View From the Cab

DECATUR, Ill. (DTN) -- Dan Lakey admits it takes some extra effort to keep the batteries charged when a tough weather year meets depressed grain prices. Shoot ... even farm equipment requires a jumpstart when it sits too long with the battery engaged.

This week DTN asked the Soda Springs, Idaho, farmer to tackle the tough topic of the current farm economy as part of the View From the Cab feature. Lakey and Quint Pottinger, of New Haven, Kentucky, have been reporting on current crop conditions and rural issues throughout the 2024 crop season.

Farm finances are not an easy discussion. While Lakey may have been a boy during the agricultural recession of the 1980s, he remembers the repercussions those hard times took on the farm and family. It is perspective he tries to use to keep the business and himself mentally grounded in this current agricultural economy.

Joining the discussion this week is Ramey Pottinger, Quint's father, who began farming during those volatile financial times. He sees both similarities and differences in what is happening with today's agricultural markets. Ramey talks about mentoring a son in the current climate and how working together as a farm team lifts morale.

One thing remains constant -- harvest is a special time on these farms. As combines fire up in Kentucky and continue to roll in Idaho (even if they might require an occasional jump start), both farmers reflect on why they look forward to bringing in the crop. Read on to learn more about how crop prospects are looking for these farms and what else is happening this week.

RAMEY POTTINGER: NEW HAVEN, KENTUCKY

It's hard to put a dollar figure on the nearly 5 inches of rain that fell in central Kentucky's Affinity Farms in late August. It was a life saver for the corn crop, figured Ramey Pottinger. The 90-degree and triple-digit temperatures that followed made short work of the moisture. The early corn crop has started drying down in earnest.

"Some of the big operators started shelling this week and we plan to start Friday," Ramey said on Sept. 5. The farm's crop consultant likes to be on hand as harvest starts to help set machines and do what they can to get a clean sample without sacrificing harvest losses.

"Early beans and corn look pretty good -- not excellent -- but good. We'll take it," noting that earlier in the season yield prospects seemed questionable. Double-crop soybeans could be the outlier since moisture was limited at planting and the crop has struggled, he noted.

When he looks at today's market prices, Ramey cuts to the chase: "Better buckle up."

There are some major differences in the farming environment today, he conceded. The acreages today are larger. The farm has shifted to a hyper-local focus for selling commodities. Most of the corn crop goes to local distilleries or it is cleaned, bagged and wholesaled as deer corn for a premium.

In 2018, the father and son partnered with a hedge fund group. Affinity Farms still operates as a family farm by holding all Class A shares and using Class B shares for fundraising and the operating structure gives them access to capital. However, they still answer to a board which scrutinizes purchases and expansions.

In the early 1980s, the damage to farm exports following the Carter Administration's grain embargo primarily caused a corn glut which finally drove prices below $2.00 per bushel.

"My interest rates on loans were 18%. Inflation was crazy," Ramey recalled.

"One year I lacked $24,000 of having enough money to get my crop out. You couldn't borrow money, and no one wanted to extend you credit," he said. He owned a semi and put it on the road until he made enough money to pay for the crop inputs.

Quint has heard these stories so often that it has also shaped his view of the world. "He's listened," Ramey said of his son. "About two years ago, we saw equipment prices going up and we got rid of some of the higher-dollar equipment to lower our equipment debt to nearly nothing," he said. The key to that move is having people on the farm staff that are good mechanics and keeping maintenance a priority.

Crop insurance that pencils and pays out in the face of disaster is also key to survival these days, he acknowledged. That wasn't the case, for example, when drought hit in 1983, and the farm harvested 8 bushel per acre soybeans. "Those were tough days," he remembered.

"We think we've made the adjustments to weather this storm and will continue to assess," Ramey said. A strength for the farm is that the willingness to embrace change. This year they are looking hard at leased land that was not as profitable, for example.

"We have some acres that have been devastated by deer pressure," he said, noting that the feeding has been so heavy as to take whole fields. Average field sizes here tend to be in the 20- to 30-acre range.

At the same time, economic downturns can offer up opportunity those who are prepared.

"We have a lot of smaller farms and an older population. I know -- I'm five years out of warranty myself," Ramey said.

"I think some of those smaller guys may decide they don't want to ride out another downturn," he added.

While the Affinity Farms leans heavily on specialty grain arrangements, Ramey doesn't take them for granted. Downturns can have ripple effects.

Ramey's own father worked for a local distillery that locked its doors in the early 1960s. Today the spirits industry depends on exports, as well as domestic consumption. In other words, tapping into a market is one thing, but demand can shift with disposable income and consumer preferences.

Ramey came into farming after being involved in education administration. "I could have quit farming in the '80s to go back to teaching. But my grandfather always said if you're going to do something, make sure you like what you're doing. If you don't, you'll be miserable the rest of your life.

"When Quint gets discouraged, I tell him the same thing," he said. That philosophy echoes through to the farm team, as well. They eat lunch together most days. Work hours are tended carefully. Too many operating hours aren't safe or productive in the long run, he said.

Harvest is a favorite time because of the camaraderie among the farm crew as they focus on bringing in the crop, Ramey observed. "It's hard to describe the environment here at this farm. The crew is family. If they have a problem, we have a problem. That's a feeling bigger than the farm and bigger than the season," he said.

DAN LAKEY: SODA SPRINGS, IDAHO

The clicking or grinding sound of a dead battery is not the way a farmer likes to start the day. The portable jump starter has become one of the most vital tools on the farm, said Lakey. "About the only thing we can count on starting without fail after sitting is the old Gleaner combine," he wrote on social platform X this week.

The farm crew continued to be busy getting after the crop this week. "We have about a week left at our homeplace finishing up spring wheat, canola, triticale and awnless barley," said Lakey. He also had some scraps -- green acres left in the field to ripen -- to cut in a few areas.

Frost has already found some of his fields, but so far, damage is thought to be limited.

Malting barley at higher elevations still needs several weeks to ripen, he figured.

Yields haven't always been what Lakey might like this year, but the quality is good. One challenge this year is finding additional storage after filling up what is available and losing access to 100,000 bushels of leased capacity.

Lakey's memories of the 1980s and 1990s are softened by childhood. "I know it was a tense time. My brother, David has described it as walking on eggshells," he said.

The family had to sell off 2,700 acres during that time to stay afloat. An 18% operating note hung over them for several years -- a big difference between then and current interest rates, he observed.

"We lived modest, even though I don't remember it affecting me as a kid. There wasn't much for excess, and Christmas presents were usually limited to a toy or two," he said. Several area crop failures due to drought during that time added to the financial instability, he noted.

Today, the crop rotation is much more diverse than when wheat and barley were the only crops. That's paying off in crop response and marketing opportunities. For example, Lakey no-tilled soft white winter wheat into mustard stubble last fall with fingers crossed that it would rain. That field hit 55 bpa average this year, which the landlord said was the best crop ever raised on the parcel.

"In the past, we didn't contract anything and were at the whims of volatile markets. We were always forced to sell our crop right at harvest to pay off the operating loans that were coming due or past due.

"Not being forced to sell the crop immediately has really allowed us to do a better job of capturing rallies and capitalizing on our storage. A lot of poor decisions are made based on fear and due to being rushed to sell," he said.

Markets and weather used to consume Lakey to the point of near obsession. "I would be waiting for reports and news that would sway it one way or another. The post-Ukraine volatility has made me nearly numb to 10-cent swings that once would have ruined my week," he said.

"Realizing that there's nothing I can do to influence weather or markets has helped me cope. I do the best I can with contracting and tending to my crops and the rest is in God's hands," he said.

"In addition, having production contracts and 'Act-of-God' clauses in those contracts, as well as great multi-peril crop insurance (MPCI) and revenue protection (RMA), really helps me sleep at night," he added.

Lakey also thinks he sees patterns in the profit picture. "What goes up must come down; what goes down will come back up. In a five-year period, we'll almost surely have one great year, one disaster year, and three years teetering on either side of average. If we contract well, insure well, know our breakeven(s), and don't get in over our head on equipment purchases on the good years, chances are everything is going to be OK."

There's not one of those cycles where he doesn't wish for his father, Dwight, to still be by his side. And he's quick to note that his brother, David, is a calm influence in any storm.

"I always think back to my dad's famous phrase when I would be freaking out about the current crisis of the week," Lakey said. "He was always calm as a cucumber and would tell me: 'Everything is going to be fine. We'll be OK, I've seen it worse, and we made it through that, we'll make it through this.'"

The atmosphere of fall provides a soothing balm for Lakey. "I love it that my wife (Marie) loves to decorate for fall and harvest, and that she makes 'pumpkin spice everything!'

"I love the cool mornings and evenings and the need to wear a sweatshirt. I love to finally be reaping the harvest of the crop that we've stressed and labored over all year. I love the anticipation of winter coming.

"The kids are back in school, and life just seems to slow down a bit even though the pace intensifies. I love closing the page on this chapter of the farming year, even if that is getting a poor crop off and the opportunity to start again or if it is getting a great crop off and the prospect of trying to do even better next year," he said.

Pamela Smith can be reached at pamela.smith@dtn.com

Follow her on social platform X @PamSmithDTN

(c) Copyright 2024 DTN, LLC. All rights reserved.