U.S. farmers not living on easy street

SAN ANTONIO, Texas — Jay Hill recalls the exact moment he decided he was going to be a farmer.

He was a little boy shovelling cat poop out of his tractor tire sandbox on his parent’s 10-acre suburban farm in southern New Mexico and he looked out at the land and decided he wanted to grow stuff.

By the age of 14 he had formulated a business plan and convinced his father to arrange for an operating line of credit.

His first crop was onions, and he harvested the crop during one of the best onion markets in New Mexico’s history.

“That was my springboard,” Hill told delegates attending Bayer’s AgVocacy Forum. “That catapulted me into agriculture.”

The vegetable farm has expanded to just shy of 1,000 acres. It produces eight million kilograms of onions a year, 1.4 million kilograms of lettuce and an assortment of other vegetables.

There is also a restaurant and grocery distribution segment.

When Hill started the farm he had an idealistic vision of driving around on his John Deere 4455 tractor and baling hay at night.

“I didn’t see staying up until three o’clock in the morning with the accountant praying to God that your last contract comes in right before the bank forecloses,” he said.

After enduring a few years of lacklustre commodity prices, reality has set in. It has reached a point where Hill can’t fathom who would step in behind him to take on the risk of running the business.

“I didn’t think I would be 32 years old and almost $10 million in debt right off the bat,” he said.

Farmers across the United States are hurting with commodity prices that have often been below the cost of production the past couple of years.

Deb Gangwish, co-owner of PG Farms Inc. and the Diamond G, two diversified farms in central Nebraska, said the farms haven’t generated a return on investment in years, and 2017 looks to be another grim year.

“Times are incredibly difficult, tougher than we’ve ever encountered,” she said.

The family will be spending $3 million on crop inputs and $1 million on irrigation in 2017. Meanwhile, commodity prices are still in the tank.

“This ag economy is killing us,” said Gangwish.

She has a friend in the construction business who says he is doing no work for farmers for the first time in six years. Bankers she talks to are concerned about the financial health of some of their farm clients.

Gangwish is attempting to weather the storm by diversifying. They grow crops, raise cattle, operate a feedlot, do custom harvesting and trucking and operate two farms located three hours apart.

Hill said diversification is the key to the survival of Hill Farms and Wholesome Valley Farms.

He grows a wide variety of crops, operates a small beef cattle herd, produces vegetable seeds for Bayer and runs a grocery distribution company that delivers produce to about 65 area restaurants.

“They say the darker years always makes you stronger, and it has,” said Hill.

He has also diversified into organic production while still growing conventional and genetically modified crops. That was to appease the millennials who found his 100-acre plots of conventional head lettuce off-putting.

“People look at me as a larger-scale farmer and they say, ‘where’s your overalls and your pitchfork?’ And so I diversified and went the organic route a little bit,” said Hill.

Gangwish also credits technology for saving her farm. She said products such as those offered by Monsanto’s Climate Corp. have proven invaluable.

Hill said technology can be a double-edged sword. A company from Israel came to his farm to showcase a robotic machine for harvesting green chilies.

“The next thing I know I’ve got one of my harvest crews on strike,” he said.

The machine would have paid for itself in half a year because it could replace the work of 60 people, but he didn’t buy it.

“Because I still need that same group of people to go to a lettuce field. I need that same group of people to go to a cabbage field.”

Gangwish is confident things will change in the farm economy, and she is determined to stick it out until the situation improves because that’s what farmers do.

“We ride cycles and we hang on,” she said. “Other people probably wouldn’t. It’s in our blood and we will get through this.”

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