Corn, wheat and soybean prices are falling, but there are still other niche crops that farmers can focus on to provide alternative sources of income.
Trade and tariff policies have hit farmers hard in the past couple of years, but at Halderman Real Estate and Farm Management, we have been helping farmers and farm owners develop growing strategies for several generations.
Farm incomes have dipped, spurring interest in new crops
With farm incomes having dropped to 50% of their 2013 levels, farmers are increasingly turning to crops besides the "big two" row crops, corn and soybeans. Soybeans continue to feel the negative impact of tariffs imposed on China, with the federal government estimating a $1.65/bushel reduction as a result.
In Indiana, we have seen farmers turn to a number of new crops with strong income potential, including sweet potatoes, blueberries, tomatoes for processing, and seed corn for popcorn.
These alternative crops can pose a challenge for farmers though. As opposed to row crops, specialized and more intensive labor is required to harvest these crops, and some, like tomatoes, require precision in terms of the growing and harvesting cycle that must be completed in exactly 21 days.
Labor is a challenge
Common row crops use primarily mechanical processes versus manual for harvesting. While local labor providers like retired farmers are highly capable of assisting with harvesting corn and soybeans, immigrant labor provides most of the expertise for alternative crops. This form of labor is more costly with the commensurate negative impact on farmers' bottom line.
Hemp on the horizon
Effective on January 1, 2019, industrial hemp has been approved by the federal government as part of the Agriculture Improvement Act of 2018 (2018 Farm Bill.) Hemp has a long history of cultivation in the U.S., and was used by Betsy Ross for sewing her historic flag.
Kentucky, once a major producer of industrial hemp until it was banned in the 1950s, has been preparing for the resurgence of hemp cultivation, with the Kentucky Department of Agriculture working with universities, farmers and processors since 2014 to prepare for the new legislation. While hemp has enormous commercial potential, processing facilities do not yet exist in states like Indiana.
Weather and the coming years
Warming trends in Indiana are making the cultivation of corn and soy more difficult over time. Warmth and the attendant decline in soil moisture are resulting in declining yields. Experts are forecasting that corn yields in the state will be down by about 50% by the middle of the century.
Notwithstanding some of the negative news, 2019 forecasts for farm income are positive. Increased yields for a number of crops are estimated to offset the damage from lower prices.
We believe that it is essential that farmers and farm owners implement medium- and short-term planning for their acreage, taking into account weather patterns and the effect of a warming climate on core crops and specialty crops like apples that can be affected as well. There are many different options to diversify crops, and Halderman can provide insight and guidance to maximize your farm's potential.