local, regional, and national media made for a stellar educational event. The following are some perspectives I gleaned after spending a good part of the day at the event.
First, I got out of my rental car and walked into the cornfield to see how high the corn was on July 9. It was not only knee-high by the Fourth of July, but four feet above my outstretched hands. As many of you know, I am over six feet tall. This is one of the foretellers of a decline in corn prices, as crops in many areas where I have travelled are really looking good at this stage.
In visiting with producers between sessions, the big question was, “What if a large crop occurs next year in both hemispheres?” If that does occur, many producers who have high fixed cost structures will either continue to burn through working capital and cash, or they may be required to refinance operating losses, if their lenders approve. Another producer commented that if back-to-back marginal economic conditions occur, some older producers who have garnished considerable profits in recent years will start cashing in and selling. The key will be how many buyers and at what price.
Another theme at the conference in the cornfield was what will happen to the young producers who have yet to experience a downturn or the prospects of higher interest rates. Can and will they take an economic punch? That will be the billion dollar question because examining USDA financial data finds much of the farm debt, measured by high debt to asset ratios above 40%, is concentrated on younger producers. However, in defense of some younger producers, the fact that they are listening, understanding, and applying financial, marketing, and risk management strategies bodes well for them. Many such producers were sitting in the audience attentively taking in the perspectives and insights.
I must tip my hat to the host farm and the sponsors of this conference. The host farm is a family business with an entrepreneurial spirit. This family understands the importance of relationships and of giving back. What a novel concept that needs to be reinforced by our political leaders at all levels!
Side note: It was so interesting to observe two young teenagers, a female and a male, listening attentively to all the presentations and to see how proud their parents obviously were of them. When I asked the young female participant whether or not she participates in FFA, she and the family responded that the program has been eliminated. It is a shame that there is not a high school FFA program in the middle of corn country, but I guess that is agriculture in the 21st century.
Rest assured that my “Back to the Future” article series will continue next week after this timely update from the road.