CORPS CLOSES THE MISSISSIPPI RIVER

barge

2014 is turning out to be a record corn harvest year.  Farmers in Illinois are forecast to harvest an average of almost 200 bushels per acre – when the 2013 average was only 178 bushels per acre.

You might also remember that more than half of Illinois corn leaves the state for export, much of it floating down the Mississippi River.  Which makes a 14 day river closure – right now in the thick of harvest – one of those things that makes you go hmmmmmmm.

At this point in the year, a 14-day lock closure could have catastrophic consequences.

Read this to learn more about the Army Corps of Engineers and their surprise river closure during harvest!

FARMING FOR DUMMIES: CASH RENT VS. CROP SHARE

Thousands of you wanted to know: Are farmers rich?  And after you read that post, you had more questions about some of the ideas I mentioned within the post – namely, what exactly is cash rent?

Well, hang on to your hats because I’m about to boil it down for you in the simplest terms I can muster.  Read on to the end – even through the hard stuff – because if you want to understand farming, this is a concept you must grab hold of.

CornFieldWHO OWNS THE LAND?

The average farmer does not own all the land he farms.  He probably owns some of it, but the farmer who owns every single acre he farms is rare.  Honestly, this hasn’t changed much over the years – farmers have never owned a majority of the land they farmed – but the move to an “absentee landowner” might be relatively new.  This change has happened over time, as older generations pass away and leave the farm to their three (or ten) children in equal parts and then not all children remain on the farm.

Around 75 percent of the land in Illinois is owned by a landowner who is not a farmer.  Most of that ground is farmed by a family farmer who is renting the ground or farming it in a crop share agreement.

A CASH RENT AGREEMENT

farmers talkingCash rent is really a pretty basic concept.  The farmer bids on the ground, the landowner makes a decision on the farmer she trusts the most who will also give her the highest price per acre, and a rental agreement is signed.  The landowner now has nothing to do with the farming that occurs on that acre, except that they get a set amount of income every year for its rental.

This is really no different from renting an apartment or leasing a car.

The landowner DOES have a responsibility here.  Just like the property owner cares about how you treat their apartment and the car dealership is interested in the condition of your leased vehicle, a landowner must consider the farmer they rent to very carefully.  If they rent to a farmer who is not careful and environmentally conscious of the quality of the land and water they own, they actually lose value on their property.  But the landowner does not have to truly understand the ins and outs of farming under this scenario.

CROP SHARE AGREEMENTS

Crop share – also called tenant farming – is an agreement where the landowner and the farmer work together to grow and harvest a crop on an acre.  When a farmer and a landowner enter a crop share agreement, the farmer and the landowner split the cost of the inputs for that acre (remember how expensive that was?) AND split the income or loss from that acre. The landowner is giving the acre, the farmer is giving the labor and equipment, and the two share in the profits or losses.

In this sort of scenario, the landowner must have at least a basic understanding of the agricultural industry.  He is paying for a portion of the fertilizer, chemical, seed, etc that is going onto that acre.  He will then receive his percentage of the harvest and would market the grain himself to earn the maximum net profit on his ground.

(It is important to note that these agreements can vary widely.  Some agreements might be a 50/50 split on cost and income, some might be 70/30 or anything in between.  Some agreements might have the farmer marketing all the grain and just splitting the income, some might have the landowner marketing his own grain.  Each contract is what works out best for this particular landowner and farmer.  The point is, they do it together.)

WHICH AGREEMENT IS THE BEST?

11-19-12 FarmerHopefully, though these descriptions are brief, you can see pros and cons to each sort of agreement.  Farmers can benefit in either.  In a crop share agreement, farmers benefit in a bad year because they share a portion of the loss with the landowner, but they also share a portion of the gain in a good year.  In a cash rent agreement, farmers benefit in a good year because the landowner does not get a percentage of the gain, only a flat fee.  In a bad year, cash rent agreements are a doozy for farmers.

And then sometimes in a crop share agreement, farmers find it difficult to work with a landowner that maybe doesn’t understand much about the farm business, yet has to understand and review every decision.  If the cash rent is low enough, maybe the farmer feels it is in his best interest to absorb that risk and eliminate the necessity of reviewing every decision with the land owner.

Different farmers prefer different agreements.  There is no right or wrong answer.

Statistically, the two agreements are used in about equal proportion in Illinois.  In some regions, cash rent is more common and in other regions, crop share is preferred.

Each of these agreements manifests itself in so many different forms that we couldn’t really understand them all here.  As an example, farmers can enter into a Variable Cash Rent agreement where the rent they pay for an acre varies on the profit they are able to make in a given year.  This allows the farmer to manage some risk, but allows the landowner freedom from understanding every decision.  Of course, landowners may prefer to have a guaranteed income they can budget for instead of a fluctuating income that depends on profit margins so for some, this just doesn’t work.

WOW.  THESE DECISIONS ARE INTENSE.

Listen, I’ve been preaching it for years, but farming is an incredibly complex way to make a living.  Farmers are businessmen who are weighing these decisions every day.  Many farmers have college degrees in economics or agribusiness to help them wade through an overall understanding of all the complexities they will have to deal with as farmers.

It’s really so much different than going to work and getting a paycheck every two weeks which is how most of us live.  Having an awareness of that alone will change the way you view the family farmers that grow your food.

Lindsay MitchellLindsay Mitchell
ICGA/ICMB Marketing Director

 

Have any other questions?  Make sure you leave them in the comments!!

 

 

A COMMENT ON PATRIOTISM …

During a recent cemetery walk in Bloomington (’tis the season for cemetery walks as you probably know), I learned a little more about Adlai Stevenson than I previously knew.

He was a Bloomington native, a800px-Adlai_Stevenson_gravend grandson of Vice President Adlai Stevenson on his dad’s side and Jesse Fell, a comrade of Abraham Lincoln, on his mom’s.  He served as Governor of Illinois from 1949-1953, lost three runs for President, and was the U.S. Ambassador to the United Nations from 1961-65.

I feel confident that Stevenson’s feelings of patriotism described in the following were a direct result of his central Illinois, Corn Belt, rural America ties.

patriotism Adlai Stevenson

Agriculture is the economic backbone of Illinois.  Though the state is famous for the city of Chicago (built on the cattle industry – thus “The Bulls”) and for a corrupt political system that elects and convicts governors one after another, farmers and farming are the silent foundation upon which Illinois is built.

Slow and steady wins the race on these farms.  Their owners toil and sweat, make a few bucks, sleep with a clear conscience and do it all again the next day.  In the process, they have literally created wealth – from one seed comes many and from many seeds come jobs, dollars spent, and new industries created.

PLANTThe patriotism of the farmer is inherent and inherited.  When Chicago corporate employees can pack up and leave due to high taxes or corrupt government – when family businesses can relocate to other states or corporations move their headquarters to other countries – farmers can’t move the land.  They stay.  They try to make the state and the country better with the tranquil, steady dedication of a lifetime.

Farmers literally own a piece of America.  We all do, I guess, and we are all a line in the story of this great country, but with their dirty hands and honest hearts, farmers care for her rolling prairies, her wooded knolls, her bubbling creeks.  They work with her and toil alongside her to create the backbone of a nation that celebrates loud, boisterous characters on TV with opinions that undermine everything they believe in.

Still, they proceed.  They are dedicated to the life their great-great-great grandfather’s began before Illinois became a state and calm in their pursuit of the greatest promise America offers to them: the pursuit of happiness.
Christ digging in dirtThey find joy in that black dirt.  In the promise of life in the spring.  In the hope of a harvest in the fall.

I’m convinced that Mr. Stevenson was thinking of the Illinois farmers he knew when he described the tranquil and steady dedication of a lifetime.  It perfectly describes the farmers I know, and farmers just don’t change that much from their fathers and grandfathers before them.

This Election Day, focus not on the frenzied burst of emotion, but on the dedication of a lifetime that makes a patriot a patriot and America the greatest nation in the world.

Thank you, Mr. Adlai Stevenson, for such a lovely comment on patriotism and a nod to farmers that built America that will endure forever.

mitchell_lindsayLindsay Mitchell
ICGA/ICMB Marketing Director

FIVE WAYS HAVING LIVESTOCK BRIGHTENS A BAD DAY

Some days when you wake up in the morning and go out to do the chores you never fully know what you are going to find… and if it’s too quiet you start to get suspicious. Raising livestock always keeps you on your toes, but in the end the animals are always a bright spot on even the worst day.

1. Farmers and Livestock have a mutual love for each other

Hog farmerMany farmers are close with each animal they raise. Every animal is cared for to the farmer’s best ability, and with care there is love. Whenever I have to hop over the fence to get a trough for the hogs, I never get out without getting a rub on my legs from each hog, and then I normally end up scratching their backs and watch them do a little dance because they like it.

 

2girl hugging cow. A Built in Friend on the Farm

Whether you own a dog, horse, duck, cat, or cow you can always count on having a friend on the farm. If you’re lucky you’ll have a friend from each animal on the farm! My brother has 3 calves and whenever he goes out to feed them he will get in the pen and play tag with them for a little bit, and they will all run around in the pen together and get a good laugh out of it (as well as a little winded).

 

 

3. They Come Running to Greet You – or just to Eat

cows eating at feederWhen you notice the hay bale getting low for the cows out in the pasture every farmer knows to hop on the tractor and get another one for them before they finish it or else they will be chasing cows all over the county! When my dad and I take a bale out to the cows, and they hear the tractor coming up the hill you see all of the cows migrate over to the feeder and start calling for the little calves to come over because supper is ready. The cows appreciate all the time and work my family did to get them these hay bales so that they are well fed.

 

4. Always a Life Lesson

litter of pigs with momSometimes when you’re out on the farm taking attendance of your livestock you notice that one may not be present, and if so, a search party (the whole family) gets called to help find the missing animal. This normally happens on my farm when a cow or sow is about ready to have a baby(s). If dad counts someone missing, everyone is sent to the pasture to find the animal, and if you’re the lucky one you will get the sweet reward of finding a the new life of a baby calf or a litter of baby pigs curled up next to their mama; healthy and happy as they could be and it can turn any day into great day.

 

5. Livestock are loyal to their farmers

farmer and dogOne thing you must know about livestock is that they are loyal. Back at home, we have four dogs and each one shows their loyalty in different ways. When I am home, my dog is always by my side. He always helps me with the chores and goes out with me in the pasture to walk the fence and check the animals.

 

Raising livestock isn’t easy, but the pros outweigh the cons. Every day farmers care for their livestock in the best way possible, and in return, each day is a little bit brighter having shared it with the animals.

ellen childressEllen Childress
Illinois State University student