Brothers Charles Bagwell (left) and Irwin Bagwell check out a bin in one of the planting machines at the family farm in Vanns Valley between Rome and Cave Spring. (AP)
Some of the 1,500 acres farmed by the Bagwell family in Vanns Valley is shown. Charles Bagwell is hopeful that production costs will not be up as much in 2013. (AP)
Floyd’s farm income figure in 2011 was $2.6 million, down 38.6 percent from 2010, and an off-the-cliff-fall of 70.3 percent from 2009.
When you break out the numbers, row crop income represents 8.5 percent of the income for agribusiness interests in Floyd County, compared to the 91.5 percent share for livestock producers — largely beef cattle, chickens and pork producers.
Cash receipts from the sale of livestock, products and crops in Floyd County in 2011 totaled $57.8 million, an increase of 9 percent from 2010. However, production expenses exceeded $66.5 million, up 15.2 percent from the previous year.
Keith Mickler, the University of Georgia Extension Service County Agent for Floyd County, said that beyond the huge increase in production costs, the problem in 2011 was actual production.
“We had more adverse weather conditions in 2011 than we did in 2010, more drought conditions,” Mickler said. “There was probably less yield on corn, less yield on soybeans, less yield on cotton, so when you have less yield, you have less gross income as well.”
Mickler recalled that fertilizer and chemical costs were up significantly.
“You’ve got fuel costs. Fertilizer is one of your biggest issues. And then you may have had issues where producers had to put in a pivot (for irrigation), which costs some more money, so that’s going to decrease their bottom line,” Mickler said. “When production costs go up, net goes down, it’s that simple.”
The BEA report, issued Nov. 26, bears Mickler’s wisdom. Feed costs were up 16.2 percent, fertilizer costs were up a whopping 22.1 percent, and petroleum products, primarily fuel and oil, were up 26.2 percent.
The total bottom line net income for all farm related activity was $2,831,000 in 2011, down 42.9 percent from 2010, down 71.6 percent from 2009 and down 81.6 percent from 2008.
Costs on the rise
Irwin Bagwell, chairman of the Floyd County Commission, operates a family farm in Vann’s Valley between Rome and Cave Spring. He said that one of the seemingly contradictory issues related to the skyrocketing increase in production costs involves natural gas. Bagwell said gas supplies have been running near record lows but that nitrogen-based fertilizers, which use the gas, continue to see dramatic price increases.
“The nitrogen, specifically, that we put on corn, we used to buy it 10 years ago for $180 to $200 a ton, and it is in the $400 range now,” Bagwell said. “Your potash and phosphorous is up just like nitrogen is.”
Bagwell said a bag of seed now could run as high as $250. Ten years ago it was in the $90 to $100 range.
The price increase is something of a double-edged sword.
“It’s strictly due to the genetics and all the research and engineering that goes into producing a bag of seed now. You used to put a weed killer on and then a grass killer,” Bagwell said. “It’s so much more advanced seed that we plant now with everything built into it. The yields have increased accordingly with it.”
Another double-edged sword for many agribusiness men is new technology. The Bagwells have a combine that is equipped with a global positioning system.
“It drives itself. Once you get on a row it follows the row all the way to the end of the field,” Bagwell said. “It does come with a price tag.”
Then there’s the weather that agribusiness interests have to deal with. 2011 was a bit drier. Yields were off as much as 50 percent last year, according to Bagwell.
Irwin and his brother Charles Bagwell plant approximately 1,500 acres — 1,000 in corn and the remainder in soybeans.
“We’re in it for the long haul, you know. We don’t anticipate getting out anytime soon. You just have to take the good and the bad,” Irwin said.
Charles Bagwell said that 2012 was very similar financially to 2011.
“It might have been a little bit better, the commodity prices I think were a little bit higher,” he said. “All signs point to prices remaining pretty steady to constant. If anything, our inputs (production costs) will remain flat or just a little bit less, hopefully.”
Todd Hice, with the U.S. Department of Agriculture Farm Service Agency office in Rome, said expenses are clearly up, but that nationally he’s seeing record commodity prices.
“Soybeans are as high as I’ve ever seen. There was a lot of people that booked beans at over $12 a bushel,” Hice said. “The problem with corn is that we didn’t make much because of the drought.”
The problem, according to Hice, is when commodity prices go up, so do all the production costs.
“Everything from seed, feed, fertilizer, chemicals, barbed wire, I don’t care what it is,” Hice said. “Farmers are always wanting more. We want it to rain more, or rain less. We want the commodities higher or inputs lower, we want what we don’t have.”
Hice said he thinks the outlook for agriculture, compared to other sectors of the economy, is as bright as it has ever been.
“Of course, that could change on a dime,” Hice said.
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