|It all starts with the
farmer. Before a shipload of grain leaves port to overseas markets, before a trainload of
corn makes its way across the UP system, a farmer's decisions trigger the cycle that moves
grain from fields to the world's kitchen tables. And while costs increase and grain prices
stall, they continue struggling to maintain a lifestyle that's been handed down for
Life on the Farm
It's quiet these days on the dirt roads surrounding tiny Ralston, Iowa. In mid-July, only an occasional mini-van stirs the dust, carrying a family to nearby Glidden or to Des Moines or Omaha, both hours away.
|In one direction, as far as
the eye can see, there is corn. The stalks have grown well overhead, with tassels as high
as the proverbial "elephant's eye." In the other direction, a field of soybeans
stands only knee-high, but nearly fill the rows, green and bushy.
In a couple of months it will be harvest time. The noise from machinery will mark the beginning of the growing cycle's final arc, as combines begin to take in another year's crop. Heavy rain and flooding have taken their toll down south, while farther north, hailstones have cut yields. Mother Nature has looked more kindly at west central Iowa, and will bestow another bin-buster harvest.
By October, dust will choke the roads, as truckload after truckload of corn makes its way to Ralston and a hundred towns like it throughout Iowa, Kansas and Nebraska -- the country's breadbasket. All will head to the local co-op or grain elevator to dump their loads and hurry back to the farm to fill up and do it again.
And again and again and again... thousands of times. A harvest that in years past took three months to bring in can now, with good weather, end in just a few weeks. The fields produce three times the volume of crops compared to just 10 years ago, filling the elevators to capacity, and beyond.
Union Pacific will get orders for a few trainloads of grain that will ease the storage pressure, but only a few. The farmers hold the harvest hand they have been dealt and refuse to sell, piling even more grain on that stored from last year. These quiet, hard-working feeders of the world now become the gamblers of the plains, playing a poker game called The Grain Market. Why?
"Because you always hold for a better price," says Dwayne "Pee Wee" Conner. "That's a farmer's trait. You're always optimistic. You have to be to stay in this business."
Pee Wee and his son, Matt, farm about 2,000 acres, half corn and half soybeans, a rotated mix that provides strong yields. Pee Wee and his wife, Joyce, live in a modest home near Glidden, surrounded by rustic farm buildings and Joyce's prize-worthy flower garden. Nothing fancy, just a quiet place to raise a family. Pee Wee, 60, says he's been farming all his life.
"I started right after high school in '56. I guess it was just about all I ever wanted to do," he says. "I was born on a farm, raised on a farm. My dad farmed just a few miles from here. I started just how Matt did, I furnished the labor and my dad furnished the machinery. I picked up 160 acres and helped him farm his land -- about 600 acres, which was a lot back then.
"My granddad was from this part of Iowa. He was a farmer, too. You do it because of the freedom to do things your own way. There's a lot of satisfaction in it."
In addition to crop farming, Matt also feeds hogs and farrows -- raises -- about 1,500 sows a year on his farm just a couple dirtroad miles away from Pee Wee's place. That's where they keep most of their implements, including their massive combine, a must for any large operation. Farrowing pigs is an inexpensive way for a young farmer to expand, since it takes little area to start up. But it's tough work that demands year-round attention. And Matt counts himself among the few independent farrow-to-finish guys left in the area.
"I've been raising pigs since I was 10," Matt says. "I spent a year at a trade school for carpentry, but I guess I just enjoy raising things. Whether they be pigs or crops, I like watching things grow."
followed me around since he was this high," Pee Wee says, holding a hand knee-level.
"I couldn't shake him if I wanted to. We've always worked together real well. We have
radios in our tractors, and a lot of days we won't say two words to each other. I don't
have to tell him what to do and he doesn't have to tell me what to do, we just do it.
Farming is a family business. It's damn nice to have a family situation than to have to
The family environment is evident in Pee Wee's home this day. While father and son talk about this year's crop, Matt's two boys, Weston and Stuart, play on nearby a sofa, and Matt's wife, Rhonda, carries their youngest, Oliver, around in her arms. Joyce walks out of kitchen carrying a plate of cinnamon rolls and a coffee pot to top off everyone's cup.
|Farming is a family
affair and everyone pitches in on the Conner farms during planting and harvest times. From
left are Joyce, Pee Wee, Weston, Rhonda, Matt holding Oliver and Stuart.
"I probably have about 100,000 bushels of corn that's worth 50 cents less per bushel now than at harvest time. That's $50,000 lost right there, just by not selling at the right time. It can mean the difference between making a profit or not. It's scary."
A few months earlier, Joyce and the older boys were helping plant corn, then beans, always rotating the crop position from the past year. Between planting and harvest time, they fight in the never-ending battle against weeds. Insects aren't such a problem anymore, thanks to specially treated and hybrid seeds. Weather, however, is always a wild card, and really wild in the Midwest.
"Storms are a part of the game," Pee Wee says. "We expect to have a few ponds (flooding) and some damage, you take the bad with the good. Perfect weather for growing is quite a little heat, timely rains and not too much rain. Before you know it, it's time to harvest."
Few farmers carry insurance because they don't want to add to their overhead costs. Instead, they manage their funds, just in case. "You have to be able to weather at least one bad crop year," Matt says. "Sometimes you get two or three in a row."
Such is the case for a few farmers farther south, who have been hit by poor weather for the past four years, says Bill Bluml, producer marketing director at the West Central Cooperative in Ralston, where the Conners have traded their grain for years. Part of Bluml's job is working with farmers in risk management and market planning.
"Those guys down south near I-80 are saying this is their last year, they can't take it anymore," he says. "They've had four years of weather problems, spending money putting in the crop and not getting any return. It comes to a point where the banker says they can't borrow any more to put in another crop. Then they're done. It's very unfortunate, but that's what they've been dealt by weather. Even if they had done their best managing their farms, they didn't have anything to market. That's where it hurts."
Playing the Market Game is just as risky. After spending the year nurturing a crop, farmers are desperate to get the best return on their hard work. The hope is for another 1995, when tight supplies and world demand produced $5 per bushel corn. Farmers made a killing. These days, thanks to a poor world economy and oversupply, the price wavers around $2 per bushel. But, Bluml says, unlike in the 1960s and '70s, when the prices would only fluctuate as much as 30 cents in a season, today's market can see dollar price swings.
"The difference in price can mean thousands and thousands of dollars," Pee Wee says. "I probably have about 100,000 bushels of corn that's worth 50 cents less per bushel now than at harvest time. That's $50,000 lost right there, just by not selling at the right time. It can mean the difference between making a profit or not. It's scary."
Especially considering the enormous investment debt that most farmers carry. In addition to paying rent for additional land -- necessary to expand a crop operation -- farmers also make payments on combines that cost more than $150,000, as well as costly tractors and other implements, and pay grain storage fees.
Bluml said 1997 is a good example of the market's volatility. "Last fall, if farmers had sold some of their crop, they could have had as much as 75 cents more per bushel on corn then they do today," he says.
So why didn't they sell? "They figure if the price is that high, it could go higher," Bluml says. "The old school is to market grain in the summer following the harvest, rather than before harvest time. The younger farmers realize they have to do something different to limit their risks."
West Central has a number of pricing programs that coax farmers to sell crops early, including one that markets grain in 10 installments throughout the year, with the farmers receiving the average selling price. Another program allows farmers to set a price "goal." When the market hits that price, they automatically sell a set number of bushels. Bluml says a big part of his job is helping his customers reduce the price risk and better manage their holdings.
"Besides, we have to have somebody to give hell about the prices," Pee Wee says. He's learned his lesson and now sells a little grain throughout the entire year. But he's the exception, as will be apparent again this year when grain begins to pile outside of elevators for lack of storage space, waiting for farmers to give the green light and sell. Should prices rise dramatically all at once or elevators are forced to make room for the next harvest, it could mean a huge glut of grain entering the rail system at once, resulting in demand for grain hoppers that railroads simply cannot meet.
Bluml says his co-op has never had to store grain on the ground, thanks to enormous storage capacity and a variety of marketing programs and market options. Ralston is just one of 14 facilities West Central Cooperative operates. Moving their crop holdings also hasn't been a problem, he says, because the co-op aggressively used Union Pacific's shuttle-train programs that guarantee equipment on a scheduled basis.
our cars come through UP's shuttle program," Bluml says. "We ran one of our own
shuttles last year and own 125 cars privately on the UP -- 100 on a West Coast cycle
program and 25 dedicated to our soybean meal service.
"The efficiency of the railroad moving those cars is very important, because we're paying a lease on them every month. If they don't turn the trips they're supposed to, that takes out of our bottom line."
And that impacts the co-op's narrow profit margins, as well as its ability to compete with other co-ops and independent elevators. Bluml's great-grandfather was among the farmers who organized West Central 65 years ago because they didn't have an outlet for their grain. Loyalty was second-nature back then. Not so anymore, as a few cents difference in grain offerings can drive farmers to deal with a different elevator.
The Conners have a number of grain elevator choices, some miles closer to their operation than Ralston, but they continue to do business with West Central because they like the service. During harvest, they work from dawn to midnight, hauling load after load of grain to the co-op. "When I get down there with a truck, I know within five minutes when I'm going to get back home," Pee Wee says. "They try real hard. Some of these outfits make you sit in lines for hours."
That loyalty isn't the only thing that's changed for today's farmer. Technology, such as computers in the combine and tractor cabs that track yield and application rates, new high-yield seeds and better crop management, all help produce larger crops. Though grain prices have their ups and downs, the average price hasn't changed in decades. The only way for farmers to increase their incomes is to increase their volumes.
As operation costs rise, and grain prices stay the same, it's becoming tougher for independent farmers to stay in the game, let alone hand down their farms to their children, many of whom are deciding on other careers. Fewer are choosing farming because of the risk and the capital needed to get started, Bluml says.
"Families have so many opportunities, education is better, and as a result, a greater percentage of kids go off to college and then move away. We have a lot of people Pee Wee's age, 60 to 80 years old, who are still involved in farming. In the next 20 years, the landscape is going to change dramatically because there're a lot fewer Matts out there than there were 30 years ago."
"You have to be willing to take a chance," Pee Wee says. "I'm sure if I was 20 again, I'd still want to farm, but you have to have somebody behind you. My old man helped me get started, and Matt did the same thing."
"It's hard to tell what it'll be like in 15 years," Matt says. "Farming's changed so much in the last decade. It used to be if you had three or four boys, they'd all have an opportunity to farm. Now, maybe one will. Hopefully, if one of my boys wants to, he'll have a chance."
"You have to be willing to take a chance. I'm sure if I was 20 again, I'd still want to farm, but you have to have somebody behind you. My old man helped me get started, and Matt did the same thing."
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Originally printed in INFO Magazine
Copyright © 1998 Union Pacific Railroad
Photos Copyright © 1998 Mike Malone