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Expert: Farmers Should Look to Spring with Caution, Optimism

A South Dakota field specialist suggests farmers aim to reduce costs this year by at least 5 percent, without cutting their yield. (gimplearn.net)
A South Dakota field specialist suggests farmers aim to reduce costs this year by at least 5 percent, without cutting their yield. (gimplearn.net)
January 22, 2018

ABERDEEN, S.D. — The farm outlook this year shows cautious optimism, according to one local expert.

Jack Davis, field specialist at South Dakota State University, said farmers will need to manage top costs and reduce them by 5-10 percent without cutting yield to be profitable. He said increasingly tight financial times are imminent for the region's farmers, who are already managing depressed markets. But he cautioned against too much negativity.

"You don't want to put the blinders on and just stay so negative that you can't make good decisions on what you need to do for your individual operation,” Davis said.

Drought in 2017 affected the production of most crops in South Dakota. Soybean production in the state was down 6 percent from the previous year, and corn was down 11 percent.

Because farmers rely on export markets, many have expressed concern about threats that the Trump administration could withdraw the U.S. from the North American Free Trade Agreement. Davis said farmers could suffer if exports are curtailed under a new NAFTA deal.

"Exports are behind. You know, if we're meeting our demand in the U.S., we need to move the crops somewhere,” he said. “So, exports are a big part."

U.S. farm exports contributed more than $300 billion of economic output in 2015, and provided 1 million full-time jobs.

A few years ago, South Dakota's popular crops, including corn and soybeans, reached record price levels. That isn't the case today, but Davis said he still has confidence in commodities in the long term.

"Also there is a positive because incomes have grown in the United States, so that's positive for commodities,” Davis said. “The wealth effect is positive for commodities, and also there's still the growing population, where the world will need food."

In addition feeding the human population, people who keep birds need birdseed. And South Dakota farmers who grew non-oil sunflowers produced 155 million pounds last year, a 61 percent increase from 2016.

Roz Brown, Public News Service - SD