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Farm News & Views - October 26, 2021

After reading a Successful Farming article titled "Farmers Need More Space for Crops to Meet Mounting Demand", the old saying,”there ain’t no free lunch” flashed through my mind. The article contends that according to the agricultural consultancy AgResource, based in Chicago, in the near future, the U.S. will need an additional 40 million acres of farm land for production of soybeans. While the demand for beans in the U.S. is not driven by increasing consumption by livestock or humans, demand may well grow dramatically for the production of of biodiesel. And that’s were the plot thickens. President Biden's climate agenda calls for putting more land into conservation programs, while also increasing the production of biofuels, which is likely to trigger a boom in soybean oil use. China is also ramping up demand for soybeans both to provide food for their citizens and to feed hogs, as they rebuild their pig herds that were decimated by the recent African Swine Fever epidemic. Speaking at a conference in Geneva, Switzerland recently, AgResource Company, president Dan Basse, pointed out that combined global yields of major grain crops appear to have leveled out in the past five years, so more crop acres are needed to fill this demand. So the question is, from where will additional soybean acres come? Basse contends that U.S. planted acreage may have reached a ceiling, and that adding further cropland growth would need to occur in South America, Africa and the Black Sea region. But, U.S. states bar companies from using imported grains for biofuels, so U.S. farmers would have to make a major shift in production of other crops such as corn and small grains to meet this demand.

How about putting idled U.S. cropland into production? The Census of Agriculture reported that about 320 million acres of farmland were harvested in 2017, that’s up about 6 million acres from 2014. But looking back over 100 years of Census data, the number of harvested acres have remained relatively constant, which indicates that there’s not much idle ground available for more soybean production. Another tactic would be to return the 23 million acres of farmland that’s enrolled in the Conservation Reserve program back to crop production, but there’s several downsides to that, because most of those acres are enrolled because they are marginal land for crop production due to soil type, topography lack of rainfall or other reasons. Also, most of the CRP acres are in states where the climate isn’t suitable for growing soybeans. So, is moderation of demand an answer to this problem?

A recent report released by the Federal Reserve Bank of Kansas City indicates that the U.S. agricultural economy has generally remained strong as elevated commodity prices continue to support farm incomes. Prices of most major crops are at multi-year highs moving into the fall harvest and are supporting farm revenue prospects. But the cattle industry isn’t fairing as well, due to low cattle prices and higher input cost that have limited profit margins for producers, who are also concerned about drought, and therefore are borrowing more money for their operating loans.

Benjamin Franklin wrote, “Beware of small expenses: a small leak will sink great ships."

Bob has been an agricultural educator and farm and ranch management consultant for over 40 years in southwest Colorado. He writes about agricultural issues from his farm near Cortez, and has helped to produce farm reports on KSJD for more than a dozen years.