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There's a lot of grain demand in the world, and there may not be enough supply to meet all that demand. Though some corn and soybean yields have been surprisingly good despite this year's drought, those are general realities this fall.
It's not a new combination of factors; tight grain stocks and corresponding high grain futures prices have motivated farmers to work to keep up, even if that means putting acres into crop production that have historically not been so.
"Our soybeans are not very good. Some are 6 inches tall, especially on the marginal ground," says Agriculture.com Marketing Talk senior contributor hobbyfarmer, who farms in southwestern Iowa. "I could point out many hundreds of acres out there like that."
The jump in these marginal acres moving into production reflect farmers' response to the increased incentive to plant more corn and soybeans. But does it provide enough incentive to justify the shift? It can have both farm- and macro-level implications on the market, says U.S. Commodities market analyst and broker Don Roose.
"If there are too many marginal acres going into corn, it changes yield potential, so it does create a little more volatility," he says. "Marginal acres will yield less, so there's going to be a change there."
On the farm level, though, they may not be the most productive acres; fields comprising less productive land may be farmed on the same cash-rent agreement as more productive fields, something that may not matter much to a landowner, says Marketing Talk senior contributor Mizzou_Tiger.
"They don't care because it's marginal ground that will not return on their improvements except in the best of years and prices," he says. "And that doesn't happen very often on marginal ground."
But market prices and land rents aren't the only ways that putting marginal land into crop production can eat away at a farm's bottom line. First of all, it takes more to get land that was previously idle or in pasture into production mode.
"Marginal acres need more care and maintenance. Not many know how to do that, hence the reason the ground was in CRP, hay, or pasture," Mizzou_Tiger says. "It takes higher prices to offset the risk and maintenance, not to mention the weather factor."
Oftentimes, like Mizzou_Tiger says, if land's not producing crops, it's for a reason. And, most often, that reason has to do with water and nutrients, says Emerson Nafziger, University of Illinois agronomist.
"Water supply is a critical thing, and most are marginal because they don't hold water well," he says. "Soil nutrient levels may be pretty low. They have to be pretty low for you to hurt yields of the crops that come, but when the main limitation is water supply, other things become less likely to be major limitations."
If you do want to put land into crop production that was in pasture, hay, or CRP last year, Nafziger recommends the following:
- Take a soil test. If the land was in CRP, particularly, you likely won't notice a change in potassium or phosphorous in your soil from when you first enrolled it into the program. "If you can get by without P and K the first year, you don't want to stir up the soil too much," he says.
- Don't overload the soil, especially if it's shallow. "A person would probably not want to crank up the corn population and put out extra nitrogen thinking that's going to solve all the problems," Nafziger says. He recommends planting a population of around 30,000 seeds per acre.
- Pay extra attention to weed control. This is especially true if the land was just in a CRP contract or pasture. "If I was doing this, and I had a pasture that had been left to grow to grass and weeds on CRP, I'd probably try to spray it if possible. Fall's a lot better time to kill weeds than spring is. If you get a kill in fall, you'll have some cover there still, but you won't subject next year's corn crop to competition for moisture," he says.
Looking ahead, if you're planning on taking ground you'd deem marginal and putting it into crop production, experts agree not to let 2012 crop output be a deciding factor, if a factor at all. The weather and resulting yields were simply too variable and strayed too far from normal to comprise a decision-making factor.
"If all things are equal on poorer ground, you get decent yields," Roose says. "But this was a tough year."
Adds Mizzou_Tiger: "The best-case scenario is for a few of these acres to maintain their capacity after a few years. But the more likely scenario is you get a few good years, then things go downhill, literally and figuratively."