US farmers take a gamble with belt-tightening as incomes slide

Wed Apr 8, 2015 1:00am EDT
 
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By Karl Plume and P.J. Huffstutter

CHICAGO, April 8 (Reuters) - Bracing for their leanest season in eight years, U.S. farmers are skimping on everything from machinery to fertilizers, betting that they can go down-market and yet maintain crop production and quality.

The belt-tightening has already squeezed sales of suppliers, and farming experts warn the gamble can backfire: less robust crop protection and less resilient seeds combined with some rough weather could hurt crops this year and beyond.

Jon Sparks, who farms 1,400 acres in eastern Indiana, is scrambling to cut costs wherever he can: buying cheaper seeds, using less fertilizer, and hoping his farm equipment will not break down this year.

Sparks is not alone as farmers nationwide are scrutinizing every expense. After four years of bumper crops and earnings, grain prices are plummeting and the U.S. Department of Agriculture forecasts this growing season to be the least profitable since 2007. (Graphic: reut.rs/1F6tttw)

Across the nation's Midwestern corn belt, new farm equipment sales are down, seed salesmen from Monsanto and DuPont Pioneer talk of a slump in business and fertilizer suppliers Mosaic and Potash Corp are reporting lower sales volumes for some products.

How such cutbacks, which have intensified since last autumn's record harvest, will affect grain production is not yet clear, but the risks are considerable.

Right now, weather forecasts are largely favorable for U.S. grains this summer.

Yet as any forecasts, they come with a degree of uncertainty. If the weather turns foul, say agronomists, corn and soybean yields could drop 20 percent or more if growers skip disease or insect treatments to save money.   Continued...