The business of farming, which once viewed weather as its biggest variable influence, has fallen in the last decade under the sway of worldwide ties to other industries with their own set of challenges.
An explosion in technology has forever changed the way farmers farm and function. And declining rural populations coupled with industry consolidations and vertical integration have decreased the overall number of farming operations, though production level trends keep setting new highs.
For an industry that banks on continuity of demand, agriculture in the last decade has undergone drastic change.
“Over the last decade, we saw a massive proliferation and acceleration of consolidation in ag inputs, especially fertilizer and seed,” said Nebraska Farmers Union president John Hansen.
When commodity grain markets hit record highs in 2008, farmers saw inputs skyrocket in response.
Seed corn, which cost an average of $30 per bushel in 2000, now can set a farmer back $70 to $80 per bushel.
“All the problems farmers have selling into non-competitive markets, in terms of the production they produce, exist as they also buy from the non-competitive supplying sector,” Hansen said.
Hansen said the industries that realized the most acceleration in consolidation were those of pork and poultry production.
“More family farms in those areas were forced out of business,” he said.
However, census reports for Nebraska showed a bit of slowing in the depopulation of rural areas.
“The only rural counties in Nebraska where there was (growth) were those that had the influx of immigrants working in processing plants,” Hansen said.
Population numbers may have trended downward, but land values over the decade increased.
According to U.S. National Agricultural Statistic Service (NASS) South Dakota land values have doubled since 2004 and have increased five-fold since 1991.
In 2009 the average value of agricultural land in the state was $1,121 per acre, compared to the 1999 average valuation of $740.
Cash rents reached record highs by the close of the decade, as did the total number of acres rented versus owned.
But of all the major shifts — sophistication of equipment, number of dollars exchanged, valuations of land and inputs, and market prices — the biggest influence casting a long shadow on agriculture as the sun sets on the first decade of the new millennium is the convergence of energy production with what was once a predominantly food-focused industry.
“We’re at a fork in the road in America,” Hansen said. “And if there’s any sector that has a vested interest in becoming energy independent and developing renewable energy, it’s production agriculture.”
Ethanol — referred to as gasohol in the 1970s — has been around for a long time. Henry Ford even used it to fuel his first Model A.
But world events and economic considerations have spurred the research and development of renewable energy sources to an all new priority.
According the Renewable Fuels Association, the number of ethanol plants operating in the U.S. increased from 50 in 1999 to 170 by 2009, with the most significant growth taking place in the last 2 1/2 years.
Production capacity that topped out at 1,701.7 million gallons per year in 1999 gave way to a gushing 10,569.4 million gallons in 2009.
Speculative trading that drove up commodity grain prices hit ethanol plants where it hurts, causing plant closures and company bankruptcies. But as we leave the aughts, alcohol derived from biomass — hailed as the second-generation of biofuels — is the new hopeful fuel on the horizon.
The development of technology for converting sugar derived from non-food renewable biomass sources, such as switchgrass and corn stover, is still in its early stages, and there is still some debate as to whether this can be done on a commercial scale, or that any biofuel facilities can be profitable without heavy-handed subsidies.
New infrastructure is needed, and the controversy over out-stripping resources for fuel still brews.
Wind energy development, primarily located on farm and ranch lands, also saw a huge surge in growth during the last decade.
Landowners lucky enough to fall within the footprint of wind-rich development sites cashed in on lease contracts for new towers, and extensive construction projects provided jobs to many rural residents. Each wind turbine contributes $3,000 to $5,000 or more per year in rental income, while farmers continue to grow crops or graze cattle up to the foot of the turbines.
According to estimates by Windustry.org, South Dakota has the potential to produce more than one trillion kWh of electricity every year, or enough to power almost a quarter of the entire country. But development of wind energy in the state has not yet lived up to this potential. As of 2009, South Dakota had about 186 MW of installed wind energy capacity and ranks 19th in the nation for wind energy production.
Nebraska is now ranked No. 3 among the states in its potential for wind development, according to recently updated estimates by the National Renewable Energy Laboratory. But the state sits at 22nd in wind-power generation capacity, with 153 megawatts.
But Nebraska lawmakers say 2010 will be the year for legislation to open the state to larger, private wind farms that can export wind energy to other states.
Hansen said wind development in Nebraska is currently suffering because of the economy and a drop in energy demand.
Rather than chasing after big wind corporations, he said, the state would be better served by focusing on wind developments that provide power to Nebraskans and that keep the profits at home.
Copyright © 2010 Yankton Press & Dakotan
