The World Turned Upside Down
THE PULSE OF RURAL AMERICA PART II
PHOTO ILLUSTRATION: BARRY FALKNER / BRENT WARREN
The World Turned Upside Down
PROFITS*
BY DAN MILLER AND CHRIS CLAYTON
question, 70% somewhat or strongly agree their road and bridges are not repaired in a timely fashion. “I pay taxes that are too high for what I get,” says Joel Lange, Jefferson, Iowa. If Trump’s proposed tax plan is enacted, seven tax brackets would become three, with the highest rate at 33%. The estate tax would be eliminated, and corporate tax rates would be My farm is profitable lowered to 15%. given my current costs for renting land. FIRST UP. With a GOP-led House and Senate, look for Trump to act quickly on issues important to agriculture. These would include EPA’s water regulations, Bureau of Land Management policies, the Endangered Species Act and climate change. The clear expectation is that immigration enforcement will be much tighter Strongly Agree under Trump, potentially putting 7% a greater regulatory and workforce strain on farmers who employ Somewhat Agree migrant workers.
30%
Strongly Disagree
24% Somewhat Disagree
FARM BILL The 2014 farm bill provides my operation with an adequate safety net.
26
Strongly Somewhat Agree Agree
Strongly Somewhat Not Disagree Disagree Sure
6%
24%
T H E P R O G R E S S I V E FA R M E R / D E C E M B E R 2 016
26%
▶ YOUR FARM
28%
52%
Pay down debt
Agriculture—stressed by tough economic times—expects to be front and center at the negotiating table as the Trump revolution unfolds. From taxes to trade to immigration, energy and the environment, agriculture expects a front-row seat to the battles sure to commence once Donald Trump moves into the White House next month. It was on election night that the wisdom of Trump’s rural strategy of reduced regulation and fairer trade became clear, as the oftderided rural counties of “flyover country” turned GOP red one after another. Trump swept much of the Midwest, the Plains from Texas to North Dakota, and the Deep South. The DTN/The Progressive Farmer election poll featured in the November issue showed Trump getting nearly twice the rural vote as Hillary Clinton. That played out for real on election night (see poll at bit.ly/2eUF3mm). The DTN/The Progressive Farmer poll predicted farmers and rural residents would be highly motivated participants in the election—and they have strong opinions about renewable energy, taxes, transportation, the farm bill and food labeling. Fifty-seven percent of respondents are unhappy with the way their tax dollars are spent. Only 6% of respondents strongly agree the taxes they pay match the service provided by local, state and federal agencies of government. In a follow-up
I have used profits from my farm operation to:
15%
28% Not Sure
11%
Trump has called for removing obstacles to energy exploration and has been supportive of the Renewable Fuel Standard. His support of biofuels meets with approval from grain farmers. When asked if corn-based ethanol or soy-based biodiesel have a positive effect on corn and soybean prices, 60% of those responding to the poll somewhat or strongly agree. TRADE CONFLICT. The Trump administration may clash with farmers on trade. Trump opposes the TransPacific Partnership pact, which has not been ratified. The National Corn Growers Association, for one, has already called for the deal to be passed during the lame-duck session of Congress before Trump takes office. Trump has called for renegotiating the North American Free Trade Agreement with Canada and Mexico. He also has said his administration would pursue trade cases against China. If he follows through, the Trump administration will push to reset the trade dynamics with ag’s three largest destinations. Our poll—the third The Pulse of Rural America presidential-year survey reaching back to 2008—was conducted by Zogby Analytics, Utica, New York, in August. The results are drawn from 1,647 completed surveys by rural and farming adults, with a margin of error of plus or minus 2.5 percentage points. Forty-two percent of those who answered the survey farm or have immediate family members who farm. Sixty-five percent of the respondents were 35 to 69 years old. Fifty-seven percent don’t have a college education, while 43% indicated they had a bachelor’s degree or higher. Nationally, 38% of Americans have a college degree. Respondents fell evenly across all income levels, from less than $25,000 per year to more than $100,000. Eighty-percent of the respondents are white, while 49% are female and 51% male. TIME OF TESTING. The just-completed election comes at a time of domestic challenge for American agriculture. On a range of questions from the effectiveness of the farm bill
Upgrade Equipment And Technology
54%
Upgrade Irrigation And Drainage Systems
21%
Upgrade Grain Storage And Handling Systems
20%
Purchase Additional Acreage
19%
I Had No Profit To Spend
18%
Other
* Total exceeds 100,
as respondents were asked to choose all that apply to them.
26%
to the consolidation of the crop-inputs industry, farmers and ranchers are trying to find their way in a fast-changing environment, including the debate over climate change. To the statement in our poll, “Climate change has a positive impact on my farming and ranching operation,” 31% strongly or somewhat strongly agree, and 52% strongly or somewhat strongly disagree. “We don’t talk about [climate change] in terms of global warming but rather how we conserve the water and get more yield for what we put into it,” says Josh W. Krohn, Lamesa, Texas. Krohn irrigates about 800 acres, more than half of that with subsurface irrigation. “We concern ourselves with things like [irrigation technology] rather than global warming.” GENERATIONAL CHALLENGES. The cost of land will make it hard for farming families to continue for another generation, respondents told DTN/The Progressive Farmer. Eighty-five percent are very or somewhat concerned that land values will impact the ability of their families to farm in the future. Farm families are making plans for the transition of their farms to the next generation. Thirty-nine percent of respondents said they have a succession plan; 26% ▶ ▶ YOUR FARM
T H E P R O G R E S S I V E FA R M E R / D E C E M B E R 2 016
27
PHOTO ILLUSTRATION: BARRY FALKNER / BRENT WARREN
THE PULSE OF RURAL AMERICA PART II
are in the planning process. Another 13% don’t have a succession plan but plan to have one in the near future. More than a fifth, 22%, do not have a succession plan. SAFETY NET. When asked if the current federal farm program provides an adequate safety for their businesses, 52% say they strongly or somewhat disagree. Only 6% strongly agreed. Another 26% somewhat agreed the farm bill helps protect their farming business interests. “The last farm bill was written at a time when there wasn’t much assistance needed,” says Darren Grogan, Arlington, Kentucky. “Personally, I’m in the camp that I would like to see the government get out of it completely. I don’t think the subsidies help the farmer. I think it mostly goes to help raise land prices and land rents.” Regarding GMOs, respondents were asked: “Do you agree or disagree with the following statement: Mandatory labeling requirement for food containing genetically modified organisms will have an adverse effect on my farming operation.” Fifty-two percent strongly or somewhat agree with that statement, while 38%
How do you diversify
DIVERSIFY* your farm income? Earn Off-Farm Income
51%
Operate CustomFarming Business Own a Farm-Inputs Business Offer Hunting Leases or Fee-Hunting Opportunities Direct-Marketing Enterprise Sell Products Through Farmers’ Markets
16% 5% 15% 8%
30
as respondents were asked to choose all that apply to them.
18%
Other
* Total exceeds 100,
T H E P R O G R E S S I V E FA R M E R / D E C E M B E R 2 016
46%
▶ YOUR FARM
PHOTO: JIM PATRICO
Darren Grogan
strongly or somewhat disagree. “There’s no loud voice on our side of things talking about the positives of GMOs,” Grogan says. In a similar vein, 62% of all respondents somewhat or strongly agree that critics of commercial agricultural practices are misinformed. “It’s not just about science, it’s a lack of knowledge about agriculture in general,” Grogan adds. CONSOLIDATION CONCERNS. Respondents to the DTN/ The Progressive Farmer survey are concerned about the consolidation of seed and pesticide manufacturers; 78% are strongly or somewhat concerned about consolidation. “Competition is always good for the consumer, and, in this case, I’m the consumer,” says Mark Ruff, Circleville, Ohio. “As we’ve seen in the past, products play out, and it takes a long time to develop another one. Without competitive pressures, will the companies keep innovating?” he asks. “But on the other hand, larger companies have the bigger engine to be innovative.” “From a cost standpoint,” says Krohn of competition among seed and pesticide companies, “who’s going to costcheck them? For example, we pay a technology fee. But if we get resistant weeds, why do we still pay a technology fee?” Thirty-three percent of respondents strongly or somewhat disagree that genetically modified grain and fiber crops are as effective as they were five years ago. Fifty-five percent somewhat or strongly agree that transgenic crops remain effective. Land prices and land rental rates brought strong reactions from respondents. Asked about this statement, “My farm is profitable given current land prices,” 69% of farmers and ranchers somewhat or strongly disagree; 30% strongly or somewhat agree. A similar statement was posed about land leases: “My farm is profitable given my current costs for renting land.” Fifty-two ▶
PHOTO ILLUSTRATION: BARRY FALKNER / BRENT WARREN
THE PULSE OF RURAL AMERICA PART II
PHOTO: DAN MILLER
Angelo Erickson
32
percent strongly or somewhat disagree with that statement; 37% strongly or somewhat agree. “We have bought some land,” Iowa’s Lange says. “But we don’t have the equity to continue to buy more.” “We’ve expanded a lot over the past 10 years,” says Tarkio, Missouri, farmer Angelo Erickson. “I was fortunate to buy ground at lower prices. That has helped my balance sheet. But, I’m not too interested in buying more land unless it is right next to my farm.” OFF-FARM INCOME. Farmers and ranchers were asked how they diversify their income. By far the largest group, 51%, say they earn additional income off the farm. Another 30% have added livestock or poultry to their farming enterprises. Seventeen percent sell products directly off the farm through outlets such as farmers’ markets, and 16% operate a custom-farming business. Fifteen percent earn additional income from hunting leases or by offering fee-hunting opportunities. Smaller percentages operate a farm-inputs business, run a direct-marketing enterprise or have invested in renewable energy. When asked how they used profit in their farming operations, 54% of farming and ranching respondents said they upgraded their equipment and technology. A similar percentage, 52%, indicated they paid down debt. After that, respondents used profit to upgrade their irrigation and drainage systems (21%), upgrade grain storage and handling systems (20%) or purchase additional land (19%). Eighteen percent say they produced no profit, and 15% of respondents have curtailed their investments in production, machinery and technology systems. “Paying down debt has been our big push the last two years,” Lange says. But he has also upgraded his farm’s grain-storage facilities. T H E P R O G R E S S I V E FA R M E R / D E C E M B E R 2 016
▶ YOUR FARM
DTN/The Progressive Farmer asked respondents about their costs of production. Equipment and technology strain the financial resources the most for a quarter of the respondents. Twelve percent point to property taxes, followed by the cost of fertilizer, land debt, regulations, fuel, seed and feed. Interestingly, given their response about rental costs, only 5% of respondents say land rent most strains their financial resources. CONTROL COST, PRESERVE VALUE. Ohio’s Ruff looks to whittle down costs wherever he can, especially for seed and fertilizer. “We apply our own fertilizer, and we buy it in bulk off the river terminals,” he says. “We’re looking at our soil-test values to see where we can trim [our nutrient costs] and not hurt ourselves in the end.” Ruff is focused on high production levels. “A person who tries to save $20 per bag on seed can hurt themselves well beyond bushels. I don’t expect to see seed prices going down. So I’m focused on value rather than cost.”
–with reports from Virginia H. Harris, Jim Patrico and Pamela Smith
COSTS*
What agricultural cost most strains your financial resources? Fuel
7% 11%
Fertilizer
24%
Equipment / Technology Regulations
9%
Seed
6%
Feed
6%
Other
* Not all responses to this question are shown.
34%
PHOTO ILLUSTRATION: BARRY FALKNER / BRENT WARREN
The World Turned Upside Down
PROFITS*
BY DAN MILLER AND CHRIS CLAYTON
question, 70% somewhat or strongly agree their road and bridges are not repaired in a timely fashion. “I pay taxes that are too high for what I get,” says Joel Lange, Jefferson, Iowa. If Trump’s proposed tax plan is enacted, seven tax brackets would become three, with the highest rate at 33%. The estate tax would be eliminated, and corporate tax rates would be My farm is profitable lowered to 15%. given my current costs for renting land. FIRST UP. With a GOP-led House and Senate, look for Trump to act quickly on issues important to agriculture. These would include EPA’s water regulations, Bureau of Land Management policies, the Endangered Species Act and climate change. The clear expectation is that immigration enforcement will be much tighter Strongly Agree under Trump, potentially putting 7% a greater regulatory and workforce strain on farmers who employ Somewhat Agree migrant workers.
30%
Strongly Disagree
24% Somewhat Disagree
FARM BILL The 2014 farm bill provides my operation with an adequate safety net.
26
Strongly Somewhat Agree Agree
Strongly Somewhat Not Disagree Disagree Sure
6%
24%
T H E P R O G R E S S I V E FA R M E R / D E C E M B E R 2 016
26%
▶ YOUR FARM
28%
52%
Pay down debt
Agriculture—stressed by tough economic times—expects to be front and center at the negotiating table as the Trump revolution unfolds. From taxes to trade to immigration, energy and the environment, agriculture expects a front-row seat to the battles sure to commence once Donald Trump moves into the White House next month. It was on election night that the wisdom of Trump’s rural strategy of reduced regulation and fairer trade became clear, as the oftderided rural counties of “flyover country” turned GOP red one after another. Trump swept much of the Midwest, the Plains from Texas to North Dakota, and the Deep South. The DTN/The Progressive Farmer election poll featured in the November issue showed Trump getting nearly twice the rural vote as Hillary Clinton. That played out for real on election night (see poll at bit.ly/2eUF3mm). The DTN/The Progressive Farmer poll predicted farmers and rural residents would be highly motivated participants in the election—and they have strong opinions about renewable energy, taxes, transportation, the farm bill and food labeling. Fifty-seven percent of respondents are unhappy with the way their tax dollars are spent. Only 6% of respondents strongly agree the taxes they pay match the service provided by local, state and federal agencies of government. In a follow-up
I have used profits from my farm operation to:
15%
28% Not Sure
11%
Trump has called for removing obstacles to energy exploration and has been supportive of the Renewable Fuel Standard. His support of biofuels meets with approval from grain farmers. When asked if corn-based ethanol or soy-based biodiesel have a positive effect on corn and soybean prices, 60% of those responding to the poll somewhat or strongly agree. TRADE CONFLICT. The Trump administration may clash with farmers on trade. Trump opposes the TransPacific Partnership pact, which has not been ratified. The National Corn Growers Association, for one, has already called for the deal to be passed during the lame-duck session of Congress before Trump takes office. Trump has called for renegotiating the North American Free Trade Agreement with Canada and Mexico. He also has said his administration would pursue trade cases against China. If he follows through, the Trump administration will push to reset the trade dynamics with ag’s three largest destinations. Our poll—the third The Pulse of Rural America presidential-year survey reaching back to 2008—was conducted by Zogby Analytics, Utica, New York, in August. The results are drawn from 1,647 completed surveys by rural and farming adults, with a margin of error of plus or minus 2.5 percentage points. Forty-two percent of those who answered the survey farm or have immediate family members who farm. Sixty-five percent of the respondents were 35 to 69 years old. Fifty-seven percent don’t have a college education, while 43% indicated they had a bachelor’s degree or higher. Nationally, 38% of Americans have a college degree. Respondents fell evenly across all income levels, from less than $25,000 per year to more than $100,000. Eighty-percent of the respondents are white, while 49% are female and 51% male. TIME OF TESTING. The just-completed election comes at a time of domestic challenge for American agriculture. On a range of questions from the effectiveness of the farm bill
Upgrade Equipment And Technology
54%
Upgrade Irrigation And Drainage Systems
21%
Upgrade Grain Storage And Handling Systems
20%
Purchase Additional Acreage
19%
I Had No Profit To Spend
18%
Other
* Total exceeds 100,
as respondents were asked to choose all that apply to them.
26%
to the consolidation of the crop-inputs industry, farmers and ranchers are trying to find their way in a fast-changing environment, including the debate over climate change. To the statement in our poll, “Climate change has a positive impact on my farming and ranching operation,” 31% strongly or somewhat strongly agree, and 52% strongly or somewhat strongly disagree. “We don’t talk about [climate change] in terms of global warming but rather how we conserve the water and get more yield for what we put into it,” says Josh W. Krohn, Lamesa, Texas. Krohn irrigates about 800 acres, more than half of that with subsurface irrigation. “We concern ourselves with things like [irrigation technology] rather than global warming.” GENERATIONAL CHALLENGES. The cost of land will make it hard for farming families to continue for another generation, respondents told DTN/The Progressive Farmer. Eighty-five percent are very or somewhat concerned that land values will impact the ability of their families to farm in the future. Farm families are making plans for the transition of their farms to the next generation. Thirty-nine percent of respondents said they have a succession plan; 26% ▶ ▶ YOUR FARM
T H E P R O G R E S S I V E FA R M E R / D E C E M B E R 2 016
27
PHOTO ILLUSTRATION: BARRY FALKNER / BRENT WARREN
THE PULSE OF RURAL AMERICA PART II
are in the planning process. Another 13% don’t have a succession plan but plan to have one in the near future. More than a fifth, 22%, do not have a succession plan. SAFETY NET. When asked if the current federal farm program provides an adequate safety for their businesses, 52% say they strongly or somewhat disagree. Only 6% strongly agreed. Another 26% somewhat agreed the farm bill helps protect their farming business interests. “The last farm bill was written at a time when there wasn’t much assistance needed,” says Darren Grogan, Arlington, Kentucky. “Personally, I’m in the camp that I would like to see the government get out of it completely. I don’t think the subsidies help the farmer. I think it mostly goes to help raise land prices and land rents.” Regarding GMOs, respondents were asked: “Do you agree or disagree with the following statement: Mandatory labeling requirement for food containing genetically modified organisms will have an adverse effect on my farming operation.” Fifty-two percent strongly or somewhat agree with that statement, while 38%
How do you diversify
DIVERSIFY* your farm income? Earn Off-Farm Income
51%
Operate CustomFarming Business Own a Farm-Inputs Business Offer Hunting Leases or Fee-Hunting Opportunities Direct-Marketing Enterprise Sell Products Through Farmers’ Markets
16% 5% 15% 8%
30
as respondents were asked to choose all that apply to them.
18%
Other
* Total exceeds 100,
T H E P R O G R E S S I V E FA R M E R / D E C E M B E R 2 016
46%
▶ YOUR FARM
PHOTO: JIM PATRICO
Darren Grogan
strongly or somewhat disagree. “There’s no loud voice on our side of things talking about the positives of GMOs,” Grogan says. In a similar vein, 62% of all respondents somewhat or strongly agree that critics of commercial agricultural practices are misinformed. “It’s not just about science, it’s a lack of knowledge about agriculture in general,” Grogan adds. CONSOLIDATION CONCERNS. Respondents to the DTN/ The Progressive Farmer survey are concerned about the consolidation of seed and pesticide manufacturers; 78% are strongly or somewhat concerned about consolidation. “Competition is always good for the consumer, and, in this case, I’m the consumer,” says Mark Ruff, Circleville, Ohio. “As we’ve seen in the past, products play out, and it takes a long time to develop another one. Without competitive pressures, will the companies keep innovating?” he asks. “But on the other hand, larger companies have the bigger engine to be innovative.” “From a cost standpoint,” says Krohn of competition among seed and pesticide companies, “who’s going to costcheck them? For example, we pay a technology fee. But if we get resistant weeds, why do we still pay a technology fee?” Thirty-three percent of respondents strongly or somewhat disagree that genetically modified grain and fiber crops are as effective as they were five years ago. Fifty-five percent somewhat or strongly agree that transgenic crops remain effective. Land prices and land rental rates brought strong reactions from respondents. Asked about this statement, “My farm is profitable given current land prices,” 69% of farmers and ranchers somewhat or strongly disagree; 30% strongly or somewhat agree. A similar statement was posed about land leases: “My farm is profitable given my current costs for renting land.” Fifty-two ▶
PHOTO ILLUSTRATION: BARRY FALKNER / BRENT WARREN
THE PULSE OF RURAL AMERICA PART II
PHOTO: DAN MILLER
Angelo Erickson
32
percent strongly or somewhat disagree with that statement; 37% strongly or somewhat agree. “We have bought some land,” Iowa’s Lange says. “But we don’t have the equity to continue to buy more.” “We’ve expanded a lot over the past 10 years,” says Tarkio, Missouri, farmer Angelo Erickson. “I was fortunate to buy ground at lower prices. That has helped my balance sheet. But, I’m not too interested in buying more land unless it is right next to my farm.” OFF-FARM INCOME. Farmers and ranchers were asked how they diversify their income. By far the largest group, 51%, say they earn additional income off the farm. Another 30% have added livestock or poultry to their farming enterprises. Seventeen percent sell products directly off the farm through outlets such as farmers’ markets, and 16% operate a custom-farming business. Fifteen percent earn additional income from hunting leases or by offering fee-hunting opportunities. Smaller percentages operate a farm-inputs business, run a direct-marketing enterprise or have invested in renewable energy. When asked how they used profit in their farming operations, 54% of farming and ranching respondents said they upgraded their equipment and technology. A similar percentage, 52%, indicated they paid down debt. After that, respondents used profit to upgrade their irrigation and drainage systems (21%), upgrade grain storage and handling systems (20%) or purchase additional land (19%). Eighteen percent say they produced no profit, and 15% of respondents have curtailed their investments in production, machinery and technology systems. “Paying down debt has been our big push the last two years,” Lange says. But he has also upgraded his farm’s grain-storage facilities. T H E P R O G R E S S I V E FA R M E R / D E C E M B E R 2 016
▶ YOUR FARM
DTN/The Progressive Farmer asked respondents about their costs of production. Equipment and technology strain the financial resources the most for a quarter of the respondents. Twelve percent point to property taxes, followed by the cost of fertilizer, land debt, regulations, fuel, seed and feed. Interestingly, given their response about rental costs, only 5% of respondents say land rent most strains their financial resources. CONTROL COST, PRESERVE VALUE. Ohio’s Ruff looks to whittle down costs wherever he can, especially for seed and fertilizer. “We apply our own fertilizer, and we buy it in bulk off the river terminals,” he says. “We’re looking at our soil-test values to see where we can trim [our nutrient costs] and not hurt ourselves in the end.” Ruff is focused on high production levels. “A person who tries to save $20 per bag on seed can hurt themselves well beyond bushels. I don’t expect to see seed prices going down. So I’m focused on value rather than cost.”
–with reports from Virginia H. Harris, Jim Patrico and Pamela Smith
COSTS*
What agricultural cost most strains your financial resources? Fuel
7% 11%
Fertilizer
24%
Equipment / Technology Regulations
9%
Seed
6%
Feed
6%
Other
* Not all responses to this question are shown.
34%
