What goes up must come down.
This simple rule of gravity seems to be playing out across the country with cash rents for crop ground as well. What seemed logical when corn was $6 is not so at $3.
“The desire to have stable cash rents across years is not practical given the variability of ag returns,” writes Gary Schnitkey, University of Illinois. In the midst of market volatility it’s often that you may see new winners and losers emerge. Growers that clearly demonstrate high standards of care and stewardship with precision agriculture may have an edge in gaining ground.
Earlier this week riding in the cab of a combine near Millersburg, Ohio, I was musing about the value of precision agriculture -- call it “marketing value” for lack of a better term -- in dealing with client landlords. Does this knowledge – in the form of data, maps and better farming practices – add up to value in the eyes of those determining who will farm that land for them?
“For many of my landlords it’s not really important to them,” says Frank Goodwill, nosing the picker carefully through a river bottom of corn that was flooded earlier in the year. “Many of them are older and the details aren’t as important as the relationship we have. We’ve worked with most of them for many years.”
Frank brings up a map on the screen in the cab and points to the variability in this particular field, one that looks flat and mostly uniform to the eye, but still warranted variable-rate fertilizer and seeding. He has been using section control for the past four years and has seen a lot of benefit. That’s important since he’s not seeing input costs coming down quite as far and fast as commodity prices.
“The price of corn is half what it was and the seed rep was talking about dropping his price $10 per bag,” he laughs.
By every report, Goodwill and his family seem to live up to their name. He and his brother Jim work to do the right thing on the acres they own and farm, more than 3,400 now, he recollects, with more than 50 “clients” of the landlord variety. In this area, fields of 100+ contiguous acres are rare and becoming even more uncommon.
“It’s becoming more difficult to hold on to land around here,” he says. “When current owners die and the land is passed to the next generation we are seeing more of it broken up into parcels and sold off.”
Economy of scale, like gravity, seems to exert an unavoidable pull. Operators must spread their management over more acres to be able to cash flow the machinery and inputs. Precision can provide an edge.
“Of course it’s more complicated,” says Goodwill, who worries a bit about how to hand over more responsibility to his son Dennis, who is 26 “When I started, I farmed 75 acres and I learned as I went along. Now there’s a lot more to it.”
Competition is strong for new ground to rent, and not everyone who wants to take it on has the wherewithal to take best care of the land. For Goodwill, that’s when sharing a boatload of precision ag capability will be very important.
“We’ve got a chance to get another good-sized field,” he says, adding that it’s not been cared for in recent years as well as it should be. “We will be bringing out all the maps and precision ag examples for that one.”