A bill for $90,000 will get your attention.
The number stared up at Monty Shivak earlier this year when he calculated the additional costs he faces because of Aug. 1 grain freight rate hikes.
“The first thing I had to do was figure out whether I could lose $90,000 out of my farm,” he recalled later. “My decision was really whether to keep grain farming at all.”
The answer has been a qualified yes. Shivak still is farming, but there have been some changes.
The 32-year-old is one of the youngest and biggest farmers in this area between Melville and Esterhazy.
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This year, he has about 2,000 acres in flax, 1,000 in each of barley, wheat and canola, and, for the first time, 100 acres in dill and 50 in caraway.
Forced to diversify
Last spring, he reluctantly bought about 80 head of cattle to try to make money off his marginal land and screenings.
“I’m forced into doing something,” he said. “I can’t look at that bill and say, ‘well, life goes on’. If I can provide my cattle with feed from my grain farm, that pays.”
Operating margins in this area are around 20 percent, which provides a net return of about $30 an acre, so a $15-$20 freight increase is a major blow. Shivak is not happy about the new freight bills but he does see a bright side.
“I can’t fake it and say a $90,000 bill is a good thing,” he said. “But in the end, it might end up forcing me to (do) things maybe we should have done 10 years ago, and being more efficient and more profitable.”
In Shivak’s view, the post-Crow push for diversification in many ways represents a return to the past, pre-1970s when farmers were encouraged to specialize in grain or livestock.
On every quarter of his land, there are decrepit fence lines lying in the grass, evidence of the time when mixed farms were the rule rather than the exception, he said.
His strategy in the next few years will be to plant his most efficient acres to high value crops and to turn cattle onto marginal land. He also will experiment with potentially lucrative new crops like dill.
“You do what you have to do,” said Shivak. “We used to do fine growing grain, so we did it. Now you see that doesn’t work anymore so you say ‘let’s get some cattle, maybe change what we grow a little bit’.”
However, he conceded not all farmers can afford the needed investment to diversify.
“The question is ‘who can take a punch? That’s what it will boil down to,” Shivak said. “This is definitely going to weed a few out.”
