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|Articles - February 2010|
|Thursday, January 21, 2010|
Converting to more profitable crops can be a smart move for farmers in rough economic times, and grass seed farmers are doing just that by growing wheat, making the most significant crop switch in the state.
“Growers are playing with other things, but not on such a significant scale” as switching to wheat, says Brent Searle, a policy analyst at the Oregon Department of Agriculture.
The grass seed industry generates $1.35 billion of economic activity each year and takes ups 55% of the cropland in the Willamette Valley; it hovers between being the third- and fifth-largest crop in Oregon.
But prices began dropping precipitously in the fall of 2008 by as much as 50%. Demand remains low because of housing construction’s slump. “There is a surplus in warehouses right now,” says Roger Beyer, the executive secretary of the Oregon Seed Council.
The council is calling for a 30% reduction in grass seed acreage in 2010, while wheat is being grown at levels not seen in Oregon since the 1970s.
Jerry Marguth, the owner of Nixon Farms in Junction City, grows both grass seed and wheat, and says he has cut his grass seed acreage from 1,500 to 1,100 and increased his acreage for wheat from 400 to 700.
“[During] normal times, grass seed is slightly more profitable than wheat,” he says, adding that he’s not sure anybody in the grass seed industry knows when prices will go back up again.
Geoff Horning, executive director of the Agri-Business Council of Oregon, says switching crops is not economically viable for most farmers because of high up-front costs associated with changing equipment, what the farm’s soil is able to sustain, how much water is needed and a farmer’s learning curve when growing something new. “There are few farming operations changing what they do,” he says.
Wheat prices are not doing much better at $4.10 per bushel after transportation costs, which is $2 per bushel below production costs. That’s a far cry from when wheat sold for $16 per bushel in 2007.
But Tammy Dennee, the executive director of the Oregon Wheat Grower’s League, says cash-flow opportunities with wheat are still better.
“[Grass seed farmers] are sitting on inventory,” says Dennee. “There’s no cash flow opportunity.”
Grass seed is typically grown under a contract, which stipulates when it will be bought. The time of sale and harvest time may differ, and farmers can find themselves storing large quantities of seed for up to a year before selling it.
Wheat producers, on the other hand, can sell immediately after harvest. “There’s a lot of advantages to wheat,” Searle says.
“This is one of the best cash crop options available for growers,” says Dennee.
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Presented by OEN + CENTRL + YESpdx.
This Roundtable will cover numerous issues under the employer "shared responsibility" rules of the Affordable Care Act, including how to track the "full-time" status of variable-hour employees, temporary or seasonal employees, and employees who experience a change in status or a break in service. Additionally, we will provide a brief overview of Code sections 6055 and 6056, which require most mid-sized and large employers to submit their first information reports to the IRS in early 2016 regarding the health insurance coverage being offered to employees. We invite you to participate in an interactive discussion on how to prepare for the future impact of the shared responsibility rules on your operations and finances.