King’s AgriSeeds’ core mission is to provide high quality forages and cover crops to our farm community. The dairy industry in particular is currently in severe distress. 2018 is starting out to be a brutal year. Not only are the prices being received lower than a rough 2017, but there are several cases of dairy farms losing their milk market. This economic challenge appears to be far worse than 2009. Depression and suicide have set in on some farms. I ask that we pray for one another’s wellbeing.
Our theme for this year’s winter meetings was entitled “Farming Through Adversity”. When this theme was chosen in the fall, we knew the ag economy was under stress, but the stress level on dairies in particular has deepened. The common theme across many dairy meetings (King’s and others) has been keeping cash flow high by keeping milk volume sold per farm high, while controlling costs. Using high quality forages is an essential key to high volume milk production at a lower cost. Feed cost is the number one cost on livestock operations by far! Farmers using King’s AgriSeeds’ forages in a well-designed forage system can improve both yield and forage quality. This is our core strength! We feel our customers can be their most competitive by addressing the number one cost on the farm. Investing in high quality seed pays huge dividends.
As you may know, I used to work for Penn State University as a Farm Management Extension Agent. During my career with Penn State, I learned that there are different ways to make a farm business work. Assuming the model is valid, management is the key to success. It takes information to manage. Farmers must control the “controllable” and also manage risk. Using an appropriate combination of winter annuals, summer annuals and perennials is a great way to control production and harvest risk. Improving soils and their productivity through cover crops is another important way to build cropping systems with increased resilience.
Another major concept that I learned in my extension career is that niche markets can be very lucrative. Niche markets related to a local, nutritional added value (food as medicine) model, or whichever model of production adherents support, is very real across many food groups. Commodity agriculture in the east can be difficult to compete in over the long haul. In the east, we have some competitive strengths. They include relatively good soils, reasonable rainfall, and a close market of consumers that have disposable dollars to buy food the way they want it produced so that the purchase fulfills their personal values. They are willing to pay premiums. Without premiums, agricultural production in our part of the world can be challenging. As a general rule, our cost of production can be higher than other regions of the country. Keep in mind the profit equation:
Profit = (Price per unit sold – Cost per unit sold) times the number of units sold.
The competition to eastern agriculture in my opinion is not the western US or imports. The competition in many of our markets is the Midwest. They have great soils, good weather, lower cost land and less environmental regulation. With today’s infrastructure they are also close enough to the market that raw products can be processed in a more vertically integrated system and shipped east. The Walmart milk processing plant soon to be completed in Indiana is a very real example of its potential impact on eastern agriculture.
The beauty of our region’s agriculture is our diversity of production systems and many niche markets. The seed business, like many businesses, is an opportunity to serve customers with more than just products. It is an opportunity to build relationships through the good and challenging years. Challenging years, once we are through them, can be looked at in a positive light as a time of personal growth. I also want to encourage us all to have an attitude of gratitude. Even though the economy is tough now, we still have much to be grateful for. We are a blessed people.