Janie Burns already is downsizing Meadowlark Farm for 2019 in case the ground she leases for raising grass-fed lambs is sold for housing or another non-agricultural use.
“It went up for sale,” the Nampa, Idaho, producer said. “With new owners, it’s possible I won’t have to change anything. But I don’t know, so I am taking the proactive step of reducing my operation.”
Southwest Idaho food producers making annual decisions about operational changes have a wider-than-usual array of variables to consider for 2019. They range from trade disputes and a strong dollar — which makes U.S. goods less price-competitive internationally — a potentially warmer winter that could produce less water for irrigation, loss of farmland to other uses and higher interest rates on top of continued low prices for many commodities.
Dell Winegar, who farms outside Fruitland and serves as president of the Idaho Onion Growers Association, may adjust his 2019 crop percentages due to water concerns.
“If water becomes an issue, we will probably plant a few less acres of onions, potatoes or less acreage of corn for sure,” he said.
Most weather models predict an El Nino winter weather pattern, often associated with greater potential for warmer weather in the northern half of the U.S. The first half of November was mostly dry in southwest Idaho.
“If the water situation is in the forefront of our minds now, that is a worry,” Winegar said. “As the water season progresses, we will be able to make decisions as to how many acres we can plant of higher-value crops” that use more water.
For producers seeking lower-input alternatives, seed crops are among those likely to be more attractive than lower-priced corn or wheat even though many seed crops also are priced below long-term averages, he said.
Seed prices lately are pressured by trade issues, a strong U.S. dollar and lower commodity prices, said Sid Freeman of Sunny View Farms north of Caldwell.
“Most of the farmers I know agree renegotiation of the trade agreements needed to happen,” he said. “But we also agree it’s going to take a long period of time to be able to receive the benefits from those renegotiations. We’ve just got to be able to hang on long enough to be able to do that.”
Commodities fetching low prices include those purchased for feed by dairy producers, who have less to spend due to prolonged low milk prices, Freeman said.
Lower prices for feed-related crops creates “competition for the ground” by other crops with higher price prospects, he said. “Like some of my winter wheat I would tear out and put in sweet corn grown for seed.”
But Freeman in 2019 plans to stick with crop changes he made from 2017 to ’18 in response to economic and market conditions. Sunny View is roughly equally divided among sugar beets, seed beans and soft white winter wheat after dropping field corn for the 2018 season.
Galen Lee of Sunnyside Farms near New Plymouth runs a dairy and feedlot in addition to growing sugar beets and peppermint. Sunnyside grows alfalfa hay and silage feed corn for its cattle.
He plans to make small changes in some crop percentages in 2019, mainly to keep field sizes efficient, he said. Feed acreage also won’t change much.
“It’s difficult because milk prices are down, and that hurts,” Lee said. “We still have to raise feed for the livestock. Smaller dairies have less money coming in from milk sales, so it’s harder for them to pay much more for feed and other inputs. They are having to get more efficient, too.”
At Meadowlark Farm, Burns said she is now reducing her headcount of breeding ewes by about one-third. Whether or not the property she leases is sold, “I am taking the proactive step of reducing my operation.”
Per-unit prices could increase a bit since she will have fewer lambs for sale, she said. “I will have to be pretty particular where I sell my limited supply. Price will no doubt reflect a little less supply.”
Meridian, Idaho, farmer Drew Eggers plans to grow slightly less peppermint in 2019, and a bit more corn and winter wheat “more due to crop rotations than prices of crops or anything like that,” he said. Pinto bean acreage will be about the same.
Peppermint growers don’t often make big changes year to year because the plant is a perennial. It’s harvested every year, “and the good years are the second and third years,” he said. “And once you take mint out, you need to leave it out for twice as long as it was in mint” before you can replant it.
Apple trees are another long-term proposition when it comes to making changes, producing the first crop some five years after they are planted, said Cathy Cabalo, owner of Cabalo’s Orchard and Gardens in Kuna. The orchard years ago began replacing Red Delicious rows with other varieties, and more recently started removing some trees to make room for others that grow cider apples; new trees are planted after the ground stays fallow for a year.
Annual yield on the 10-year U.S. Treasury bond, tied to many property and equipment loans, stood at 3.057 percent Nov. 19 compared to a one-year range from 2.69 to 3.46 percent. The Prime Lending Rate — which banks charge their best customers and is used to calculate rates on many producers’ annual operating lines — was at 5.25 percent, up a percentage point from a year ago. Also up by a 1 percent in the past year, to 2.25 percent, is the Federal Funds rate at which institutions lend to each other, usually overnight.
“It’s going to affect everybody a little bit differently” based on amounts borrowed, Freeman said. “It’s a bitter pill we have to swallow.”
He is watching a range of agricultural market and economic factors as 2019 approaches.
“I don’t see where all of it is going, but hopefully we can get through this lull and still be able to operate on the other end,” Freeman said.