Big Worries at Big Iron

Not much joy in higher grain prices.

Chicago wheat futures went over $9 per bushel during Big Iron last week, beating the old record by $2 per bushel. But I didn't see any farmer at North Dakota's largest outdoor farm show dancing a jig among the exhibits.

In fact, many people were downright gloomy.

"It is great to have higher grain prices, but a lot of it is already gone," said Roger Bendickson, Garrison, N.D., who attend Big Iron with his son, Nick.

Higher costs have already eaten up the increases, he said.

Rent, fuel, fertilizer, machinery and seed have all gone up.

"Costs are downright sinful," said Pam Holmquist, Chisago City, Minn.

Verna Hultman, Center City, Minn., echoed the sentiment. Higher grain prices didn't impress her. "Margins are the same."

Gene Hanson, Elbow Lake, Minn., who had his 2-year-old grandson Peyton with him, allowed that it was "pretty exciting" that wheat set a record. "But how long will it last? That's the big question."

Everyone seemed to want to know the answer to one important question: When will land rents and the price of machinery, fertilizer, chemical and seed come down?

"There's not one thing here [at Big Iron] that will go down in price when the wheat price goes down," said Betsy Jensen, a Stephen, Minn., farmer and Northland Community Technical College farm business management instructor. She spoke at a marketing seminar sponsored by the Minnesota Association of Wheat Growers and North Dakota Grain Growers Association held in conjunction with Big Iron.

Several people observed that in wake of Russian grain sales in the late 1970s when grain prices soared, input costs jumped too. When grain prices fell, land values eventually collapsed, but most other costs never came down.

History will repeat itself, predicted Randy Benson, Bisbee, N.D. Grain prices will go down and costs are going to stay up. "Its' going to hurt a lot of people…bury them like in the 1980s."
Mike Evenson, Hillsboro, N.D., was more optimistic, even though he had forward contracted all of his 2007 wheat crop and some of his 2008 crop before the summer rally.

"I still got good prices." he said. "I'm happy. I'll forward contract more."

High grain prices are better than low prices, noted Larry Mueller, also of Hillsboro.

"You can find a way to manage costs if you have a high gross income," said Mueller, a Mycogen seed dealer. "If you have a low gross, you don't have anything to work with."

Evenson nodded in agreement.

"If you can't have fun farming now, you probably never will," he said.

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