SDSU Extension publishes the South Dakota Pest & Crop Newsletter to provide growers, producers, crop consultants, and others involved in crop production with timely news pertinent to management of pests, diseases, and weeds in South Dakota.
After a recent trip to Ethiopia, I began thinking about how farming on the steep, terraced hillsides of the rural highlands there might relate to agriculture across the rolling plains of South Dakota. As part of the Farmer-to-Farmer Program, jointly sponsored by USAID and Catholic Relief Services, I had the opportunity to speak with nearly 300 smallholder farmers about fertility and soil health.
From 1991 to 2015, agricultural land values in South Dakota, and in most other major agricultural production states, appreciated each year. In 2016 on average all agricultural use land decreased in South Dakota except rangeland, which will be discussed in a future article.
Cash prices are separated by region and a simple cash average price is then calculated for each specific region. The basis is calculated by subtracting the closing futures price of the nearby futures contract from the average cash price of grain in each of the six regions.
The current average cash rent to value rates of return on agricultural land in South Dakota remain very low. The rent to value (RTV) ratio is calculated by taking the cash rent per acre divided by the land value per acre. This calculation is an approximation for how rapidly an asset will pay for itself. The 2016 average RTV of land value was 2.7% for all agricultural land. Categorically, the average was 3.3% for cropland, and 2.4% for rangeland. During the 1990s, the same ratios were 7.4% for all agricultural land, 8.0% for cropland, and 6.8% for rangeland.
The Silage/Earlage Decision Aid calculator is a useful tool for crop producers and livestock feeders to estimate silage costs.
Many farms in South Dakota built working capital and financial reserves between 2009 and 2012, a recent period of relatively high returns. Since 2013 the strong working capital position has been on a downward trend. Figure 1 shows average working capital positon per acre of farms enrolled in South Dakota Center for Farm and Ranch Management (SDCFRM) program.
Crop production costs have not adjusted to the decrease in revenues received from them. The major costs (direct and fixed) which include seed, fertilizer, machinery, management and labor and cash rent, have not decreased as much as the revenues that farm operators have received in recent years. The costs for 2015 did decline from 2014 with most of the decrease coming from fertilizer and cash rent. Cost control will need to continue in 2017 as revenues are down and Agricultural Risk Coverage (ARC-CO) payments will likely decrease.
The variable moisture levels and growing conditions have led to wide disparity in crop progress and conditions. Farmers with crops that are either stressed by a lack of rain or being considered for alternative uses should consider the type and level of crop insurance coverage they purchased. Most field crops in South Dakota are covered by Federal crop insurance sold by private insurance agents. The most common product is Revenue Protection (RP). In several counties in Western South Dakota, dryland corn may be covered by Noninsured Crop Disaster Assistance Program (NAP), which is administered by the USDA’s Farm Service Agency.
This past year crop rental rates declined state wide compared to 2015. In 2015 the average rental rate for cropland across South Dakota was $145.10 per acre in 2016 the average was $141.00 per acre. This is a 2.8% decrease in the cropland rental rate state wide. This follows up a 3.3% decrease in 2015 as well. Some regions, such as the Northeast had greater decreases (12%), while others such as the Southwest had lower decreases (1.9%). The continuation of the decrease in crop rental rates is likely due to the current economic conditions.