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A new era in agriculture

Written by Ernie Verslues on .

Change means opportunity across the ag sector

The general economy of the United States since late 2008 has remained soft, if not depressed, whether in terms of GDP, job growth or other economic factors. Still, during most of this same time period the farm economy has been robust.

Look no further than all-time highs for producer earnings as well as earnings for agricultural retailers, distributors or manufacturers. Adequate margins across the ag sector have been shared by all. All of this is leading many to refer to this period as the “Golden Years of Agriculture.”

My question is: If commentators have named an era, what does that tell us? It tells me the ag economy is beginning a new cycle.

This is not a column substituting for an economics class but rather an attempt to highlight what all of us are facing. A glance at corn prices tells an illuminating story. Corn prices were $3.55 at the farm gate for the marketing year 2009/10.

The peak came in at $6.89 for marketing year 2012/13. As of this writing, corn price at the farm gate hovered around $3.75. While today’s corn price is good for livestock producers, it’s at or below breakeven for many producers.

To illustrate further, turn to soybeans. Farm gate price in marketing year 2009/10 stood at $9.89. That same commodity peaked at $14.40 in 2012/13 and is expected to drop to the low $9 range next year.

Missouri and the United States in general are one year removed from a record grain harvest. This year in Missouri 500,000 acres of corn did not get planted because of wet conditions. That’s a 15 percent decline. During the same time frame, one million acres of soybeans did not get planted for the same reasons. That’s a 20 percent decline.

Despite these facts, U.S. production is not expected to be down significantly this year. It follows that we’ll see continued lower prices. Depending on farm bill impact and insurance coverage, producer revenues will also be down.

In terms of the cattle market, producers have seen steady increase in prices from 2009 to 2014. Cattle price per hundredweight in 2009 was $82. That peaked at $158 in 2014. Cattle producers experienced high feed prices through 2013. For the last two years, cattle producers saw good profitability. But, again, the price trend is downward.

Beef cows are not MFA’s only feed market, but cattle are the largest species MFA serves. The herd saw a steady decline from 2010, driven by drought and feed costs. The herd is now growing here and across the country. That underscores my suspicion agriculture is starting a new cycle.

That new cycle means change across the industry. Change can mean opportunity. MFA’s theme, both for our managers meeting and annual meeting, is Dawn of a New Era. At MFA, no one has been complacent. MFA from top to bottom will always be structured to serve the best interests of our farmers and ranchers. It is the mission of the cooperative.

MFA continues to employ new technology and offer enhanced products and services that are designed in the best interests of our farmers and ranchers. MFA aggressively pursues business, but not at any cost. We cannot and should not be all things to all people. The cooperative will focus on what we do best. MFA will be profitable while building a strong balance sheet. That insures MFA will not just exist, but will thrive.

At MFA, we’re ready for this new era. On the feed side, MFA is offering Ricochet mineral, Shield Technology and Evolution. Ask your MFA feed sales person about these products. They are game-changers. On the field-crop side, MFA features Crop-Trak and Nutri-Track as well as Precision Advantage. MFA’s branded seed, MorSoy and MorCorn, offer genetics and traits with performance that is second to none. Again, ask your field-crops sales person.

Simultaneously, MFA is upgrading facilities, opening a new warehouse and improving the overall image of our existing facilities. We will improve our interaction with customers through better computer systems and smartphone technology.

To serve our customers, MFA must offer top-notch products, services and facilities. Better still, MFA offers a team of dedicated, well-trained, passionate people. MFA is a great place for great people to do great work. That’s how MFA will thrive along with our customers in this new era.

-Ernie Verslues, MFA President and CEO. This email address is being protected from spambots. You need JavaScript enabled to view it..

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