The business of farming: Many factors affect a crop's success

Monday, May 17, 2010
Jerry Davis, owner of Davis Farm Supplies, stands next to a New Holland T6030 tractor at the Fruitland location. (Fred Lynch)

The recession has affected local farms, small and large, but some agriculture gurus say this industry has fared better than other areas of the economy.

"Anytime there's a general downturn, people spend less money. When there's less money going around, it affects input costs and prices go up, from tractors to supplies like chemical fertilizers," explains Gerald Bryan, agronomy specialist at the University of Missouri Extension Center in Jackson. He notes that fertilizer and seed prices have been extremely high for the past few years, directly affecting the farming industry. Transportation costs have also increased and lending criteria have tightened, making it more difficult for farmers to get needed loans.

Tom O'Loughlin, who operates a cattle farm between Jackson and Oak Ridge and row crops between Allenville and Whitewater, says he has been affected by rising costs of corn seed and fertilizers. He cut down on fertilizers in 2009, using only nitrogen products, and plans to add other fertilizers as the prices stabilize. Despite the need to to counteract the downtrodden economy, O'Loughlin reports that both his crops and cattle have done fairly well in recent years.

"Expenses are up," says O'Loughlin. "Our input costs are quite high -- '08 and '09 were extremely expensive. But by and large, I think the agricultural economy has not been hit as much as the rest of the economy."

Jerry Davis, owner of Davis Farm Supplies, agrees.

"I think '08 and '09 were the best years for row crop farmers because the prices were up -- they had a good yield and a lot of rain," he says. "The economy has not hurt us as much as the rest of people. Farmers have been fortunate." Davis says the store, which has locations in Fruitland and Perryville, Mo., continues to sell a lot of lawnmowers, ATVs and four-wheelers, while other sales, such as for home construction equipment, have slackened off. He believes business has remained steady in part because Davis is one only a few New Holland and Kubota dealers in Southeast Missouri. Even more, Davis says some of the bigger companies, including New Holland and Kubota, are offering zero percent interest or zero percent down on "just about everything."

"That really helps farmers make a difference," says Davis, especially considering that, for many, "farming pays off in satisfaction, not money."

Both Bryan and Davis believe that many farmers who don't already have a supplemental income are working other jobs off the farm. Says Bryan, one family member working off the farm gains not only extra money but possibly a company health insurance plan. Other farmers, says Davis, may find success by offering a specialty, like custom planting or hay baling.

"A successful farmer has to be one of the best businessmen in the country," says Bryan. "A lot of people don't think of farmers as businessmen, but those who do treat farming as a business are successful." He notes that farming operates much like any other business, with input and output costs, a budget and cash flow. In fact, most farmers have more money invested -- from land to storage to equipment and more -- than a typical family with a small business, he says.

"There are not many businesses, especially family businesses and small businesses, that have that much invested," says Bryan.

As for Davis, he says most farmers finished planting their crops in April -- well ahead of last year's delay to May or June -- and he remains hopeful for this year's farm season. "I wouldn't say it's a bad year. It all depends on how much rain we get," he says.

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