A Decade of Defining Moments

A Decade of Defining Moments

Farm Futures celebrates a 10-year milestone with a look back at some of our favorite cover stories

In 2004 Farm Progress Co. re-launched Farm Futures, a magazine written specially for commercial, large-scale farmers, and launched its corresponding website, www.farmfutures.com. Since re-launching in 2004, the editors re-dedicated themselves to providing information and advice in a new way, with a sharp focus on business and marketing concepts that had been sorely missing from the ag media.

Farm Futures celebrates a 10-year milestone with a look back at some of our favorite cover stories

Who knew back in 2004 what a wild ride this decade would be. The past 10 years have been marked by strange weather, even stranger politics, mind-boggling technology, productivity gains, jarring volatility, and managerial tests that challenge even the smartest farmer CEOs. And, it has left us wondering: can the next 10 years possibly top this?

In our October issue we reflected on some of the cover stories we tackled over the past decade. Here's a few more to consider – why we pursued them and what happened afterwards. Enjoy!

Farm bill on the chopping block (May/June 2005)

A Decade of Defining Moments
Farmers always want to say they’d rather get income from the market than from the government. But for the last decade, they got the best of both worlds.

Agriculture for the most part has enjoyed prosperity from strong markets as well as a government that still has its back, despite claims of cuts in spending.

In our May/June 2005 cover story - three years ahead of what eventually became passed as the 2008 Farm Bill - we outlined what we perceived would be the four drivers in the final product. Here’s how it turned out.

Trade:  In the end legislators completely disregarded any world trade implications and actually paid off Brazil to keep them happy.

Budget: Members of Congress scoffed at any true attempt to considerably roll-back spending and were even able to override a Presidential veto when he tried to say it was too expensive.

Transparency: Remember the Environmental Working Group publicizing payment information? Didn’t seem to matter in the end, but we thought it would.

Rural needs: The farm bill had the makings for more money for rural development and renewable fuels. Then the 2005 RFS mandates passed and it didn’t need to be in the farm bill.  

Jim Moseley, former deputy secretary at USDA, also penned a piece in the 2005 issue discussing how conservation funding would likely find more public support than traditional Title 1 commodity programs. You may not know it, but many of the conservation programs were master-minded by Moseley (and sometimes then ruined by members of Congress) to help make agricultural support more defendable to the general public. His ideas are the foundation for the Environmental Quality Insurance Program (EQIP) and the Conservation Stewardship Program (CSP).

“Agriculture has been remarkable and far beyond my expectations to retain something in Title 1,” Moseley states now. He’s felt for years Title 1 funding would disappear and although the latest farm bill reduced spending on commodity programs by $14.3 billion over the 2014-2023 period – mostly by eliminating direct payments – it also increased costs by $5.7 billion over the same period in the crop insurance title. Conservation meanwhile took a $4 billion hit over the same time period.

In our October 2011 cover story – Change is closer than it appears – we accurately said direct payments would go away and risk management protection would take on a greater role. We also said that conservation compliance would again be linked to crop insurance, which was a controversial part of the farm bill discussion, but in the end was left in the final bill.

But Moseley is sticking to his philosophy that Title 1 programs remain hard to defend, especially in the House of Representatives with fewer members representing agricultural interests.  And the hard fight the House had in passing the latest farm bill amplified those concerns. “If I stick with this insane philosophy long enough, eventually I’m going to be right. But I may have to live until I’m 100,” Moseley says.

Train wreck ahead? (January 2012)

Risk management lies at the core of Farm Futures' editorial mission. If you read closely, it's in nearly every story we print or post online, and it certainly was the focus of this cover story that appeared in January of 2012.

Our definition of risk management has nothing to do with predicting where the high price for the year is going to be. Rather, it's about examining all forms of risk to get the best possible outcomes for your business and family.

A Decade of Defining Moments
Authors Mike Wilson and Bryce Knorr had believed for some time that row crop agriculture was in a bubble that quite possibly was about to burst.

This story focused on supercharged farmland prices and the possible impact that currency fluctuations and higher interest rates might have on asset values.  It looked at ways to make sure the farm is sound financially if a bubble should burst.

At the time, farmers were riding a wave of good times, as USDA predicted overall debt-to-asset rates would tie a record 50-year low in 2011 at just 10.4%.

Our advice at the time is the same as it is today: do some stress testing on your farm's financial condition. Determine what would happen if farmland values dipped by 20%. Most farmers have significant debt and they need to conceptualize that risk as, what is the worst that can happen? Is it enough to drive me out of business? Is there a way to mitigate the impacts of a downturn? What would a reduction in asset value or income do to the future of your business?

At the time, our story may have been a bit sobering, but even farmers knew then that good times can't last forever. In one of our 2011 surveys, 67% of farmers agreed with the statement, "Another farm crisis like we had in the 1980s is just a matter of time."

Game over? (April 2012)

Every so often we run a cover story that ends up being, well, flat wrong, thanks to the whims of Mother Nature.

Such was the case in April 2012 when our cover story implied that the big demand drivers that had fueled high prices were fading. Little did we know then that a game-changing drought would end up driving prices to record levels just a few months later.

"In early 2012 we saw an end to a lot of the growth dynamics that had been driving the market," says senior market analyst Bryce Knorr. "We had high prices that stimulated big increases in acreage, but ethanol demand and ethanol growth rate was starting to slow."

A Decade of Defining Moments
In other words, high prices were set to cure high prices. Until the drought came along.

"I always look at the range of outcomes, the probabilities of those outcomes, and balance the risk and reward in these kinds of cover stories," says Knorr. In fact, the story offered several scenarios for the growing season, including what might happen if a drought the likes of 1988 might surface. As then market analyst Arlan Suderman pointed out: "Big crop acreage magnifies changes to the bottom line when weather patterns either raise or lower yields."

With corn, we're only one big crop away from lousy prices.  All signs in April of 2012 pointed that way if a big crop materialized.

With forecasts, if the conditions say production may be big, it can be really big; if there's less demand there to soak the crop up, prices go lower. That's what we're seeing now, with two back to back big crops in 2013 and 2014. The 2012 drought merely delayed the huge supply build-up that is dragging prices down today.

"That's why in our marketing coverage, our goal is not to predict the highs for the year, though we always offer an opinion on that," notes Bryce. "We focus on 'what do you do,' in your marketing plan. Things can change rapidly and the flash drought was a prime example of that."

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