Weathering a tough farm economy: The Spokesman Speaks Podcast, Episode 1
Listen to episode 1 of The Spokesman Speaks podcast in your favorite podcast app
Welcome to episode 1 of The Spokesman Speaks podcast. In this episode, Spokesman editor Dirck Steimel speaks with Iowa Farm Bureau’s chief economist (and Lucas County farmer) Dave Miller about cash flow opportunities for Iowa’s farmers to pursue in this tough farm economy, and podcast host Laurie Johns talks with Farm Bureau field service manager (and resident Iowa Farm Bureau historian) Tim Niess about the moments and mentality that have shaped Iowa Farm Bureau over the past 100 years.
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- Narrator: Since 1934, Iowa's farmers have turned to the Iowa Farm Bureau Spokesman as their trusted news source. Now The Spokesmen Speaks. Listen in and hear from leading experts on topics important to farmers and agriculture. Now here's your host, Laurie Johns.
Laurie Johns: Welcome to The Spokesman Speaks, a new podcast by Iowa Farm Bureau. Thanks for joining us for our first full episode of the podcast. This is our December 3rd edition. I'm your host, Laurie Johns, and we're delighted to have you along for the ride. You'll find some interesting information, something you'll learn, something that will be fun to hear, all kinds of possibilities, so we want to thank you for your time. And you know if you're an Iowa farmer, there's a good chance that you've been reading the Spokesman newspaper for years, maybe even decades, but you've never heard The Spokesman Speak until now. We look forward to bringing you the news that matters to you whether you're at home or on the go. If you missed our special sneak peek episode and you're interested in learning more about what we have in store for you on this podcast, I encourage you to go back and listen to that mini episode which you can find at IowaFarmBureau.com/Spokesman, or you can find it in your favorite podcast app, including Apple Podcast and Google Play. Today's show is a mixture of past, present and future, which is appropriate because Iowa Farm Bureau's wrapping up a yearlong centennial celebration with our annual meeting on December 3rd, 4th and 5th. I sat down with Iowa Farm Bureau Field Service Manager, and our resident Historian Tim Niess who reflected upon the moments and mentality that have helped shaped Farm Bureau and farming over the past century and where that leaves us as we continue to serve farmers, helping them find opportunities and overcome challenges as we begin our second century. Speaking of challenges, we know that farming's never been easy and it's especially challenging these days. Spokesman Editor Dirck Steimel, talked with Iowa Farm Bureau's Chief Economist Dave Miller, who, by the way, also farms in Lucas County, about some of the opportunities that exist in this tough farm economy. Every time I hear Dave and talk to Dave and I know if you know him as well, you learn something. So he has a lot of really insightful information, whether it's about market risk or you know, some things that you can make in differences in buying seed or whatever it happens to be. I guarantee you'll learn something about this. So, I invite you to sit back and enjoy this insightful conversation with Dirck and our Iowa Farm Bureau Farmer Economist Dave Miller.
Dirck Steimel: Thanks for joining us today, Dave. We're in the fifth year of depressed commodity prices. What are some of the strategies that Iowa farmers can use to help them survive the current economic situation?
Dave Miller: Probably the number one is to be very mindful of cash flow. The good news is we have not had a steep decline in asset values such as either machinery or land like we did in the Farm Crisis of the 1980's. It is more of a cash flow crisis with operating margins very tight. So one is managing that cash flow. That says we probably need to pay more attention to when there are marketing opportunities and is probably a time for hitting singles instead of going for home runs. The second point would be it is a time, as always, but it's a probably more pointed time for looking at expense management. The four or five top expenses that most of us have on the farm from a crop perspective would number one be cash rent. Number two is probably fertilizer. Number three is seed. Number four would probably be our herbicide programs. Number five is probably machinery expenses. My guess is at the moment most of us probably know what our cash rents are going to be for the upcoming year. There may be some opportunity to still modify some of those with landlords, work with them and see what kind of arrangements can be worked out. Possibly sharing some risk on the downside, a sharing opportunity on the upside. With regard to fertilizer, it is a good time to take a look at soil testing. You know, building soil fertility in the long run is always a good thing, but in the short run it really doesn't hurt to maybe extract some of those resources that we've built up a little bit over the past good years. And then there's some opportunities to do some things like that. There are some opportunities maybe to adjust seed prices. Look at 'do we need all the traits that we've been buying? Are we getting the value out of that herbicide programs? How do we manage those? Are we with a one pass program, a two pass program? Are there some alternatives to what we've been doing? Is there a role for conventional seed back in some of our programs? Are we getting value out of the traits, which obviously affects our herbicide program?' And then as always, this time of year, looking at a capital needs and expenses, there really does become a tradeoff there between what you do on capital expenses for new equipment versus when we try to extend used equipment, we probably get increased maintenance cost, but quite often that increased maintenance cost for a year or two, maybe quite less than the commitments that we need to make on capital purchases. But those would be some of the things that would be highlighted on how we adjust through these periods.
Dirck Steimel: What conversation should farmers be having with their lenders, their landlords and others as they work through this sort of extended downturn?
Dave Miller: Transparency is number one. People don't like to be blindsided. Particularly with lenders, be upfront. Let them know what your situation is, talk to them, go in and talk to them. I think being transparent with landlords and providing them with information and services about what's happening on their land and how you're taking care of it, etc. are always good things to do. Don't assume that somebody can read your mind, let them know what the economics are but be honest. I think with many landlords with multiyear relationships they like consistency and they like to know what their tenants are doing and how they're handling the farm and what they're doing for them and they understand markets go up and down, so it's an opportunity to have that discussion with them.
Dirck Steimel: Are there other income opportunities for farmers that they might be exploring now such as alternative crops, adding livestock if they don't have livestock or using skills and off-farm employment?
Dave Miller: All of these are good potential opportunities. There is a growing use of cover crops, for example, in Iowa. Much of that seed is still coming from out of state because we tend not to grow the small grains, the wheat, the triticale, the rye, some of those things that are being used as cover crops here. Some of the things like annual rye grass and some of those seeds are probably still going to come out of Oregon or other places. We're not likely to grow turnips or radishes or some of those things, the seed here, but we can grow the broader cover crops, the cereal ryes, the triticales, those. I just last week I bought some rye, just bin run rye seed at $10 a bushel, even a 40 bushel yield competes quite well against $10 soybeans because the input costs are going to be less, etc. So I think there are some opportunities for those types of things and with a clean seed and bag seed, some of those types of things, I know some of that is still selling in the $15 to $20 a bushel range. There can always be opportunities if we have unused time dependent on our cropping business in the demand's there for doing such things that are compatible with all farm employment, whether it may be driving a school bus. I see a number of school districts have continued to be looking for drivers and most farmers are quite capable of driving that type of equipment. There are a number of machine shops. In a time of very low unemployment, tight employment circumstances, skills such as welding and machine operation may be in demand in local areas. There may be some opportunities in construction that may not a conflict too much with the demands for the farm. There was definitely a driver shortage for over the road trucking, not that people don't necessarily do that, but I know in my own experience back in the 1980's when we had a drought and had a downturn on the farm we took our semi and put it on the road and I drove truck for a year and a half or so to again turn cash flow. So there can be a number of opportunities out there that are quite compatible with the farm and I know when I was driving the company I was driving with had no problems if I want to take three weeks off, four weeks off during planting time and three or four weeks off during harvest time. So those types of things become very compatible for turning cash flow and using skills and experiences that we already have on the farm.
Dirck Steimel: As you look forward, do you see any significant improvement in Iowa farming come in the next six months to a year? If so, what are the factors that can make that happen?
Dave Miller: I think there will be short term market opportunities ahead of us over the next six to 12 months. I tend to think while the trade dispute with China may last longer than a lot of people, definitely longer than a lot of people hoped, the longer than maybe many of us expect, the reality is there could be some adjustments to tariff situations along the way. We may well see the Chinese do something internal to mitigate some of the soybean tariff issues, which may give us a marketing opportunity for soybeans during the December to February period. I'm not sure that signals and into the tariff war, but it may give us an opportunity. I think there are probably some opportunities we need to look for in the hog markets, for example. In the upcoming 12 months with African Swine Fever hitting the Chinese hog herd pretty hard, there could be opportunities on a worldwide basis for stronger pork prices and these opportunities could be in front of us. I think we have to pay more attention to marketing out of storage. We've been blessed, if you will, for the last six, seven years of pretty much being able to market commodities into somewhat strong markets. Almost every year had a dollar, dollar and a half rally in the bean market. The corn markets had pretty consistent 50, 60 cent rallies postharvest this year. Maybe we may need to temper our expectations some and look at ways, how do we capture the carry that is in the market? July beans are trading significantly above where November beans are trading. But it could be, you know, the traditional is we think cash will go up to the distant futures. This way maybe the future's trading down to cash. So we need to look at how do we capture those and lock in that carrying charge. How do we manage basis opportunities when beans are trading a dollar under the board by March or April? Might we get opportunities to lock in a 30 or 40 cent carry in the futures market plus maybe gained 20 or 30 cents in basis improvement. If we can get the 70 or 80 under, that would end up getting us. Again, the goal of this year may be can we get a $8.50 out of the cash beans and then add into it the trade related payments for soybeans and maybe we can end up with a net price on soybeans that's something over the $9 a bushel range.
Dirck Steimel: What education and marketing opportunities or other things is Farm Bureau doing to help farmers through this period?
Dave Miller: We have a number of programs that we're going to offer, that we have been offering, but also offering through the winter on our market education series. Several programs that are designed in a simulation or a game format to help people sharpen their marketing skills, to increase their knowledge about what's happening with basis. How do we manage basis when we're looking at record wide basis levels? What kind of opportunities are there in storage? One of these is called winning the game and Ed Kordick here on the Farm Bureau staff does an excellent job of working with the university personnel and others in offering this winning the game program around the state at locations scheduled all over the state. There will be other opportunities. There are webinars and podcasts that we do on a variety of topics that, again, are geared to our members getting through some of these tough times. We do have an upcoming seminar, a webinar on handling farm stress. And some of the things that we need to do with some of the people skills and emotional challenges that go along with the tough times. And there's no doubt we have some tough times in agriculture right now.
Laurie Johns: There's no question that farmers are feeling the pinch in today's economy, but we want you to know that you've got people in your corner. You have an organization, the Iowa Farm Bureau, that's here for you now and for the long haul. And when I sat down with Farm Bureau's Field Service Manager and Historian Tim Niess, he painted a picture of how far farmers and Farm Bureau have come in the past 100 years by working together. Now, if you know Tim, he is a fountain of knowledge. How do you talk about a hundred years in 12 minutes? Which highlights do you pick? Well, tell you what, we talked for quite a while. So we're giving you just some highlights, but if you know Tim, you know you can approach them anytime and ask questions and there's more where that came from. Let me tell you what. It's really some fascinating stuff. I think you're going to learn a lot by hearing it. A hundred years ago, why even was the Farm Bureau started?
Tim Niess: Well, I like to think of the Farm Bureau movement, I guess, as it came is that it was inevitable that it was going to happen. Really, you've got to go back and look at what was going on in the country in that time in agriculture and one of the greatest developments that happened right around 1918 or so, some prior to that, was the development of tractors, the development of gasoline as an alternative fuel to oats and hay, which fueled horses prior to that, not only made the practice of agriculture, the implementation of row crops and livestock and all of that, not only made that more efficient, but it freed up about 25 percent of all the acres. You know, you think about this as a business, you now have 25 percent of your business that's now going to create cash for you as opposed to just fuel. So farmers were experiencing a level of economic improvement that they had not seen for decades. The other thing that was going on at the same time was as they became more efficient, as their economies grew, they became more important to their communities. They started taking more financial risks and risk management is a huge part of how Farm Bureau started. It was okay were there aren't a lot of risk management tools for farmers in the early 1900's, so you had those economic factors that were driving it. On the policy side of things, farmers were seeing, farm policy was primarily being developed by people with absolutely no agriculture background.
Laurie Johns: And it was put on them. Not developed by them.
Tim Niess: Exactly, and they just had to deal with it. They wanted to set the table. They wanted to have influence in it. Farm groups, prior to the Farm Bureau movement, we're primarily very partisan and followed one or two people at the head of that organization. They created their policy and it was developed by personalities as opposed to a grassroots process. Laurie Johns: Strong personalities.
Tim Niess: Strong personalities. Absolutely, and once those personalities went away, those farm groups also went away. Also, World War I was going on at that time and the need to provide more food to feed the people in Europe was the catalyst to create the Farm Bureau organization probably much faster than it would have just grown organically. That patriotism really fueled them become organized within a one-year period, really for the Iowa Farm Bureau.
Laurie Johns: When you think of this power of bringing people together and having a unified voice, you know, what do you think is important memory that needs to always be remembered about that time and that coming together, that unified people? Especially as we're looking at current situations when sometimes the country seems so divided.
Tim Niess: You know, that's a really good point, Laurie. And you talk about what are those timeless values and I think that was sort of a theme that came out as we were working on the centennial, was that if there's one thing that hasn't changed, it is those timeless values of the importance of family, the importance of community, the importance of giving back to your community, and that's remained an essential principle and philosophy of our county Farm Bureaus. They're members of the community, they're not there to just have meetings and eat pie, you know. It's about how do we give back, how do we have influence in the community and how do we leverage what we have done as farmers to raise the boat for everybody else? That's one essential message I would say going back 100 years, possibly even stronger today than it was back then.
Laurie Johns: When you think about it, as a grassroots organization and a general organization, which does make us unique, we have organic, we have conventional, we have corn, beans, everything, well more than cows, plows and sows, right? As they like to say. And that continues to unite us even today. What do you think now, especially as we come to celebrate, all come together here for our annual meeting to celebrate the history of Farm Bureau, what has been the most surprising thing that you think people should know?
Tim Niess: There's things that we played a very key role in that are just forgotten now because they happened 70, 80 years ago.
Laurie Johns: Like we created the national organization.
Tim Niess: That was probably the first thing was, you know, James R. Howard, who was our first president, was the first AFBF president. John Coverdale, who was our first executive secretary, was their first executive secretary. So the AFBF was structured very closely on the same corporate structure that the Iowa Farm Bureau was, and that has stood them well for 100 years, you know, as well. I would say one of the next big things that we did was to help with the rural electrification projects in Iowa in the '30s. Where in order for local RECs, rural electric companies, cooperatives, in order for them to get going, they had to be backed. Someone had to basically cosign the loan with the USDA so that they could build their infrastructure, set up the poles and the lines and all that. The Iowa Farm Bureau did that for every one of those RECs and basically the USDA said 'and if Farm Bureau won't do it, I don't see how we're going to get it done.' And it, it brought electricity to the farmers in Iowa and also to a lot of these smaller towns, you know, which there are plenty of those in Iowa. It completely changed our lifestyle for everybody in Iowa.
Laurie Johns: Well, yes.
Tim Niess: And that was because the Iowa Farm Bureau took that risk. There's another piece of our history that we just take for granted. You know that we've always had electricity like that.
Laurie Johns: When you think of the bringing of the groups together for the sake of all, for the unity, for that strength, do you think of other organizations that we bring together because we are known for working with everyone and bringing them all to the table, you know? The Coalition to Support Iowa Farmers. There's so many other examples.
Tim Niess: Absolutely, and I think that you talk about, the Coalition to Support Iowa Farmers was a landmark partnership. It has never been done before. Where you had a farm organization and then commodity groups that were not always on the same side of things, you know, they're all independent, but they came together for this one purpose of trying to help farmers do the right things when they're siting livestock buildings. Do the right thing when it comes to neighbor relations. Do the right thing when it comes to using the best technologies to be good neighbors, but also that it's a way of ensuring that we're going to have young families here in Iowa involved in farming because growing livestock is one of the best ways of doing that. So that was a great partnership. We did it again with the Ag Literacy Foundation, and bringing some of those same groups back together, you know, so that we can get that story of agriculture told in Iowa schools and so our children will understand the real value of what they see when they're driving with their parents, you know, out in the country and that it means something that it's got value to the state.
Laurie Johns: Absolutely. And assuring that sustainability of the farms stay in the family, Take Root.
Tim Niess: And again, was something that that we developed because there was demand for it. Because our leaders were asking for 'we need some help, that we can start putting together our own transition plans, but we need some help from somebody who's not there just to sell us something.' And that was the key to a very successful program that has helped thousands of farm families in Iowa, in that they know they can go there, they're getting good information, it's not slanted one way or another and it's not predicated on being sold a bill of goods. Now those goods are important pieces of that, but that's not what we were there for. It was about giving them a roadmap to a successful transition in the family.
Laurie Johns: You sure get a lot for Farm Bureau membership.
Tim Niess: You certainly do.
Laurie Johns: And the leadership training at no cost. Leadership training. You think of the Iowa Farm Animal Care Coalition. There's Renew Rural Iowa. Again, because a lot of farmers do have that side hustle. Great ideas. You know that deserves a platform and can go on to become a success. There's probably too many things we even have time to talk about. What do you think about it?
Tim Niess: You could spend a lot of time going through each individual program and they're all very valuable and again, they're valuable because it's what our members have asked for. It's a really key point to make about a grassroots organization is that we don't develop programs and then try to go out there and make them important to our members. We listened to what our members want and then develop the program so that the demand is there. It's another principle and philosophy of the Iowa Farm Bureau that not many other organizations have, and we need to stay true to that because it's very successful.
Laurie Johns: There's so much ground to cover when you're talking about 100 years after all. If you'd like to read up more on Iowa Farm Bureau's impact over the past century, head over to IowaFarmBureau.com/ 100. We have an interactive timeline with more than 40 key moments and 50 photos from Iowa Farm Bureau's history. I don't know about you, but I think it's always kind of neat to look back at those old photos too,. You know, we didn't even have a chance to cover the key role that Iowa Farm Bureau played in starting the ethanol, biodiesel and wind industries in Iowa in the early 2000's and how Farm Bureau helped save the turkey industry in Iowa in the 1990's. All of that information and more is available IowaFarmBureau.com/100. So check it out. And as we wrap up this first full episode of The Spokesmen Speaks podcast. I'd like to thank you. Yes. Thank you for tuning in to our first episode, but also thank you for the work you do for your family, your community, your state and folks all around the country and the world. Thank you for being a Farm Bureau member and if you're not already a member, we hope you'll consider joining us. If you're a member, chances are you're downtown right now celebrating Iowa Farm Bureau's 100th annual meeting, December 3rd, 4th and 5th in Des Moines. We have educational seminars, great entertainment, including Don Felder. You remember him from the Eagles? Wow. And an inspiring keynote address from Iowa native and former astronaut, Dr. Peggy Whitson. Really good stuff. Do you know what? We do this every year. We bring amazing talent, some really great discussions and expert insights that we look forward to sharing with you during our next episode, which will release on December 17th. So until then, thanks for reading the Spokesman. Thanks for all the great stories and inspiration and thanks for listening to The Spokesman Speaks.
Narrator: Thank you for listening to The Spokesman Speaks, a podcast by Iowa Farm Bureau. Check out more podcasts and articles from the Spokesman IowaFarmBureau.com/Spokesman. You can also find and subscribe to The Spokesman Speaks podcast is the Apple Podcast app, Google Play and other popular podcast apps. We appreciate your ratings and reviews and welcome your feedback at podcast@IFBF.org
About The Spokesman Speaks podcast
Since 1934, The Iowa Farm Bureau Spokesman has been Iowa’s leading agriculture news source, and today it is the largest circulation ag newspaper in Iowa. While the Spokesman newspaper is available exclusively to Iowa Farm Bureau members, The Spokesman Speaks podcast is available publicly, reaching farmers on-the-go with stories that matter to them. You can find episodes of the podcast at IowaFarmBureau.com/Spokesman or subscribe and listen in your favorite podcast app, such as Apple Podcasts, Google Play, Spotify, Stitcher or TuneInRadio.
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