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Wet fields take toll on business
Sellers of seed, fertilizer and other inputs likely to see significant declines
By Brian Rustebakke, The Grand Forks Herald
June 8, 2001
 
Business in farm inputs -- products like fertilizers, chemicals and seed -- stands to be off significantly this year in areas where farmers have had difficulty getting their 2001 crops in because of wet fields.

Frequent rains that have crisscrossed the region, for example, have left some suppliers in parts of northwestern Minnesota with considerably larger-than-usual amounts of goods on hand.

"When you gear up for a year, you project tons of this kind of fertilizer, gallons of that kind of chemical -- you have to have it on hand to sell it," said Dave Meshefski, manager of the Hallock, Minn., branch of Agriliance. "This spring, it's been three days, then it rains, another few days, then it rains again. So we do have a lot of product on hand that we would've normally moved out."

Agriliance deals in farm inputs including chemicals and seed as well as custom fertilizer application. A fair number of farmers in the area, Meshefski said, simply won't be able to get part or all of their crop in this year because of wet field conditions.

"Say, along the Red River -- there's no way they can get out there. Once it dries up, that's actually some of the first ground they're in on. This year, that didn't happen," Meshefski said. "We had one real untimely rain -- 21/2 inches or so about May 5. That really killed it up here."

For example, Meshefski said that -- in a more normal spring planting season -- the company would do a relatively brisk business in anhydrous ammonia fertilizer. Time to apply it, however, ran out this season.

"We'd normally move 600, 800 tons of anhydrous. This year, none, really," Meshefski said. "It just got too late."

Like chemical and fertilizer business, seed sales in the area have taken a hit this spring.

"That, too -- there's a big impact there. A lot just isn't going in," Meshefski said. "We have guys calling in every day about returning seed."

A double whammy

One Grand Forks County elevator manager, who wished to remain anonymous, said that fewer acres being planted amounts to a double whammy for businesses that supply farm inputs in the spring and buy grain in the fall.

Farmers in parts of southern Grand Forks County have had a considerably difficult run of things this season as well because of wet field conditions.

Simply put, less crop going in the ground in the spring means less revenue and, likewise, a smaller crop passing through local elevators means less revenue come harvest time.

"It is a sensitive situation...definitely a bad situation. We feel sorry for the farmer, but it's going to have an effect on us, too," he said. "Farmers can buy insurance that will at least help them out if they can't plant a crop or can only plant part of a crop, but we -- the elevator, the supplier -- have no protection from things like this. And it is going to show up in the rural economies."

Multiplier effect

Any overall dollar figure on the amount of revenue that prevented planting will cost the agricultural supply sector -- therefore the farm economy as a whole -- likely will be some time in coming, said Eric DeVuyst, a North Dakota State University agricultural economist.

"For sure, it's absolutely too early and very difficult to even speculate. Many of those numbers, if they're tracked, might take as much as a year to come out," DeVuyst said.

What is certain is that if ag suppliers -- much like their farmer-customers -- have to tighten their belts because of smaller-than-average revenues, local economies will feel the resulting pinch. Depending on the individual businesses, that could mean cutting back on services or keeping fewer employees on staff.

"The supplier doesn't earn the profit, so presumably some of that profit isn't going to be going back into the local economy -- just not there to be spent, to be passed around," DeVuyst said. "In economics, we call that the multiplier effect. If there are fewer dollars out there, they don't make their way around, trade hands over again through the economy as a whole."