To Survive The Bust Cycle, Farmers Go Back To Business-School Basics : The Salt Farming is entering its third year on the bust side of the cycle. Major crop prices are low, while expenses like seed, fertilizer and land remain high. That means getting creative to succeed.
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To Survive The Bust Cycle, Farmers Go Back To Business-School Basics

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To Survive The Bust Cycle, Farmers Go Back To Business-School Basics

To Survive The Bust Cycle, Farmers Go Back To Business-School Basics

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RENEE MONTAGNE, HOST:

After a long boom cycle, the farm sector is now in its third down year. Major crop prices are low while expenses remain high. And that means farmers have to get creative to succeed. From Iowa Public Radio, Amy Mayer reports.

AMY MAYER, BYLINE: Modern crop farms in the Corn Belt are sophisticated businesses. So put aside your notions of bucolic red barn surrounded by a few cows and pull out your best business school vocabulary.

DAVID MUTH: Farming is - we build commodities. And every individual acre is a unique production facility.

MAYER: That's David Muth who runs AgSolver, one of many data-driven startups promising to make farms more efficient. Muth compares each acre of a farm to one store in a chain of coffee shops. Some locations are profitable, others, not so much.

MUTH: The question we like to ask is - would we be satisfied if any one of those individual production facilities is operating at a loss?

MAYER: Probably not, he says. So what do you do with the coffee shops that are losing money? Any MBA will tell you you've got to do two things - reduce expenses and stop wasting money. Let's start with that second one.

Andrew Heineman is driving his old pickup to a field already bright green in early May.

ANDREW HEINEMAN: Here they are.

MAYER: This young farmer has planted about 150 acres of oats, a crop not seen on his family's corn/soybean farm in his lifetime.

HEINEMAN: Found out this is kind of one of our lower profit farms. So we were trying to figure out a way to kind of offset kind of the stuff from $3 corn.

MAYER: Oats are risky. But Heineman did the math and ran his idea past Iowa State University Extension agronomist Mark Johnson, who told him...

MARK JOHNSON: This would be a great year to try to raise them if you've got a market.

MAYER: Now back to the other business school lesson - cut costs. Modern seeds are packed with special traits that protect them from insects or fungus. Farmers could cut seed costs in half if they dropped all the traits.

JOHNSON: Most guys are going to only (unintelligible) back some traits. And so maybe they're only going to save 25 percent or 20 percent. But still, today's corn - that's still a pretty good chunk of money.

MAYER: We're talking thousands, maybe tens of thousands of dollars. Ryan Bristle farms about 20 miles southeast of Heineman.

RYAN BRISTLE: You take a little bit of a gamble when you try to redo some things. But we did reduce some of our traits.

MAYER: He's also using a website app that Iowa State has developed. He simply plugs in his location, the expected corn price and the cost of fertilizer to find out just how much to use. Bristle will apply less this year because a small bump from extra fertilizer won't generate enough additional corn to pay for itself. But he's cautious.

BRISTLE: You don't want to do it where it's detrimental to your yield 'cause at the end of the day, yield is still king. And that's what's going to drive your return.

(SOUNDBITE OF ENGINE STARTING)

MAYER: Here's one more savings tip - make do. Bristle's maneuvering a huge, red herbicide sprayer. It's not new. He and his family are repairing rather than replacing equipment. One side benefit of a rough farm economy - both state and federal officials are seeing increased interest in conservation programs.

(SOUNDBITE OF VEHICLE IGNITION CHIME AND DOOR CLOSING)

MAYER: Andrew Heineman drives back to his shop where his uncle and 92-year-old grandfather are busy with chores. He says the older generations are helping him navigate the lousy farm economy.

HEINEMAN: They say ag comes and goes in cycles. And then you just kind of got to prepare for some of the bad times and the good and then be able to ride it out and come back up.

MAYER: That optimism is that the hallmark of an entrepreneur, from Silicon Valley to the Iowa Prairie. For NPR News, I'm Amy Mayer in Ames, Iowa.

MONTAGNE: And that story comes to us from Harvest Public Media, a reporting collaboration focused on food and agriculture.

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