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Will soybean producers continue toward sustainability?

According to NASS, soybean harvested acres and yields in the Midsouth states of Arkansas, Louisiana, and Mississippi have been relatively constant over the last five years (2014-2018). What changed significantly in 2018 vs. the previous 4 years was the price producers received for their production (see below table).

Soybean harvested acres, average yield, and price received in the Midsouth–2014-2018.

Year

State

Harvested acres

Avg. Yield

Price*

 

 

x 1 million

bu/acre

$/bu

2018

Arkansas

3.25

50

$8.61

 

Louisiana

1.31

50

$8.79

 

Mississippi

2.20

53

$8.80*

2017

Arkansas

3.50

51

$9.77

 

Louisiana

1.25

54

$9.67

 

Mississippi

2.17

53

$9.74

2016

Arkansas

3.10

47

$9.83

 

Louisiana

1.19

48.5

$9.93

 

Mississippi

2.02

48

$9.94

2015

Arkansas

3.17

49

$9.46

 

Louisiana

1.39

41

$9.74

 

Mississippi

2.27

46

$9.72

2014

Arkansas

3.20

49.5

$10.60

 

Louisiana

1.40

56.5

$10.90

 

Mississippi

2.19

52

$11.00

*Market year average price for 2014-2017; Oct. price for Arkansas and Louisiana in 2018. Oct. 2018 price for Miss. not available but likely similar to those for Arkansas and Louisiana; thus, a price of $8.80/bu. is shown (all data from NASS).

According to 2018 soybean enterprise budgets published by Miss. State University Dept. of Agric. Economics, estimated specified costs (exclude land and management costs) of producing an acre of irrigated soybeans in the Delta region of the state was $508–$526/acre depending on the herbicide technology of planted varieties. Estimated costs of producing an acre of nonirrigated soybeans in the Delta was $377–$394/acre, again depending on the herbicide technology of planted varieties. Estimated cost of producing nonirrigated April-planted soybeans in the non-Delta area of the state was $312/acre, whereas estimated cost of producing May-planted soybeans in the non-Delta area was $384/acre. All of these estimated costs assume that the necessary and recommended production practices and management inputs were applied to these acres.

If a Delta irrigated soybean producer achieved an average yield of 60 bu/acre, then that producer would only have covered the estimated specified expenses in the aforementioned budgets using the $8.80/bu price. If a Delta nonirrigated soybean producer achieved an average yield of 40 bu/acre, then the $8.80/bu estimated Oct. price would result in no profit or a slight loss according to the aforementioned budgets. The same can be said for nonirrigated May plantings in the non-Delta area of the state.

It is likely that some producers who irrigated soybeans in 2018 achieved yields in the 70 to 80 bu/acre range, and they would have made a small profit using the Oct. price. It is also likely that some nonirrigated producers achieved yields at or around 50 bu/acre, and they too would have made a small profit using the same price. However, it is also likely that the majority of Midsouth producers made yields that resulted in little to no profit in 2018 using the Oct. price.

It is also very likely that most producers were levied some, moderate, or excess dockage at the delivery point following harvest in 2018. This would have lowered the price they received and would have resulted in further reduced profit potential.

So all in all, 2018 was likely an unprofitable year for many Miss. soybean producers, even though the state average yield is estimated to be above 50 bu/acre. So what is a producer to do when making these lofty yields that may prove unprofitable at 2018 commodity prices?

Regrettably, some or many producers will cut costs by eliminating inputs that are necessary to sustain the high yields seen over the last 5-7 years in the Midsouth. Thus, this goes against sustaining the high yields that are now so necessary to ensure any future profit potential.

As a matter of fact, it is likely that the trend toward increasingly higher yields in the coming years must be sustained since it is unlikely that cost of production will decline, especially since new and forthcoming technology will likely add more expense to soybean production. So again, what is a producer to do to ensure an even chance for sustained profits?

Producers must push the retailers of seed and other inputs (recent surveys indicate these members of the agricultural community are the most depended on for advice) to provide them with advice on using only those inputs needed for their specific environments. Producers can no longer afford to apply expensive inputs that are purported to increase yield, but may not increase them enough to cover the cost of the input.

Seed industry members, both public and private, must dedicate more resources to discovering genetic solutions to combat the myriad maladies that affect soybeans, and producers should demand this of them. Synthetic chemical remedies may provide short-term benefits, but it is a fact that the use of these expensive inputs will lead to continuing resistance issues among the pests they are targeting. Thus, in the long run, their continued use will increase producer problems; they must be replaced with genotypes that have inherent resistance qualities to combat pests wherever possible.

Since private companies supply the majority of soybean varieties to producers, it is incumbent upon them to work with public breeders and geneticists who have developed enhanced germplasm so that these enhanced genetics can be incorporated into future soybean varieties.

Again, producers should demand and expect these actions of their retailers. The sustainability of soybean production may depend on this course of action. It is certain that the current course of solving production problems with another pesticide or expensive input is not working toward a sustainable soybean production system.

One last note. I know there are several definitions of “sustainability”, and they all have merit. But I assure any audience that any production system that is not profitable over the long term is not sustainable no matter what “environmentally friendly” tweaks are applied. So we had better start looking toward “sustainable profitability” as the true measure of sustainability. Otherwise, the American bread basket may become an empty pantry.

Composed by Larry G. Heatherly, Jan. 2019, larryheatherly@bellsouth.net