BILLINGS - A Montana farm boy was still listening for life's calling when his father suggested that milking cows, the family business, might not be so bad.
"He said, 'You might want to think about this dairy thing because there will come a day when the world is going to need your food. They might pay you well' " recalled Tim Huls, a boy no longer, who wonders what his dad might have thought of this world.
Huls isn't being paid well for his food these days. A once-prosperous world that thirsted for the Corvallis farmer's food has fallen on hard times and lost its appetite, or at least its ability to pay, for Huls' product. And he's not alone.
A year after receiving record prices for their products, farmers across Montana are struggling to break even. Foreign markets for American meat, grain and milk have been sapped by a global recession. The United States has lost 6.9 million jobs, more than were created in the previous eight years. People are eating out less and bypassing pricier items like Montana beef when grocery shopping.
There's an abundance of food available, and that's driven prices down for most of what's grown in Montana. Those problems of abundance are partially self-inflicted, say farmers like Gordon Stoner, of Outlook.
"We produce wheat until the market tells us it doesn't want anymore. Then a few of us go broke and the cycle starts again," said Stoner, who grows durum in a northeast corner of the state, a place that's closer to Regina, Saskatchewan, than any large Montana community.
Last year, grain was in demand and in winter months sold for $24 a bushel, roughly five times the normal price. World stocks were up this year, fewer people were buying, and wheat plummeted to $4 and change. That's sobering news for a state that sold more than $1 billion in grain last year.
Banks are being more cautious about farm operation loans, said Carl Mattson, of the Montana Grain Growers Association. Profit margins are thin, and most producers agree that it's more important to be a good businessman than a grower of crops or a livestock steward.
Eastern Montana
Sugar beet farmers were poised to reap record yields and historically sweet profits this year before an early October frost clobbered the 2009 crop. Now, the industry is racing to see how many beets can be processed before spoilage sets in.
Prices nearing $50 a ton await those with beets to sell. Consequently, the mood at the beet dumps is bittersweet. Economic conditions were so much better than a year ago when better prices for wheat were luring farmers away from the sugar business. Farmers responded by planting 10,000 more acres of beets in 2009 than the previous year, said Russ Fulmer of Sidney Sugars. They'll enjoy profits this year that wheat couldn't possibly deliver.
Western Sugar Cooperative, which represents Montana sugar farmers from Forsyth to Fromberg, expected near-record yields of 30-plus tons per acre.
The other 19 counties in the eastern region are generally experiencing good yields if they had good weather for dry land grain crops.
But there's a lot of different weather in an area stretching 492 miles from Livingston to Westby. Cool weather and timely rains produced 40-bushel-per-acre harvests in much of the region. In extreme southeast Montana, the winter snows were catastrophic for the cattle industry. Deep spring snows killed more than 4,000 head of livestock in Carter and Powder River counties last March and April. Estimated losses totaled $1.5 million.
Farmers in the best financial shape are ones like Stoner of Outlook, who raise several different kinds of crops. Stoner raises lentils, peas and durum.
North-central Montana
There's a lot of "new paint" glistening in the fields of north-central Montana. That's farm-speak for new combines, new tractors, and new trucks, bought on loan when grain prices were at historic highs in 2008. Actually, there's a lot of new paint everywhere because of grain prices that topped $20 a bushel in 2008. The Golden Triangle is often characterized as the state's wheat area, but wheat is grown as a cash crop in all but one of the state's 56 counties, according to state economists.
Because most of that grain is shipped overseas, Montana's economy is hardwired to world markets. If the global economy sneezes, Montana's catches a cold.
"Eighty percent of Montana wheat is exported. We can't eat that much wheat," said Carl Mattson, a Chester farmer and Montana Grain Growers conservation and farm programs associate. "In Montana, every man, woman and child would have to eat 40 loaves of bread a day."
A sagging global economy combined with an abundance of wheat worldwide in 2009 has driven state grain prices downward to slightly more than $4 a bushel, an amount insufficient to cover equipment loans taken out in 2008. Prices for fuel and particularly fertilizer, which in some cases quadrupled along with 2008 grain payouts, kept profit margins slim a year ago and make 2009 winter wheat expensive to grow.
Banks worried about agriculture's volatility are declining loans to new farmers or farm operations looking to expand, Mattson said. The shiny new equipment in state wheat fields looks like prosperity, but for many it is probably only polish.
The upside to the current economy is that fertilizer is once again affordable, Mattson said.
South-central Montana
Tom Milesnick knew beef was in for a bumpy ride when prime cuts began appearing in the meat case at Costco Wholesale in Bozeman. The cut is usually a restaurant-only item.
"People just don't have the bucks to spend, and the steakhouses aren't selling steak," said Milesnick, who raises beef north of Belgrade. "Costco has got prime beef right now and the reason they've never had prime beef before is because restaurants took it before they could buy it."
And the price of that prime beef is just a dollar more than the choice-graded beef selling beside it. The beef industry has been hit hard by the recession. Ranchers from every county in Montana will deliver their feeder calves to market this fall, where they'll be paid 10 to 15 percent less for their livestock than they were in 2008, when payouts were also 10 to 15 percent less than the year before. That's bad news for an industry that contributes more than $1 billion to the state's economy annually.
Western Montana
What should have been an above-average year for Flathead Valley cherry growers hit a bump in midsummer at packing houses in Washington where Flathead's sweetest crop is boxed and shipped to grocery stores. Montana cherries were in good supply, but Washington had its own bumper crop to process. With cherries galore, Washington packers selected only the largest premium cherries, grown locally.
Afterward, supermarkets, concerned that recession-bit consumers wouldn't buy seasonal fruit, demanded discounts, driving orchard prices lower.
"Anything that's something you wouldn't eat year-round, any kind of specialty thing, retailers felt that if it wasn't on sale they'd have trouble selling it," said Dale Nelson of the Flathead Cherry Grower cooperative.
Consequently, growers left their smaller, less-profitable cherries unpicked.
The cooperative is talking about switching to trees that bloom later in the season to avoid possible market gluts caused by Washington's much larger crop. And Nelson said the growers are now turning to the U.S. Department of Agriculture for help with a regional distribution plan enabling them access markets in Montana and the Dakotas where the Flathead name attracts customers.
A different kind of access problem clobbered the Western Montana milk industry. Dairy Farmers in Flathead and Ravalli counties have been trucking their milk more than 250 miles to Bozeman because they lack a local processing plant. Meadow Gold shuttered its Kalispell facility a year ago.
Since then, milk payments have plummeted to 25-year lows, making the trip to County Classic Dairies a money loser. Foreign demand for U.S. milk is a recession casualty and has created a domestic milk glut. Farmers say to break even they would need 30 percent more for their product than they've received since the beginning of the year. Many are calling it quits.
Posted in State-and-regional on Saturday, October 24, 2009 2:20 pm
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