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." |