Latest / Professional Ag Marketing Podcast / Sarah Sellers SDSU Extension Input Outlook

Transcript

Sarah Sellers SDSU Extension Input Outlook · Professional Ag Marketing Podcast

• 0:03
  SPEAKER_00: You're locked in to the Grain Market Talk Podcast.
• 0:07
  SPEAKER_00: Fast updates, market movers, and the green news you need right now.
• 0:12
  SPEAKER_00: Trading commodity futures and options involve substantial risk of loss and is not suitable for all investors.
• 0:21
  SPEAKER_01: Today is October 14th, and I have a special guest with us today from SDSU.
• 0:27
  SPEAKER_01: We have Sarah Sellers with us.
• 0:29
  SPEAKER_01: How's it going, Sarah?
• 0:31
  SPEAKER_02: Everything's good.
• 0:32
  SPEAKER_02: How are you doing, Mike?
• 0:33
  SPEAKER_01: We're doing great.
• 0:34
  SPEAKER_01: We're doing great.
• 0:34
  SPEAKER_01: Well, we're going to talk to Sarah a little bit today about a plethora of different items with work that she does at SDSU, talking about uh farm inputs and many other things she's got going on for workshops this winter as well.
• 0:47
  SPEAKER_01: So Sarah is an assistant professor and uh SDSU extension specialist in uh sustainable farm and food systems at SDSU there.
• 0:57
  SPEAKER_01: So she does a lot of work with uh input sides of the the business and research.
• 1:02
  SPEAKER_01: And uh you come from a background uh farm grain and livestock, I believe, outside of uh what Winchester, Illinois as well, correct?
• 1:11
  SPEAKER_01: So you've been here in South Dakota how long now?
• 1:14
  SPEAKER_02: A little over three years.
• 1:15
  SPEAKER_02: I've lived here.
• 1:16
  SPEAKER_01: Very nice.
• 1:17
  SPEAKER_01: And before that, you were uh spending some time at the University of Illinois and Purdue University and uh kind of getting broke into the Midwest culture here, huh?
• 1:27
  SPEAKER_02: Yep, yep.
• 1:28
  SPEAKER_02: I've lived all across the Midwest.
• 1:30
  SPEAKER_01: So very nice.
• 1:32
  SPEAKER_01: Well, uh let's just start off with a few things like your economic dialogue and and what you've been working on in SDSU, Sarah.
• 1:39
  SPEAKER_02: Sure.
• 1:39
  SPEAKER_02: Thanks, Mike.
• 1:40
  SPEAKER_02: It's really a privilege to be here today talking to you and really excited to share some of the stuff we've got going on.
• 1:47
  SPEAKER_02: And um so I just wanted to mention our Extension Economics team, our SDSU Extension Economics team.
• 1:54
  SPEAKER_02: So most of our programming is housed on the SDSU Extension website under the Ag Business tab.
• 2:01
  SPEAKER_02: Um, so our team, we have um we have two field specialists, uh Heather Gessner and Paul Rand.
• 2:11
  SPEAKER_02: So Paul works in Sioux Falls doing kind of outreach stuff there with economic development and business.
• 2:17
  SPEAKER_02: Heather works with, she's one of our livestock field specialists, but she's moved into an administrative role.
• 2:23
  SPEAKER_02: She's serving as the interim ag and natural resources extension lead.
• 2:28
  SPEAKER_02: So we're kind of um Han and I have actually taken over doing the ag economic dialogues that was Heather's brainchild, but she's they've put her doing all this administrative stuff.
• 2:40
  SPEAKER_02: So we've been fortunate to be able to take that over, but she's she's still really involved with the team.
• 2:46
  SPEAKER_02: Um, and we have Han Lee, she's a faculty, she does our state land value survey.
• 2:52
  SPEAKER_02: Um Matthew Dearson, he does a lot of ag finance and and livestock economics.
• 2:58
  SPEAKER_02: Matt Elliott, he um he does a lot of ag business cooperatives, and he has a lot of really cool online web grain marketing tools.
• 3:06
  SPEAKER_02: He does a lot of our grain marketing stuff as well.
• 3:09
  SPEAKER_02: Uh we have myself, I do a lot of the cost of production, farm management, um, comparing economics of of different row crop systems, focused mostly on row crops, corn, soybeans, wheat.
• 3:22
  SPEAKER_02: Now I've had to expand to wheat and and sunflowers and alfalfa.
• 3:26
  SPEAKER_01: So change information.
• 3:32
  SPEAKER_02: Yeah, it's amazing.
• 3:33
  SPEAKER_02: The first time I drove across South Dakota, I was amazed.
• 3:36
  SPEAKER_02: I was moved to tears actually because I saw every every type of crop and every type of livestock.
• 3:42
  SPEAKER_02: And we were a little unusual on our farm because we had cattle and hogs and hay and corn and soybeans.
• 3:48
  SPEAKER_02: So it was a little unusual for Illinois.
• 3:50
  SPEAKER_02: And then I drove across South Dakota and you see a lot of a lot of that more.
• 3:54
  SPEAKER_01: So very much so.
• 3:56
  SPEAKER_01: Yeah.
• 3:57
  SPEAKER_01: So what can you tell us about the uh economic dialogue and what you've been working on specifically?
• 4:03
  SPEAKER_02: Sure.
• 4:04
  SPEAKER_02: Um, and then we also have Tong Wong.
• 4:06
  SPEAKER_02: She does a lot of the sustainable agriculture, profitability, stuff like that.
• 4:10
  SPEAKER_02: So for our economic dialogue, it's a free one-hour webinar.
• 4:15
  SPEAKER_02: It's the third Friday of every month.
• 4:17
  SPEAKER_02: Um, you can register on the STSU Extension website.
• 4:21
  SPEAKER_02: The next one is actually coming up this Friday, October 16th.
• 4:25
  SPEAKER_02: So we're gonna have two 30-minute presentations.
• 4:28
  SPEAKER_02: First presentation is going to be actually my my graduate student, Amelia.
• 4:32
  SPEAKER_02: She's going to be talking about the economics of tillage and wind erosion here in South Dakota.
• 4:38
  SPEAKER_02: Um, she's working with a long-term no-tillage and crop rotation study from the Southeast Research Farm.
• 4:45
  SPEAKER_02: And then she's going to talk a little bit about some of the dust events we've had in South Dakota and some of the economic costs that those have had on the state from car accidents and things like that.
• 4:58
  SPEAKER_02: And then the other presentation is going to be about South Dakota land use trends and farmland conversion.
• 5:04
  SPEAKER_02: So that's going to be my colleague Hon Lee.
• 5:06
  SPEAKER_02: She's going to talk about how land use in South Dakota has changed since the year 2000 and where farmland is being converted to development in the state.
• 5:15
  SPEAKER_01: Interesting.
• 5:16
  SPEAKER_01: Well, uh, very relevant topics, especially in this part of the world.
• 5:21
  SPEAKER_01: You know, it was really dry just south of cooking.
• 5:24
  SPEAKER_01: So a lot of folks asking about no-till and how that did this this winter and last summer.
• 5:29
  SPEAKER_01: So uh some really relevant topics, especially with CI credits, things like that becoming more uh important in this part of the world, specifically in agriculture going forward, some of those questions will be pretty valuable, I'd assume.
• 5:43
  SPEAKER_02: Yeah, absolutely.
• 5:44
  SPEAKER_02: There's a lot going on in that space, and especially with the high diesel prices, too.
• 5:48
  SPEAKER_02: It's a good year to be thinking about them too.
• 5:51
  SPEAKER_01: And we'll get to the high diesel prices.
• 5:53
  SPEAKER_01: I can't wait to hear what you've got to say about that.
• 5:55
  SPEAKER_01: So uh what can you tell me about some of the other tools that you've got on the webpage and and some of the other services you help provide people?
• 6:04
  SPEAKER_02: Yeah, so pretty much any topic you need, we've got somebody on our team that can that can help you.
• 6:10
  SPEAKER_02: So um all of our resources can be found on the SDSU extension under the agriculture tab.
• 6:17
  SPEAKER_02: We have an ag business tab, and that'll take you to most of our we have a whole list of decision aid tools that you can use to make business decisions on your farm, help you make evaluate things from an economic perspective.
• 6:32
  SPEAKER_02: And um we also have some other programs.
• 6:35
  SPEAKER_02: We have Heather's program, sustaining the legacy.
• 6:37
  SPEAKER_02: It's about farm transitions.
• 6:39
  SPEAKER_02: And then I work with a colleague, um Wee Chow, on the rural library hotspot lending program.
• 6:45
  SPEAKER_02: So this is kind of a rural development program.
• 6:47
  SPEAKER_02: We're looking for libraries in rural areas to collaborate with.
• 6:52
  SPEAKER_02: We purchase hotspot devices for them and then they lend them out to their patrons, just like you would check out a book.
• 6:57
  SPEAKER_02: Trying to, we're trying to increase connectivity in in rural areas, especially where internet's spotty, but anywhere in South Dakota is eligible to be part of that program.
• 7:08
  SPEAKER_01: Well, interesting.
• 7:10
  SPEAKER_01: Let's let's take one of those topics and dive a little deeper here.
• 7:13
  SPEAKER_01: So if I went and looked at, you do a lot of research around farm financials, for example.
• 7:19
  SPEAKER_01: Uh this crop year is just wrapping up here.
• 7:21
  SPEAKER_01: How do you think folks are sitting financially in this part of the world in agriculture right now, Sarah?
• 7:28
  SPEAKER_02: That's a good question.
• 7:29
  SPEAKER_02: And that's something I've been trying to figure out myself for the last couple of years.
• 7:34
  SPEAKER_02: Um, so I when I was in at the University of Illinois, I worked closely with the Illinois Farm Business Farm Management Association, and they had data on over 2,000 farms across Illinois, farm financial data, and and some of that data they've been collecting from the same farms for for years.
• 7:52
  SPEAKER_02: Um the program was started over 100 years ago.
• 7:54
  SPEAKER_02: So it has a really rich history of working side by side with farmers and helping them with their finances, and then we as researchers could use that anonymized aggregated farm data, and we could look at, okay, how's the farm financial condition in the state?
• 8:10
  SPEAKER_02: What are the most profitable farms doing?
• 8:12
  SPEAKER_02: Um, what do the most profitable farms raise?
• 8:15
  SPEAKER_02: Questions like that.
• 8:16
  SPEAKER_02: When I got here to South Dakota, um we we do have a similar program.
• 8:21
  SPEAKER_02: It's based out of Mitchell Tech, but they only have about 65 farms in the data set, so it wasn't really enough to answer some of those financial questions.
• 8:30
  SPEAKER_02: And I was starting to become really concerned about the farm economy for for row crop farming, but I didn't have any data to kind of back up my concerns or to see if some of the financial ratios or financial positions of our South Dakota farms were softening.
• 8:45
  SPEAKER_02: So I'm actually starting a new project in collaboration funded by the South Dakota Corn Utilization Council to start work with Mitchell Tech and grow that program, have kind of part it linked to SDSU as well, um, and collect more farm financial data.
• 9:03
  SPEAKER_02: So hopefully in in 10 years, I'll be I'll be able to tell you with more certainty.
• 9:07
  SPEAKER_02: We can track the health of more farms, and I can I can be able to say, okay, you know, I'm really concerned, we're really in in danger, you know, we have this many farms having financial problems, or, you know, or everything's kind of cooled off.
• 9:22
  SPEAKER_02: So I don't have a good idea right now of the economic condition, but and then in the short term, while we're collecting that data, we're going to start doing a survey of ag lenders and have like a quarterly farm financial report, just kind of start monitoring the financial health of farms in in our state better.
• 9:40
  SPEAKER_01: Nice.
• 9:41
  SPEAKER_01: And from those early phases of those talks, have you developed any bias you think on how guys are sitting right now?
• 9:51
  SPEAKER_02: I think it depends on the operation, whether they're purely crops or diversified crop livestock.
• 9:58
  SPEAKER_02: I've definitely heard anecdotal evidence of some financial concerns and some lending concerns, but I don't have any data to back up my claims.
• 10:09
  SPEAKER_02: Um it's really interesting the environment in South Dakota because we have so many young farmers as well compared to other states.
• 10:17
  SPEAKER_02: So the land ownership structure is a little bit different.
• 10:21
  SPEAKER_02: We have a lot of uh a lot of young people who don't own very much land, but they're doing a lot of really creative things to make money.
• 10:27
  SPEAKER_02: Maybe they're they're doing custom farm work on the side, or they they're they have multiple businesses.
• 10:33
  SPEAKER_02: And um so yeah, I I don't have a good answer to your question.
• 10:38
  SPEAKER_02: I think it depends on the farm, the characteristics, the land ownership, the age of the operator, but um there's a lot going on out there.
• 10:46
  SPEAKER_01: And I have some concerns.
• 10:48
  SPEAKER_01: The question around land ownership specifically, I I love that you brought that up because it's very interesting to me how um the younger generations, 20s, 30s, even folks into their 40s, especially here locally, you know, in eastern South Dakota, uh, not a lot of land ownership for that demographic.
• 11:07
  SPEAKER_01: And even if you compared what a average 35 or 40-year-old farmer in this part of the world owns for landmass versus what their father did, who farmed before that, uh, it doesn't seem like it's quite as much.
• 11:20
  SPEAKER_01: Can you talk a little bit about what you've seen just with that age of uh land ownership?
• 11:25
  SPEAKER_01: Uh some key takeaways you think?
• 11:27
  SPEAKER_02: Yeah, so nationally, if we look at like the NAS statistics, um, most of the farmland is owned by people 65 years and older.
• 11:36
  SPEAKER_02: Most of the farmers are 65 years and older.
• 11:39
  SPEAKER_02: So um, we always hear a lot about this aging demographic of farmers and this kind of cliff, and there's going to be this huge transition of land, this asset, and and we need to work on planning better for transitioning this.
• 11:53
  SPEAKER_02: Um, and a lot of land is non-farm landowners, so maybe somebody that lives off the farm and they rent the land out.
• 12:04
  SPEAKER_02: So one of the issues with that is like we're at when we're asking farmers to implement all of these environmental practices that improve soil health, like cover crops or some type of fertilizer application or no-till, a lot of these um practices take time to see an effect.
• 12:22
  SPEAKER_02: Um, and then in the short term, they can actually have a negative effect.
• 12:26
  SPEAKER_02: So we've we've seen data from the research farm suggesting that you actually get a you know, a yield bump in the short run when you use tillage.
• 12:34
  SPEAKER_02: So if you're renting land, it it makes sense that you would use tillage because you know you're you never know if you're going to be renting that land in the future.
• 12:42
  SPEAKER_02: So you're just optimizing year by year for the short run.
• 12:46
  SPEAKER_02: And and when you own the land, you can actually optimize for the long run.
• 12:50
  SPEAKER_02: You can think about over 10 years or 20 years, but if you don't own the land, it doesn't make sense from an economic perspective to think that way.
• 12:58
  SPEAKER_02: So um it has implications for how people farm and what makes sense economically to do.
• 13:07
  SPEAKER_02: Um, I would like to personally, I'd like to see more, you know, land.
• 13:12
  SPEAKER_02: I think it's better when the farmer farmer owns the land and and um and if we can help promote land ownership by the farmer.
• 13:21
  SPEAKER_02: Um, because then we also see margins getting squeezed too.
• 13:25
  SPEAKER_02: And and with the government payment programs, a lot of that is is just getting passed through in the form of cash rent if you're renting land.
• 13:32
  SPEAKER_02: So they're giving direct payments that are supposed to help farmers.
• 13:37
  SPEAKER_02: In reality, um that that can just be causing cash rents to go higher, and then the landlord's capturing a lot of that that subsidy.
• 13:45
  SPEAKER_02: So um that Illinois I saw I saw cash rents that were higher than the profit of the field, you know, that weren't even making sense economically.
• 13:57
  SPEAKER_02: The the environment was just so competitive there that it was leading people to make irrational economic decisions and and bid more on cash rent than what they should be paying.
• 14:07
  SPEAKER_02: So um I think it's complex.
• 14:09
  SPEAKER_02: I do, you know, if I were a landowner, I would want to keep my land.
• 14:13
  SPEAKER_02: It's a it's a great asset to have, but um we have to think too about the longevity of the farm and and optimizing soil health and and things like that as well.
• 14:24
  SPEAKER_01: With some of the government programs, just building on that a little bit, what what are you seeing out of things like 45Z and impacts and adoption and and program availability?
• 14:35
  SPEAKER_01: Are folks able to take advantage of that in a big way yet?
• 14:40
  SPEAKER_01: Is it close to having big impacts on the way we farm land today?
• 14:44
  SPEAKER_01: What is your overall take from of some of the sustainability practices and pushes that you think are approaching us in agriculture?
• 14:53
  SPEAKER_02: That's a great question.
• 14:54
  SPEAKER_02: So I worked a lot on the agricultural carbon markets when those first I was gonna say when they first started coming about, but they they've actually been a conversation for a while.
• 15:05
  SPEAKER_02: But a few years back when I was in grad school, they kind of had a hit the news and had a huge, you know, revival and everybody was talking about carbon markets.
• 15:15
  SPEAKER_02: So I got really into studying that and trying to help farmers navigate those decisions.
• 15:19
  SPEAKER_02: Um I don't work as much with the 45Z and that.
• 15:22
  SPEAKER_02: So I'm no expert in that, so I don't know how much help I can be with that one.
• 15:26
  SPEAKER_02: But I've heard a lot of talk about that, a lot of excitement, a lot of sounds like there's a lot of potential if it if it happens.
• 15:32
  SPEAKER_02: But um I think one of the challenges we've seen is when the policy, when the policy environment is constantly changing, then um it causes it can cause these programs to change and what's being offered to change.
• 15:45
  SPEAKER_02: So farmers can't get too too comfortable with anything because you know policy could always swing back the other way or or ship the other way.
• 15:53
  SPEAKER_02: So that's what we've seen with some of the carbon market stuff.
• 15:56
  SPEAKER_02: It's it's kind of gone away, which you know, the m the prof profit on those was pretty thin anyway for farmers.
• 16:02
  SPEAKER_02: But it wasn't to me, it was an interesting, it was a way to kind of diversify and generate some additional revenue and and potentially provide money to those who were doing prices that have benefit to society.
• 16:15
  SPEAKER_02: So I thought it was an interesting step toward quantifying some of those benefits, but um with all the policy uncertainty, it's just it's difficult as a farmer if you want to try to participate and capture some of that value.
• 16:30
  SPEAKER_02: So maybe with the 45Z, there's maybe a bit more optimism that that could take off.
• 16:37
  SPEAKER_01: Makes sense.
• 16:37
  SPEAKER_01: How about on uh specifically looking forward to farm inputs going into 2027?
• 16:43
  SPEAKER_01: A lot of your research has revolved around that as well.
• 16:47
  SPEAKER_01: Uh, what do you see for trends comparing last year's numbers to 2027's outlook?
• 16:52
  SPEAKER_01: I know you haven't released the numbers yet.
• 16:54
  SPEAKER_01: I I think it'll be coming out soon, it sounds like here.
• 16:57
  SPEAKER_01: Uh, but what can you tell us about what you know now going into this next uh marketing year?
• 17:03
  SPEAKER_02: Sure.
• 17:03
  SPEAKER_02: Yeah.
• 17:04
  SPEAKER_02: So I do the uh South Dakota crop budgets.
• 17:07
  SPEAKER_02: So I look at the cost of I try to come up with an average cost of production for um central and uh eastern South Dakota high productivity land, middle productivity land, and then west and central lower productivity land.
• 17:22
  SPEAKER_02: So I try to make assumptions about okay, what does the typical farm applications look like?
• 17:27
  SPEAKER_02: What are they paying for inputs?
• 17:29
  SPEAKER_02: What does their return look like?
• 17:30
  SPEAKER_02: Sometimes it feels like I'm throwing a dart at a dart board because there's a ton of variation of what farmers do.
• 17:38
  SPEAKER_02: So that that number varies a lot, but um but I've been looking at the input costs for the last few years and I'm pretty concerned about the fertilizer costs.
• 17:48
  SPEAKER_02: Those have have gone up quite a bit when I look at the numbers over time.
• 17:52
  SPEAKER_02: I I receive them every fall and spring from an egg retailer and then incorporate them into the crop budgets and uh fertilizers just going up significantly.
• 18:02
  SPEAKER_02: It's and it's already a large portion of the crop budget to begin with.
• 18:07
  SPEAKER_02: So um I think I have some some stats here somewhere, but like for example, in for the corn, when I got the fertilizer prices in 2024, urea was$415 a ton, map was$775 a ton, potash was$415 a ton, AMS was$420 a ton, and 28% was$315 a ton.
• 18:34
  SPEAKER_02: And now getting those prices involved 2026, you see urea at$570, MAP at$950, Potash at$455, AMS at$460, and 28% at$385.
• 18:48
  SPEAKER_02: So those are uh all of those nutrients are between$40 and$175 a ton higher in 2026 than they were just two years ago when I started doing the crop budgets.
• 18:59
  SPEAKER_02: So to me, that's that's concerning.
• 19:02
  SPEAKER_02: It's becoming a larger share of the return is going towards paying for fertilizer.
• 19:08
  SPEAKER_01: Especially even when you compare fertilizer to even last year.
• 19:18
  SPEAKER_01: So it'll be interesting to see as price of uh commodities are fluctuating here a little bit if uh if fertilizer does continue to stay higher.
• 19:27
  SPEAKER_01: The one that stuck out to me was map sulfur products.
• 19:30
  SPEAKER_01: Seems like those are a little bit more expensive, doesn't it?
• 19:32
  SPEAKER_01: Seem like it.
• 19:33
  SPEAKER_02: Yeah, yeah, it went up quite a bit.
• 19:35
  SPEAKER_02: And yeah, I think there's a whole kind of supply chain story to why that that's going on.
• 19:41
  SPEAKER_02: But yeah, it's definitely affecting the the price here in in South Dakota and the price that farmers are paying.
• 19:48
  SPEAKER_02: And then it affects the crop crop returns and crop budgets.
• 19:51
  SPEAKER_02: So I've just been seeing the margins get thinner and thinner since I started doing the crop budgets three years ago.
• 19:57
  SPEAKER_02: Uh, but I don't include government payments when I do the crop budgets.
• 20:01
  SPEAKER_02: So if you include that, it helps push the margins positive.
• 20:06
  SPEAKER_01: But um, and those government program payments have seemed to ramp up here over the past few years, especially since uh COVID.
• 20:15
  SPEAKER_01: Uh what about diesel?
• 20:17
  SPEAKER_01: You know, that seems to be the elephant in every room and and getting talked about this fall.
• 20:22
  SPEAKER_01: Uh it's an important time of the year for diesel use, obviously, in agriculture.
• 20:26
  SPEAKER_01: So, what have you been hearing on uh diesel going into this next year?
• 20:30
  SPEAKER_01: Is it I know it's improved a little bit over the past week, but what's your overall outlook on diesel going into next year?
• 20:36
  SPEAKER_02: Yeah, there's a lot of concern about diesel prices.
• 20:39
  SPEAKER_02: We've seen diesel at the pump reach over six dollars a gallon, which it as a national average, which has never happened before.
• 20:46
  SPEAKER_02: Some states, like California, it's it's happened in states, but it's never happened nationally.
• 20:52
  SPEAKER_02: Um so it's definitely concerning.
• 20:55
  SPEAKER_02: Um for when we think about a percentage of corn revenue in in South Dakota that goes to diesel or fuel and oil, it's about 5% of our gross revenue.
• 21:09
  SPEAKER_02: When I look at the crop budgets from in 2026 compared to 2025, it was 4% of gross revenue.
• 21:16
  SPEAKER_02: 2023, it was 3% of gross revenue.
• 21:19
  SPEAKER_02: So it's a relatively small piece of the financial puzzle, but it is it is growing by about 1% each year that I look at it.
• 21:28
  SPEAKER_02: Um, but when the commodity prices are are higher, we don't we don't see as much as a effect.
• 21:33
  SPEAKER_02: It kind of helps soften things.
• 21:35
  SPEAKER_02: Um and while commodity prices have improved a bit, they're still lower than they were in the past.
• 21:42
  SPEAKER_02: Um, when we had we had some high diesel prices in in 2022, but we had a lot higher commodity prices then.
• 21:48
  SPEAKER_02: So it it wasn't as painful.
• 21:50
  SPEAKER_02: But um, like if I look at the the total use of diesel, farmers usually use about two to six gallons of diesel per acre, depending.
• 22:00
  SPEAKER_02: What practices they're doing.
• 22:02
  SPEAKER_02: So if I'm just using the pump price of diesel, if it's$6.26 an acre, and let's say they're using five gallons or six dollars and twenty-six cents a gallon, they're using five gallons.
• 22:15
  SPEAKER_02: That's about$31.30 an acre.
• 22:18
  SPEAKER_02: If we compare that to September 2025, when diesel was$3.75 a gallon times that say five gallons, it's$18.75 an acre.
• 22:27
  SPEAKER_02: So that that would be about a$12.55 increase in diesel, which is significant.
• 22:35
  SPEAKER_02: It's not nothing, but it um I would also say the fertilizer price change is what concerns me the most.
• 22:42
  SPEAKER_02: And um then this kind of cross effect between fertilizer and diesel, both being high, is what I find really concerning.
• 22:52
  SPEAKER_02: So it's not so much the diesel alone that that concerns me.
• 22:55
  SPEAKER_02: $12 is not nothing, but uh when I look at the the margins from fertilizer, that's what concerns me the most.
• 23:02
  SPEAKER_02: And when I look at fertilizer and diesel together, that's that's when I become the most concerned.
• 23:07
  SPEAKER_01: That's a great point.
• 23:08
  SPEAKER_01: Just how it impacts your overall revenue.
• 23:10
  SPEAKER_01: You know, diesel's probably not that big of an expense, especially when you compare it against something like fertilizer, but they've both been trending up.
• 23:18
  SPEAKER_01: They both seem like they uh have a pretty high floor at this point, just fundamentally with things that have happened with taking refineries out and and uh other you know urea production across the world.
• 23:31
  SPEAKER_01: Uh, it seems like the floor is pretty high on both of those products here going forward, at least for the next couple of years, honestly.
• 23:38
  SPEAKER_01: So it's concerning and uh it really makes you uh appreciate uh being able to take advantage of any rallies that we've had in this uh grain market and any that'll go forward to help kind of at least get a good floor in for revenue for these producers here in agriculture.
• 23:55
  SPEAKER_01: So any other input sides uh uh of things to cover, really, you think that have stood out to you going into this next year before we wrap up?
• 24:03
  SPEAKER_02: I guess I would also mention that like when I look at fertilizer share revenue, it's about 25% of the gross crop revenue goes to fertilizer.
• 24:12
  SPEAKER_02: So if we compare that to diesel where, you know, about 5% goes to fuel and oil.
• 24:17
  SPEAKER_02: So the fertilizer, a huge portion of of the revenue is is made up of the fertilizer expense.
• 24:23
  SPEAKER_02: And um, I really hope that they can figure out some sort of policy relief or or technological change to help with that.
• 24:33
  SPEAKER_02: That's that's really what concerns me the most.
• 24:36
  SPEAKER_01: But anything on equipment that stood out to you here lately?
• 24:41
  SPEAKER_02: I haven't I haven't gone so much into the equipment side.
• 24:45
  SPEAKER_02: It's always been on my to-do list.
• 24:47
  SPEAKER_02: I I give a lecture every year in the precision ag class.
• 24:50
  SPEAKER_02: I give a guest lecture about the economics of farm machinery.
• 24:54
  SPEAKER_02: I'm back in like the 1960s, the ag economists were doing a lot of work, like finding the optimal machinery size and things like that.
• 25:02
  SPEAKER_02: And I've always meant to kind of update that.
• 25:05
  SPEAKER_02: Okay, what does that look like in modern times?
• 25:08
  SPEAKER_02: But um haven't got that project, haven't started on that project yet.
• 25:12
  SPEAKER_02: So it I think it it would be interesting to explore that more.
• 25:16
  SPEAKER_02: But if we look at the the share of revenue spent on equipment, you know, in the 90s or 80s compared to now, it's it's changed a lot.
• 25:27
  SPEAKER_02: It's a lot, a lot higher.
• 25:28
  SPEAKER_01: So absolutely.
• 25:30
  SPEAKER_01: All right.
• 25:31
  SPEAKER_01: Well, thank you for joining us today.
• 25:33
  SPEAKER_01: I really appreciate it.
• 25:34
  SPEAKER_01: Everyone else, please uh log on to the SDSU extension page.
• 25:37
  SPEAKER_01: You can find tons of tool, cool tools like Jake was just showing there on the screen uh regarding things like crop budgets, uh financials, things like anything along those lines.
• 25:48
  SPEAKER_01: Uh, it could be some really cool tools, grain bid storage uh calculators.
• 25:53
  SPEAKER_01: So uh please reach out to the extension office if you need anything.
• 25:56
  SPEAKER_01: In the meantime, click the link or subscribe below uh to get some cool things like daily market commentary and many other things.
• 26:03
  SPEAKER_01: So, Sarah, can't wait to have you on next time.
• 26:05
  SPEAKER_01: And I I really appreciate your time today with us.
• 26:08
  SPEAKER_02: Thank you so much, Mike.
• 26:09
  SPEAKER_02: It's been really fun and great.
• 26:11
  SPEAKER_02: Always great to talk with you.
• 26:14
  SPEAKER_01: All right.
• 26:15
  SPEAKER_01: Well