STATE OF THE CITY 2000 (Agribusiness): Surviving a tough year down on the farm

ORIGINALLY WRITTEN BY JULIE ANDERSON
Agribusiness faced a tough year in 1999, with a number of challenges for farmers?and those who make their living off of their enterprises.

Farmers faced low commodity prices, average crops and depressed livestock and grain markets, as well as mixed weather. Net profit for Kansas farmers was estimated at $17,000, the lowest in years.

?It?s been a tough year,? said Lyman Adams, general manager of Cooperative Grain & Supply.

Adams said dairy operation weathered better than many others sectors of agribusiness. The beef industry also began to improve during the last quarter of 1999.

He said farmers were not able to replace equipment like they wanted to and limited themselves to purchases that were absolutely necessary.

?There really wasn?t too many segments in agriculture generating profits,? Adams said.

Steve Tonn, Marion County extension agent, said low prices made the biggest impact on farmers, followed by the cost of input prices for fuel and chemicals.

?It was another year definitely lower in gross revenue and profit for (farmers) in 1999 in Marion County,? Tonn said.

In regard to production, Tonn said, 1999 was an average year.

Another factor affecting the local farmer economy last year was Mother Nature.

A year of mixed weather included a wetter-than-normal environment in the late winter and early spring. Then, with the 2000 wheat crop freshly sown, farmers received little to no rain in October.

Adams said this tough year was no surprise. He said 1997 had been a good year and profits had carried over into 1998. Then in 1999, the situation became tougher.

Because of the farmers? dilemma, 1999 was stressful for all ag-related industries over the past year.

?With lower income, farmers have fewer dollars to spend in businesses,? Tonn said.

One benefit for farmers, Adams said, was that the government was more flexible in assistance payments in an effort to help out farmers.

Payments through the Farm Service Agency set a record in 1999. Farmers and ranchers in Marion County received $14.26 million through the fifth year of a seven-year program, an increase of 50 percent from the previous year.

Observers are looking for some improvement in 2000.

?We?re cautiously optimistic on how agriculture will do,? Adams said. ?But we don?t look for things to boom.?

Usually, the economy runs through cycles, but Adams said with new technology he is not sure if trends will change.

One area expected to change is the hog market. Efficient hog farmers, having in 1999 come through the worst price plunge since the Great Depression, are already able to show at least a modest profit.

Adams predicted grain prices will likely continue to be on the low side, although beef looks a little more encouraging.

Tonn agreed that 2000 looks like it will be similar to 1999 unless weather problems arise on a large scale or in other countries, changing the current market situation.

?Producers are trying to trim costs the best they can without affecting productivity, and that will be a big challenge for next year,? he said.

Cooperative Grain & Supply

CG&S was one of the businesses that felt the effects of the farm economy in 1999.

?We?re like all agricultural businesses,? Adams said. ?The less money producers have, the less they spend.?

Two areas producers tended to cut back were fertilizers and chemicals.

Adams said the cooperative is looking on the positive side, trying to find ways to improve producers? productivity and income.

?We still think very positively about agriculture and the future of agriculture,? he said. ?We will hit higher grain prices.?

One thing CG&S introduced to help producers is grain-price protection service. The service improved marketing on grain.

The service was implemented a year ago and Adams said they will continue working to improve it. ?We are looking at tools and ways to add to producers? bottom line.?

Ag Service, Inc.

Ag Service also experienced a small decrease in sales in 1999.

Mike Kleiber, owner, said profits were down slightly because the cost of the products decreased.

?We?re very pleased with the way the year turned out in retrospect of the cycle agriculture was in,? Kleiber said.

He said Ag Service was fortunate that area farmers had good yields.

One change Ag Service saw this year was a shift in herbicides and crop protection because of the biotechnology used with seeds.

Kleiber said he thinks agribusiness will continue to see more scientific methods introduced in farming.

Ag Power, Inc.

Sales in new equipment declined in 1999, but service increased for Ag Power, Inc.

Owner Mike Kleiber said one of their goals for the year was to boost the service aspect of the business.

Changes in technology have also had an impact on their business.

?Electronics has pretty well taken over for anything that has a motor,? Kleiber said.

In response, the business continued to handle equipment with more sophisticated systems, which also requires more training to service it.

?We have a good customer base in the area, very consistent and conservative throughout the years and also progressive,? Kleiber said.

This year, like most others involved in agribusiness, he would like to see commodity prices rise.

?We?re just going to continue what we do best, and that is service our customers,? Kleiber said.

United Feed, LLC

United Feed experienced a stressful but successful year in 1999, according to Luke Lindsay, general manager.

With the completion of their new $4 million mill in the Hillsboro Industrial Park in October, sales have continued to increase.

?It has gone real well,? said Lindsay. ?Sales and production were higher than expected.?

When the new mill opened, the company faced some technological difficulties and adjustments to make the mill efficient.

In 1999, United Feed also picked up new customers and expanded its territory.

Because of the growth in business, five new employees were added last year.

Looking to 2000, Lindsay expects he and his employees will work out the remainder of their growing pains.

?We?re expecting to work out inefficiencies in the mill,? Lindsay said.

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