DAVENPORT, Iowa — Robb Ewoldt said he has barely had time to think about his winter preparations as he stepped out of his combine a few days before Thanksgiving.
The Scott County, Iowa, farmer was still pushing through harvest, and more rain in the forecast that day meant he would have to wait even longer.
However, when he gets around to sharpening his pencil, he knows it will not be an enjoyable experience.
“This year is really tight,” Ewoldt said. “We put up some new storage this year, which we needed, and did some things with our drying system which we expected because of the year we were having. There went a lot of money. There will not be any purchases this year.”
That extends to any new equipment, as Ewoldt said he is opting to repair and maintain his current equipment and has no intention of looking at a trade.
He has already prepared for a few of their input costs. Ewoldt said much of the seed is taken care of going into next year and they pre-paid for nitrogen, on concerns the price will shoot up in the spring.
While the weather has been an outlier this year, Ewoldt said farm economics have been moving toward the negative “for a long time.” Input costs jumped around the 2012-13 seasons on the heels of $14 soybeans and $6 corn, but as the market prices have dropped significantly, inputs aren’t dropping as quickly.
“We could see it coming, but if you are looking at the snowball effect, the hill got a lot steeper this year,” Ewoldt said.
James Plagge, president and CEO of Bank Iowa based in Des Moines, said a lot of the issues with market prices are out of farmers’ control — with international trade deals and domestic issues like biofuels casting a shadow of uncertainty toward the future.
Plagge said his lenders don’t want to put their customers in a position where a trade deal has to be agreed upon for success. Instead they are looking at current prices of the 2020 contracts and making decisions based on those.
“The farmers have the production aspect of agriculture down,” he said. “They do an excellent job with that, but the marketing side of it is becoming more and more important.”
During last year’s meeting with his banker, Ewoldt said the most helpful thing he had to share was his new off-farm job working as a truck driver.
Despite the extra income, Ewoldt had to drop one of the farms he usually rents out due to operational costs. He noted that rents have started to drop in his area, but it wasn’t enough for him to make it work on the balance sheet.
John Benz, a farm manager in northeast Missouri and western Illinois with Farmer’s National, works with landowners to rent ground. When it comes to setting rent, it can vary during more difficult years.
“On the cash rent side, we’ve adjusted things over the years,” Benz said. “Crop-share leases is less revenue for the owner, but with (Market Facilitation Program) payments have helped fill that void. Most landowners I work with understand there are some really good years and really bad years.”
During the recent trend of lower markets, he said it has led to some operators not renewing leases on ground they have previously rented. But that ground typically gets picked up by others who are looking to grow their business.
In the end, Ewoldt said his focus is knowing his breakeven points and being able to make a profit. He said that has led to him changing a few things up, such as finding premiums by farming non-GMO crops.
“If I can pick up a $1.50 extra a bushel, that can make you profitable,” he said.