Friday, September 9, 2016

Dr. Walter P. Falcon of Stanford Writes About Summer 2016 on His Iowa Farm

I am delighted to again feature Dr. Walter Falcon's writing here on Big Picture Agriculture, for the fifth year in a row, as he wraps up yet another summer on his Iowa farm. His observations are always keen as well as whimsical. If only we could visit that coffee shop that he hangs out in. Enjoy. --Kay M.

Iowa Farm Almanac, No. V., September 2016.

Milestones, Markets, and Malaise

by Walter P. Falcon*

It is now the end of summer for what has been a milestone year for my wife and me. This essay, itself a mini-milestone, is the fifth annual report from our farm. As readers of prior Almanac postings will know, my day job is as professor of international agricultural policy at Stanford University; however, we also own a medium-sized farm in East Central Iowa that produces corn, soybeans, alfalfa, and beef from a cow/calf herd. Our friends laughingly refer to our operation as a corn-California crop rotation.

The 2016 crop year has been nothing short of phenomenal. Planting was early, the weather was warm—sometimes downright hot—and the rains were ideal. On average, our county receives nine inches of rain during the critical growing months of June and July. This year we received more than 12 inches, quite unlike the two inches I wrote about in 2012.

Both corn and soybeans are about two weeks ahead of their maturity schedules for what promises to be record production. Corn yields of 225 bushels per acre on our farm look probable. Soybeans are more uncertain; they are loaded with pods, but all of the rain has left them susceptible to a fungal disease known as sudden-death syndrome (SDS). This fungus, present in many Iowa soils, enters the roots and emits a toxin. Plants looking healthy one day can suddenly wither a few days later. The exact amount of bean loss is mainly a function of how close the plants are to being ripe. We are almost past that maturity barrier now, so even if SDS strikes, it should not lower our yields very much. Unfortunately, record yields do not equate to record incomes, an important point that I return to later.

The perfect summer and record crops were complemented by two milestone events of a more personal nature. In June, my wife and I celebrated our 60th wedding anniversary. Then in September, we both celebrated our 80th birthdays. There has never been a day when I have not known my wife. We grew up on nearby farms and are fourth-generation caretakers of land that was settled in the late 1850s. And we have both seen the most extraordinary changes over our eight decades. Even with a 50-year hiatus while at Harvard and Stanford universities, Iowa has always been home.

Anniversaries are the time for reminiscing and looking at old pictures. Not surprisingly, a major topic of conversation at our gathering was the change in farming practices. As the younger son in our family, I remember a long list of chores, even when I was small—gathering eggs, filling the watering tanks for pigs, and “going after” the cows in the evening. But I really took notice of agriculture when I was about 10.

It was shortly after Word War II, and at that time we used a four-year crop rotation: corn, corn, oats, clover. We were in the transition from horses to tractors, with the corn still being planted with a two-row horse-drawn planter. This was a task reserved for my father (a.k.a. Buck), for no one else could get the rows sufficiently straight to suit him. On a really long day, when the horses were in good condition, father could plant 15 acres. He used 42-inch rows, wide enough for the horses, and planted about 18,000 kernels of seed per acre. The seed was “checked”, which meant that cornfields could be cultivated for weeds both via the length of the field and across it.

The contrast between then and now is stark. An 18-row planter, dispensing 36,000 seeds per acre in 20-inch rows, can now plant 40 acres per hour—almost three times what my father could do in an entire day. Unlike horses, the tractors do not get tired. And they have lights. Steering the tractor is no longer a problem, since the fields and tractors are now synchronized with global positioning systems.

For the most part, farmers are just along for the ride, and to keep awake on mile-long rows, several have become Sudoku fanatics! The planting system is wonderful except for one large problem—a new 24-row planter costs upwards of $225,000, not including the tractor.

Photo: Courtesy Yesterday’s Tractors

Photo: John Deere

When I was 12 my father decided that he needed more help and that I was his newly designated “hired man.” To reinforce the point, he decided that I needed my own tractor. He purchased a new Farmall “C” for me, including a two-row cultivator for attacking weeds. The grand total cost of this equipment was $1,600! (Perhaps what I remember most is driving myself around the block in my hometown on the day we took delivery.)

For the next 10 years, I spent most of my summers on that damned tractor fighting morning glories (that would tangle and often require dismounting every 100 yards), thistles, button weeds, and all manner of other species. Now, herbicides, Roundup-ready seeds, and no-tillage farming are the norm. What took a summer for me to do is now completed easily in a day or two with a high-clearance sprayer with long booms that cover 48 rows at a time.

What the future will bring is an interesting question. For 20 years or more, farmers have used and overused highly effective herbicides such as Roundup. And predictably, there is increasing weed resistance to these herbicides. In our county, there has been a devastating spread of Palmer amaranth—a tall spiky plant that produces thousands of seeds. It is highly resistant to commonly used herbicides, and whether its control lies in yet another new herbicide remains to be seen. For the moment, however, it is a menace.

Photo: Courtesy Yesterday’s Tractors

Photo: Courtesy Case International

For years, our entire crop rotation was constrained by labor availability at harvest. The picking of ear corn by hand was time-consuming, and typically a cold, miserable task. I can still hear my father saying, “the mark of a man is whether he can pick 100 bushels of ear corn, and then shovel them into a crib before nightfall.”

Several things happened almost simultaneously, however, that fundamentally changed rural Iowa life: the switch from horses to tractors; the availability of cheap commercial nitrogen fertilizer; and the large-scale introduction of soybeans. The departure of the horses was a joyful occasion in itself—tractors neither kick nor need their sheds cleaned.

Moreover, much less land was now needed to provide hay, oats, and straw for the horses. A new crop rotation evolved that took the form of corn-soybeans-corn-soybeans. Commercial nitrogen helped maintain the soil fertility; hybrid corn seeds offered new genetic potential as yields on our farm went from 70 bushels per acre in 1946 to more than 200 bushels per acre currently; herbicides more or less controlled the weeds; and perhaps most of all, the mechanical corn picker broke the critical labor bottleneck at harvest.

To the extent that my family ever celebrated, we partied the night our first new Case corn picker was delivered in 1948. (Father may have even had one of his carefully hidden beers that evening!) It was a one-row snapper that was simple beyond belief–just rollers that stripped the corn ears from the stock and elevated them into a trailing wagon.

It was the start of a new era, however, and the one-row pull machine quickly gave way to two-row pickers that mounted directly on a tractor, which in turn gave way to self-propelled picker-combines that used multiple “heads” for harvesting either corn or soybeans. These machines are huge—and are extraordinarily costly.

A new 12-row combine fitted for corn harvest costs on the order of $600,000. Unlike picking by hand, when 100 bushels per day was the norm, the new behemoths can harvest 10 acres per hour—some 20,000 bushels per day—provided that the farmer has enough trucks and collector wagons to move the grain from the combine to market or to on-farm storage units. Many are the farm spouses who now drive massive grain trucks during the harvest season!

Photo: Courtesy Yesterday’s Tractors

Photo: Courtesy John Deere
Despite the serenity of the summer, the record crops, and the jaw-dropping technology that is everywhere, there is now a kind of malaise that overlays the community. The early morning gatherings for (what passes as) coffee in the old country store in Waubeek have a tone that is different from earlier years. The number of new pickups—my index of farmer prosperity—is down, and there are many more comments, sometimes said jokingly but many times not, about “what my banker thinks.”

The coffee crowd is delighted that the traffic from presidential politicians across Iowa is down substantially from last summer, but the two remaining candidates seemingly have yet to say anything meaningful to my neighbors. Farmers are feeling economically trapped and politically abandoned. “None of the Above” would certainly win the election if it were held today. While Iowa shows as a dead heat in the presidential polls, it is the most unenthusiastic 50/50 that I have ever seen on both sides.

Most farmers truly enjoy their work and lifestyle, but they are now hurting. It is easy to understand how the hurt arises. In the last 36 months, corn, soybean, and fed-cattle prices have dropped about 50 percent, 33 percent, and 25 percent, respectively. The $600,000 machines that (perhaps!) were feasible economically with $7 per bushel corn now look like a mechanical albatross with corn at $3.50 or less per bushel.

Even with low interest rates, many farmers find themselves overcapitalized and with heavy debt burdens. During the prior period of high prices, many borrowed against the equity they had in land, only to see local land prices go from about $9,200 to roughly $7,800 per acre. Solvency has become a serious question for some. Interestingly, the younger, most modern, and most aggressive young farmers seem in the most trouble, whereas some of the older, more conservative farmers using rebuilt machinery are coping better.

The morning coffee conversations are also punctuated by several environmental topics, especially nitrogen and water runoffs. The state of Iowa is pressing hard for voluntary conservation approaches. But farmers are truly puzzled and worried about what they should do. For 100 years they have been urged to improve their land by tiling, that is, to lay clay or perforated plastic pipe three to four feet underground such that wet portions of fields could be drained to facilitate greater yields. Often these tiles have outlets into creeks or ditches.

But now there is a dilemma. The EPA is asserting that water from tiles is running water, and therefore subject to EPA regulation under the Clean Water Act. Given uncertainty about the regulations, farmers fear the worst. Moreover, much of the nitrogen runoff from cornfields is via drainage into those same tiles. While better placement and timing of fertilizer applications can help, it is hard to envisage major curtailment of nutrient runoff without also taking up the tile issue.

Tiles are virtually in all fields, and the implications of potential new regulations are enormous. As a consequence, groups like the Farm Bureau are pushing new voluntary conservation measures very strongly. They are also going after EPA’s attempt to regulate farm waters in an all-out war. In the meantime, farmers wait uneasily and hope for the best.

Photo: D. Harney

Photo: R. Naylor
My final comment for the summer is not a “cock and bull” story, although it borders on one. (Definition: “an absurd, improbable story presented as the truth.”) It was partly motivated by “Desperado,” the 2,972-pound Angus bull that won the “Super Bull” contest at the Iowa State Fair. (Lest I be accused of being gender insensitive, I should also report that the life-sized cow, sculpted in butter, is still doing well and now stands beside a sculpture from “Star Trek”, also in butter. Do not ask me why!)

I have done no formal surveys on the topic, but my conjecture is that in rural areas, the word “bull’ is most often used as the adjective in an expletive. An adjective form is also used to describe markets. For example, the July 14 th issue of Bloomberg Businessweek headlined a story, “A Bull Market You Haven’t Seen.” Farmers also watch the stock market carefully, and this watching was done with mixed emotions. To see the Dow-Jones Index of Industrial Stocks rise to over 18,500 was of limited joy, since farmers were invested in land, whose price was falling, not rising. The bullish stock prices, in a curious way, simply added to the malaise mentioned earlier.

During the summer I was also involved in another bull market—a market for real bulls! This part of the story perhaps needs a bit of background. When growing up, both my wife and I had great fun exhibiting steers at various fairs and expositions. (She reminds me frequently that the last time our animals were in head-to-head competition, her ribbon count was more prestigious.)

We particularly enjoy young calves, and in a wild moment, we decided to develop a small cowherd of our own that would be separate from the large herd kept by the neighbor who rents our land. By the time we reconfigured the fences, fixed the barn, installed a new water system, and invested in equipment, we have a small herd of what must surely be the most expensive cows this side of Switzerland. But we are enjoying them. This year’s steer calves have meaty names, e.g., Porter(house) and Sir Loin (spelling courtesy of a dinner menu in Chile) and the heifers have grape names, e.g., Cabernet and Zin.

In early July, timed for spring calves next year, we began searching for a bull. Size, breed, and age were all questions, as was an artificial insemination option. To our surprise, we found that there is a bull rental market. We ended up with a 1,400-pound red Angus yearling bull, which we rented, and which we hope is up to his appointed task. The cost was $600 for four months (purchase would have been $3,000), including delivery and pick up. And what delivery service! He rolled up, all by himself, in a semi trailer designed to haul 36 head. Now that is first class. Unfortunately, however, there may be a problem. He seems to have little interest in his new harem, at least during the daytime. So we watch and wait, and hope that he is working the night shift. Will we have spring calves or will we have to hire in a substitute? It is not yet clear, so stay tuned, and I will report on the final outcome in next year’s Almanac.

In the meantime, I am off to Stanford for another milestone—my 45th year on the faculty. It will be a rather severe test of whether age, wisdom, and guile, can keep ahead of youth, brains, and energy.

Photo: D. Skeen/Flicker

* Walter P. Falcon writes from an unusual perspective. During the academic year he serves as a Senior Fellow and Farnsworth Professor of International Agricultural Policy (Emeritus) at Stanford University. During the summer he spends time on their farm near Marion, Iowa.