Commodity costs spur farmers to improve profitability on farm through precision ag tech — but at what cost?
Falling commodity prices (U.S.)
Crop/ Price per sale unit in 2013/ Price per sale unit in 2015/ Total change/ Percent change
Barley/ 6.06/ 5.50/ -.56/ 9.25 percent
Corn for grain/ 4.46/ 3.60/ -.86/ 19.3 percent
Wheat/ 6.87/ 5.00/ -1.87/ 27.2 percent
Sunflower/ 21.40/ 18.90/ -2.50/ 11.7 percent
Dry beans/ 39.10/ 28.70/ -10.4/ 26.6 percent
Source: 2015 Crop Values Summary, U.S. Department of Agriculture’s National Agricultural Statistics Service
Quick stats about Colorado farmland
10.6 million acres of Colorado’s 66.3 million acres are cropland.
In 2014, there were 31,800 farms and ranches in the state. The average size of one was 909 acres.
Nearly 45 percent of Colorado’s farms or ranches are dedicated to crops.
Source: U.S. Department of Agriculture’s National Agricultural Statistics Service
Colorado is in the top ten for crop production in…
Crop / Rank in U.S.
Dry beans/ 8
Proso millet/ 1
Sorghum grain/ 8
Sorghum silage/ 10
Sugar beets/ 8
All wheat/ 7
Winter wheat/ 3
Source: U.S. Department of Agriculture’s National Agricultural Statistics Service
When Marc Arnusch graduated from college in the mid-1990s, his father didn’t want him to come back to the family farm in Keenesburg, Colo.
Crop prices were so bad, Hans Arnusch didn’t think his son could make a living, like he and his father before him had. Arnusch understood his dad’s concerns, but he grew up with farming. He loved it. He couldn’t stay away.
Now with modern crop prices even lower than they were in the mid-90s — and after two decades of market swings — Arnusch understands why his dad warned him. He’s worried that he’ll be the last Arnusch to farm wheat, corn and alfalfa. But he also has a son studying agriculture at Colorado State University, and so Arnusch does everything he can to stay profitable.
Though technology can help him raise his yields and the quality of his crops and therefore, his profits, it also has a price tag. Some precision ag systems can cost tens of thousands of dollars.
While some, like Arnusch, incorporate tech as frequently as they can, many farmers see precision ag technology as a luxury, and it’s one of the first areas where they start cutting back.
That’s a mindset Arnusch, who serves on the Colorado Farm Bureau’s board of directors, thinks the ag world can’t afford.
“I don’t see that technology as a luxury at all,” he said. “I see it as important as the tractors that are on our farm. “
Arnusch farms 2,800 acres with a diversified operation. Though the farm continues to do well, he is no stranger to hard times, something he reminds the young farmers who come to him for advice.
In 1996, a hailstorm devastated his crop. The storm, and that year’s low prices, made Arnusch think that only two years after he’d begun farming, his career would be over. In 2012, he had to close his successful onion shed, because of concerns about onion prices, food safety and immigration. He says that’s the hardest thing he’s ever done.
Now, commodity prices are low once again, so low that Arnusch has to find ways to grow smarter so that he can stay competitive, like leasing expensive technology and selling wheat and barley seed.
“There isn’t a book on a shelf anywhere that you can go to and flip to the chapter, ‘How do we get through this?’ We kind of have to feel it out on our own,” Arnusch said. “This is where you really find out how good of a farmer you are.”
A new low
Since 2013, prices for some of Colorado’s staple crops, like corn for grain and wheat, have dropped drastically. According to the National Agricultural Statistics Service, in 2013, the value of the state’s corn for grain crop was nearly $600 million. In 2015, it came in at just under $500 million, a drop of nearly 20 percent in value. At its peak in the last ten years, corn in Colorado was more than seven dollars per bushel. Last year, it was priced at $3.70.
Tim Magnuson, co-owner of Magnuson Bros. LLC in Eaton, has farmed since the mid-2000s. He got to see prices slink up, then slide back down. That’s taught him a lot, he said. When corn was over $7, he didn’t have to be as crafty as he does now.
“There was a while that you could pretty much do whatever you wanted to do within reason,” said Tim Magnuson, co-owner of Magnuson Bros. LLC in Eaton, where he and his brother farm corn and alfalfa. “You don’t have a complete open checkbook anymore. You start pinching your pennies more, trying to look at cost per acre more.”
In recent years, the ag tech world has made major strides to help farmers increase their yields and crop quality while using fewer resources. One of the types of tech Arnusch uses is soil-moisture monitoring. He buries tension probes with the crops with sensors to see how much water is in the soil. Last year, he used 20 percent less water on his corn crop.
That said, it’s a pricey technology. Arnusch can’t afford to own the probes himself, so he leases them. But they’re worth it to Arnusch.
“Every water molecule counts,” he said. “Our water issues are here to stay, and if all these technologies combined allow us to continue to produce in the backyard of this growing Front Range, we need to all be on board with that.”
Another big way ag tech helps farmers is by reducing the stress on them, or by reducing the time they have to put into planting or harvesting. Magnuson uses a new piece of tech to put down fertilizer at the same time he tills his land. He also uses a GPS system to help extend the hours he can work in the field, as well as reduce the physical stress that comes from staring down a line of crops and focusing on keeping the tractor going straight down that line.
Magnuson, 32, grew up on the farm, and he remembers the stories his grandfather told him of running the farm via horses. Now, when he presses the buttons on the tablet in his tractor’s cab, though the Magnusons have farmed for more than 100 years, they’re farming differently than ever before. It’s made him and his brother better farmers.
But that doesn’t mean that Magnuson doesn’t see the flip side. Those who have the best in tech likely invested back when prices were good, he said. He understands the difficulties farmers face in investing in new tech or in upgrading, particularly if they’re new to the industry.
“I would say it’s harder because there’s just not the luxury money,” Magnuson said. “When corn was $7, it was pretty easy to justify.”
For some farmers and ranchers, like Dale Jackson, who raises feedstuffs for his cattle outside of Kersey, having the latest and greatest in technology is secondary to staying afloat. When the market’s up, that’s when he can invest in new technology, but for now, he’s fine with his 40-year-old tractor and more than 60 years of farming and ranching knowledge.
“Most of us in agriculture will buy when the opportunity is there,” he said. “Otherwise, you work on it and keep it going.”
Growing more, growing better
Some farmers use technology to grow more of their crop, get bigger yields and therein, make more money. While this is one way to combat the lower commodity prices, it also floods the market with more product, which lowers the value of the grains even more.
The other school of thought is to use tech to hit specific windows in the growing season. Arnusch used the example of the 2015 growing season’s wet, rainy start. It took his farm nearly a month to get the corn crop into the ground. There was a significant difference in the yields for the corn that was planted at the start of the planting window, before the rain delays, and after.
“We don’t farm on the calendar anymore,” he said. “We farm in these windows that seem to open and close quickly on us.”
With precision ag tech, like steering technology in tractors that allows farmers to work around the clock, problems that drastically impact yields and crop quality like these can be avoided.
Another piece of the tech puzzle that many farmers use is biotechnology, or what’s often referred to as genetically engineered crops, which helps many farmers increase their yields and decrease their costs. Advancements in plant genetics, both through biotech and selective breeding, have created crops that are more resistant to pests and weeds, more tolerant to weather extremes and require less pesticides.
Arnusch is a biotech grower and a seed sales representative for biotech company Pioneer. He sees biotech as an important tool for farmers to combat the low commodity prices, but he also sees consumer pushback as an important thing to address. Many consumers are afraid of genetically modified organisms, or GMOs, in their food, for reasons ranging from lack of research to lack of transparency. Farmers can help with that, Arnusch said, by talking to consumers about the food they grow. They can use advancements in technology outside of ag tech, like social media, to reach out to their consumers.
Since Arnusch works with farmer’s groups, like the Colorado Farm Bureau, he goes into grocery stores and talks to people about their food, as well as campaigns for ag at the state legislature. He uses his Facebook, Twitter and website to tell consumers what products his wheat might end up in, whether that be a loaf of bread or a tube of toothpaste.
“I think consumers want to know what’s in their food,” he said. “We have to begin that conversation with that interested audience.”
It’s considering all these pieces, and looking at what technology can actually do on the farm, whether that’s increase yield, decrease input costs or make a crop better, that farmers need to look at, Arnusch said.
At his desk, Arnusch still has a Rolodex. He has an old fashioned calculator, with a roll of paper on the top that spits out calculations when he clacks numbers in. The bookshelf in the corner of his office is filled with binders and printed out records, each containing all the information Arnusch collects about his farm every year. Also on his desk is his laptop, his phone and a few brand new zip drives. It’s a conglomeration of old methodology and new technology, papers strewn across the desk with numbers gathered from both precision ag machines and from good old fashioned harvesting.
If he’s being completely honest, Arnusch doesn’t like spending so much time in the office, crunching numbers and playing manager instead of farmer. He came back to the land in the ‘90s to get dirt under his fingernails.
But farming isn’t just about that any longer. They have to get all the data they can gather on the farm, whether it’s something like soil moisture, or something other sensor technology can track like which parts of the field are growing the best, and planning your farm operation off that. Farming isn’t just about getting the dirt under your nails anymore.
It’s about being a businessman. ❖
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I want to address a couple of issues in this week’s editor’s note.