Expert says South Dakota farm budgets will remain tight


ABERDEEN, S.D. (AP) — A South Dakota State University expert says increasingly tight financial times are imminent for the region's farmers, who are already managing depressed markets.

Jack Davis, a field specialist at the university's extension service, presented on crop production and income trends for farmers early this month.

Davis told Aberdeen American News that agriculture producers should expect tight budgets for about two more years.

"Producers need to really try to manage those top costs very closely and try to reduce them 5 to 10 percent without cutting the yield," he said.

The region's popular crops, including corn and soybeans, reached record price levels a few years ago. But the prices have dropped, which is causing farmers to struggle.

"Gross (crop revenues) are down about 50 percent from peak," said Davis. "The expense side of that is only down about a third from peak, so it's very tight margins for many producers."

According to Davis, some expenses have adjusted to the drop in crop prices, such as fertilizer. He said seed hasn't adjusted significantly, and farmers will need to decide whether paying more for hybrids is worth the cost.

Davis said land costs have declined slightly and it's still possible for farmers to negotiate.

He recommended that farmers focus more time on managing expenses in order to stay on top of them.

"Agriculture is still more positive long term as the world population grows and incomes grow," Davis said. "But this might be a long reset as we get adjusted here."