Looking at the scrappy collection of contenders, not one stood out as a real top seed. But across the region, farmers stared at past stats, leaned on gut instincts and penned down their play for the 2019 spring planting season.
Due to global supply and demand and unsettled trade affairs, low prices for major crops, baring a major disruption in supply, will provide only marginal bottom lines for Southeast growers to rebound from this growing season. To illustrate this cloudy forecast, we started the first Farm Press March Madness Planting Season bracket competition, a cheeky nod, of course, to the NCAA Men’s Basketball March Madness, and yes, we’ve dutifully filled out official brackets for that very real tournament of tournaments.
To help with our pseudo tournament and bracket creation pitting some major commodities against one another on the court of fiscal competition, we got up with Dr. Nathan Smith, agricultural economist with the Clemson University, who acted much like our tournament referee, scorekeeper, and color commentator.
Basic rules of play:
- A team (crop) will consist of one acre.
- Yield for each team was determined by combining the Olympic (when possible) averages yield of South Carolina, Georgia and Alabama and combining irrigated and non-irrigated averages.
- Team unit (bushel or pound) price is based on estimated harvest prices at time of planting.
- A team’s score (profitability) was based on average net return above variable costs, or ANRAVC.
The first round of tournament play included peanuts versus corn, cotton versus soybean and hemp versus tobacco.
Peanuts vs. Corn
The one-acre peanut team weighed in at an Olympic average of 3,716 pounds and was given an expected price of $411.67 per ton with an estimated per acre gross return $763. The one-acre corn team weighed an Olympic average of 150 bushels and was given expected price of $4.25 per bushel with an estimated per acre gross return of $638.
Given these game stats in straight head-to-head play, corn came out on top, scoring an average net return above variable costs of $100 per acre against peanut’s ANRAVC of $89 per acre.
“It should be noted that corn tends to play better in an El Nino year, which we are in right now and expect to have through the growing season.” Smith said. “Peanuts are in a surplus situation and probably need some help from the other crop teams’ prices to go up.”
Cotton vs. Soybean
“This game you could call almost before the teams hit the court,” Smith said.
The one-acre cotton team weighed in at an Olympic average of 845 pounds per acre and was given an expected price of 73 cents per pound with an estimated per acre gross return of $617. The one-acre soybean team weighed an Olympic average of 38 bushels and was given expected price of $9.35 per bushel with an estimated per acre gross return of $355.
Given these game stats in straight head-to-head play, cotton came out on top with an ANRAVC score of $113 per acre compared to soybean’s ANRAVC score of $25 per acre.
“It might be important at this point in the tournament to mention that if we applied potentially all the costs per acre, which include fixed costs, we’d be coming up with negative scores (or returns) under similar scenarios,” Smith said.
Hemp vs. Tobacco
A much-anticipated match between a dynasty franchise and an old crop with newly invigorated fans, hemp versus tobacco was an interesting pairing. Let's call it an exhibition game for our tournament’s purpose.
The one-acre tobacco team weighed in at a 2,000 pounds with an expected price of $1.95 per pound with an estimated gross return of $3,900. Hemp’s one-acre team weighed in at 1,000 pounds with an estimated per-acre gross return of $25,000.
Given these game stats in straight head-to-head play, hemp appeared to run away with the game with an ANRAVC score of $13,889 per acre compared to tobacco’s ANRAVC score of $402 per acre. But Smith had some interesting commentary on this match:
“Tobacco is limping into March with news of cuts in contracted production for some by U.S. Tobacco Cooperative and tobacco companies. So, while the projected net return above variable costs of $402 per acre looks like it can cover production costs, it falls way short of total costs and farmers will be paid on leaf tobacco, no lower stalk tobacco. Tobacco is facing tough odds this year,” he said.
“So, a new team is rising in some old tobacco-growing areas called industrial hemp. It has three main styles of play depending on the use of hemp: fiber, seed or cannabidiol, or CBD for short,” he said. “Industrial hemp production for CBD use is labor intensive and preliminary estimates show variable costs at over $11,000 per acre. A projected price is hard to come by but assuming $25 per pound of dry flower material and a 1,000 pound yield per acre gets the attention of many at $13,889. Industrial hemp is the team with new shiny outfits, but tobacco companies have a history of paying contracts and industrial hemp has no history and startup processors may or may not pay.”
In second-round play, cotton went up against corn. Assuming the same stats, cotton beat out corn, but, "It depends on which way you look at it. Using Alabama, Georgia and South Carolina budgeted yields, cotton does beat out corn, but using the five-year Olympic average yield, corn beats out cotton due to better yields on corn. Of course, all of these results will vary on a farm-by-farm situation and history. The bottom line is prices overall for our historically major row crops will be down again this year and growers will have to do the best they can with supplying the needed inputs to reach the highest yields while being attentive marketers to take advantage marketing opportunities throughout the season and after,” Smith said.
At the USDA’s annual Agricultural Outlook Forum (not connected to the Farm Press March Madness Planting Season bracket competition) held the last week in February, USDA’s chief economist Robert Johansson said falling commodity prices in recent years have weighed on farm income, but that the “dramatic fall in net farm income in 2015 and 2016 seems to be leveling out, yet the current expectation of farm income is a long way from the $134 billion peak in 2013,” according to a USDA report on the meeting.
He said real net farm income is down 28 percent compared to the 10-year average. Farm equity has also fallen, but only by 5 percent from the peak in 2014, and overall measures of financial solvency also remain firm, underscored by relatively high land values and current low interest rates.
Johansson said that net farm income is expected to rise, but only slightly, remaining below $80 billion annually over the next 10 years.
Though our spring planting tournament play is over, the real game will last all growing season. Before play action began for Farm Press bracket tournament the organizers and commentators held an earnest prayer session asking for safe play for all and that no major natural disaster will come along in 2019 and drastically disrupt play.
Good luck. Take care, and thanks for reading.