ND State Barley Show’s boom and bust message

The 75th Annual Barley Show has come and gone. The show went big this year making it a two day event for surrounding communities to enjoy what the Barley Show can offer with informational presentations on Friday afternoon and the well-attended Dueling Duo performance on Saturday night. The future of the show may not be set in stone, but the Barley Show board of directors are optimistic.

Posted 3/28/19

By Melissa Anderson

“We’ll keep the show going as long as we can and hopefully attract some growers from other parts of the state up here,” North Dakota State Barley Show Secretary-Treasurer Justin Balsdon said.

Byron Parman, an NDSU Extension Ag Finance Specialist, was the first speaker of the day for those in attendance on Friday afternoon. Parman, a production economist, spoke on input costs, farm financial health and outlooks, overall ag health asset values and overall farm economy.

“Yields have been one of the very things that, despite the lower commodity price, have kept us above water,” Parman said.

The spring planting will also face difficulties after heavy snow fall over the winter is sure to bring very wet fields. With flooding already occurring in lower plain states, the pressure is on to get in the field and get the 2019 crop planted.

“When we gget in the field dictates what crops we can plant based on timing, and if everybody else in the upper plains and central plains are having the same problem- what is that going to mean for prices of certain commodities?” Parman explained.

The events of last fall will also play into spring planting. Parman explained that states like Iowa, Illinois, and Nebraska were unable to put fertilizer down before the ground froze because of late moisture.

“This will create a bottleneck in spring for North Dakota as states fight to get fertilizer,” Parman said.

Will as much corn be planted as predicted? Have the floods wiped out the winter wheat crop? These are the questions being put forward following the massive flooding in Nebraska, Iowa, Illinois, Missouri, Kansas, and South Dakota. The financial toll of this comes on top of an already hurting ag economy.

In North Dakota, 2013-2017 have been some of the worst net farm income years on record.  The gross farm income ties closely to production expenses, and with ever -increasing costs, many producers are turning to loans to fund current operating expenses and off-farm income to supplement.

“Farmers around the country have burned through operating capital cash,” Parman said.

Parman presented data from the Minneapolis Federal Ag Credit Service showing that net farm income is down 44 percent and farm capital spending is down 63 percent. This, compared to the 40 percent increase in loan renewals and extensions and a 38 percent increase in loan demand, does not look good for the short-term future of American farming.

“North Dakota had been trending down but starting in 2014, debt to income has been increasing 40 to 60 percent,” Parman shared.

Being ”big” also does not shield a producer from this situation either. Parman explained that the bigger farming operations are tied to what they have in terms of equipment investment and acreage.

“There is the farmer that is just big enough to benefit from commodity prices but still flexible enough to change when things get bad,” Parman said.

From the U.S. Department of Agriculture standpoint, farming is not going to be lucrative. The well-being of farm operator households is determined by a combination of on-farm and off-farm activities. The USDA is projecting a relatively unchanged income for the average American family farm from the last few years. However, the USDA projections for expenses related to farming are going to increase. These expenses include seed, inputs, and land rent prices. The equipment prices are projected to stay at the same level.

Parman’s final point of the presentation was on the market price of farmland. In review of data, Parman explained that market price of farmland is way too high. This is creating very thin margins in the relation between land rent prices and the income produced.

“We are in a period right now where the amount of land value does not justify the rent being paid,” Parman said.

Parman believes that a lot of these prices are being based on the years spanning from 2011 to 2014 when land appreciation was at 5 percent, low interest rates, and excellent commodity prices created the perfect storm. For this reason, the current situation in the ag economy is not supporting the land rents being paid.

The short-term outlook for farming looks like a bust with an increase in bankruptcy and farms not being able to survive the downturn. For the long-term outlook of agriculture in America’s heartland, Parman is optimistic that the ag economy will right itself.

“Ag booms repeat themselves about every 25 years like clockwork,” Parman said.

The bust has come for barley in the area as the American Malt Barley Association has stated they will no longer support 6 row barley research, and, instead, strictly 2 row will be funded. Dr. Richard Horsley, the head of the Plant Science Department and barley breeder at NDSU, knew that this move has been coming as NDSU switched their research exponentially over the last few years to 2 row barley.

“In 2019, 90 percent of barley researched at NDSU will be 2 row,” Horsley said.

With the move to 2 row, which is very difficult to grow in the northeast region, brewers are looking to have the higher malt extract with less commodity.

“Extract is to a brewer as yield is to you,” Horsley said.

What makes the 2 row so difficult to grow in the northeast part of the state is that it has a weaker straw, is more susceptible to foliar disease, and also matures later in the growing season. Another issue is that 2 row varieties have sprouting issues if there is heavy moisture in the fall.

Now that AMBA has made the switch to 2 row official, the question of what to do with 6 row barley has been asked. Dr. Horsley believes that the pet food market will be a great area for the 6 row. High yield potentials as well as less concern on the protein percentages make the pet food market a viable option. Dr. Horsley notes that the market is also comparable to the brewing market with contracts differing by about a $1.