Well, I guess give me a sense
of, you know, all the different
challenges that are being faced by
soybean farmers right now, because
they're Obviously, there's the
usual ones and then there's new ones
and the global ones and local ones
Right, so the challenges right
now for soybean farmers are
manifold.
Number one, we would probably say is
trade.
Trade is our, we export
over half of the soybeans we grow
in this country,
maybe 60% in a normal year.
So when our international
trade falls off, we
feel it very, very quickly because
it's such a large percentage of
our soybean production.
The second area that
is challenging, but also an
opportunity, and that is
biofuels.
If you've been listening, you know a
little bit about what's going on
with the 45Z tax credit,
sustainable aviation fuel,
California Air Resources Board has
made some
Let's just say wrinkles in the
water, but by
and large, if we can get our
biofuels thing work in the
way we would like to see it,
that will go a long ways towards
giving us new demand and
that new demand is really, really
important.
That'll probably mean instead of
exporting soybeans in
the future, if this can all happen,
it'll be export soybean meal.
Interestingly, on the global stage.
Brazil doing the exact same thing.
They're ramping up their soybean
processing and they've
already got a 15% biofuels
mandate for diesel fuel.
So they will be using a lot
of their soybean oil also
for fuel.
We're a little bit behind them in
terms of our, you know, our
government is
a little slower to set things up
and what's
most important is that we
send a clear signal to our
processors.
To the soybean industry so
that they are willing to
make the investment.
The investors are not going to
invest in a new frontier
without some kind of
assurances that it's going to be
here.
That it's not, you know, this
administration and then the next
administration, we're going a
different direction.
So we have to be very, very
clear in terms of our
policy that we
send the signals that are unwavering
and consistent.
And that lack of consistent and
clarity seems to be the biggest
issue right now, especially with the
federal government in terms of what
will be the policy tomorrow or next
week or next year.
Clearly consistency is absolutely
essential.
A couple years ago, you know, there
was a pretty good signal that this
is the direction we were going and
there were quite a few new plants
planned and many of them were
built.
And the last administration was
very slow to follow through on
that and this administration
hasn't put
the fast track in any of it.
It's just been painstakingly
slow, no matter which side of the
aisle you're on.
As farmers, we would like to see
this clarity to
build certainty in our markets.
If our exports are going to change,
if we're going to constantly be at a
disadvantage to our South American
producers, which as all indications
are, they're not going to stop,
then we clearly have to build other
markets.
And I think the biofuels thing
is
a perfect example of that.
Yes, we need international trade.
Yes we have opportunities in
international trade I
think there's more to come.
Our United Soybean Export Council
has worked diligently on
the commercial side, working with
our large soybean processors,
on the IP and the food grade side,
SSGA has done a wonderful job of
finding new markets and building the
markets that we already have.
So we can't turn our back on our
existing markets.
But we need to build because farmers
in this country have a tremendous
ability to produce and
without markets,
that production capacity will
drive us, as it does in all
commodities, toward break
even and below.
That doesn't work for any business
for very long.
So right now, the biggest
thing in the headlines is China
saying we're not buying from the
U.S. Anymore.
And that's part of a trade dispute.
Tangent to that is also Brazil
increasing production and creating
new markets for China to
go to, so they have that
opportunity.
Do you think China coming back in
is still on the table or
at this point should the U S and
farmers be talking about new markets
and new products entirely and
not worrying about China?
We would want.
Welcome, China, to come back and
I mean, the facts are
in the marketplace,
our beans are cheaper than Brazil's,
so in the absence of tariffs,
we're ultra competitive.
In fact, isn't it interesting that
just last week we exported two
containers or two ships
full of beans?
Why did that happen?
Well, it happened because our beans
are really competitive.
So yes, this trade dispute is a big
deal and we do
need to get it fixed.
I can't force it to happen.
No farmer can.
The economic incentives are there.
We really welcome China
back with open arms as a buyer.
We understand that we have to be
competitive. We're more than happy
to be We're more
than happy to do our,
do whatever we need to to build
markets in a fair and equitable
fashion.
Market access is really important to
us.
We need a level playing field.
So what does it mean now in
the in the very near future as we're
coming up on harvest for for farmers
now, what percentage of the fields
are already sold and
contracted versus what percentage
is still sitting there not knowing
where it's going to go or who's
going to buy it.
I think you have two parts to that
question. One is
on the producer side,
I would say that very few producers
have beans forward contracted.
Largely this crop is waiting for
a rally, waiting for
an upsurge in prices.
When the combines roll and the beans
come off,
the people in the middle that
buy the beans
they're going to buy the beans.
If they don't have a home farm,
typically that means they'll widen
the basis.
That means they're gonna take less
risk. They're going pass that risk
on to the farmer.
So instead of having a
50 cents under or
80 cents under basis,
maybe that basis will go to $1.20
under or $1 50 under.
And when storage space is
at a premium when there isn't any
bin space left,
then the basis will widen even
further. So we need we
need the market to
take the beans.
Typically in this country, we don't
store our soybeans very long.
Typically, we do move them off the
field.
The exception might be those that
are doing the food grade side
because that's a steady flow through
the year.
But certainly on the commercial
side, a lot of those beans
are are bought off
the field by the
by the marketplace.
So you sit up here.
Look, if we drive around, most of
those fields have not been they're
not assigned yet. They're still
waiting to see what it's going to
look like.
Those farmers are going to harvest
the beans. They're gonna load them
in the truck. If they have a bin,
they're going to put them in.
If I don't, they are going take them
to the elevator.
And when they get to the elevator,
they have couple choices.
Take what's offered or
put them into commercial storage
and begin to pay a storage
premium, which is so much
a month. And then as you know,
there's also interest values on the
value of that soybean.
So storage costs can be
maybe 10 cents per bushel per
month.
So to think that you can put them in
the bin and they'll be worth a
dollar more next spring is
sometimes short sighted because
sometimes the storage costs more
than eat up the
increase in the price over time.
So what are we looking at for the
impact, barring some
change in the international
situation?
Are farmers going to go under?
Are they just going to have it? Is
this going to be just a bad year?
What will the impact be in the short
term?
Well, it's a good thing we have a
good yield.
It doesn't do anything.
A good yield never helps price
because it means more supply.
Certainly farmers that are short
on working capital or young and
don't have a lot of equity, maybe
they're not well financed,
they're at risk.
They're at significant risk.
Very simply put, if
a farmer can't pay his bills,
it isn't long that that trickles
into all of the people he does
businesses with.
And they are not able then to
get compensated for the services and
the goods that they provide.
And then that has a ripple effect to
the next step.
So large agronomy
companies, large machinery
companies, landowners,
if they can't pay the rent, they can
pay the lease payment on this
equipment.
He can't buy inputs for next year.
He doesn't have last year's paid off
yet. It's a snowball effect.
And so to think that it's just a
farmer's problem is short
sighted.
Agriculture is still the basis of
our economy in so many ways,
especially here in Wisconsin.
It's the foundation.
And without that foundation, those
ripples go out across,
affect every one of us.
And there's a lot of small
communities that still are centered
around that farming
community that, you know, it's the
diner, the gas station, the
restaurant, and like all of those
will see those impacts, right?
Yeah, it doesn't hold any
favorites.
It's pretty universal.
Obviously, there's a political
aspect to this.
Farmers, by and large, supported
Donald Trump.
Have you seen any change in the
mentality of some of the farmers who
supported that and saying, wait a
minute, I didn't think this was
going to be the result?
Or are they keeping those feelings
separate?
Well, certainly, there's some pain.
Certainly, there are some
uneasiness.
And as farmers, we would much prefer
to have the marketplace give us
our financial
stability as opposed to
the government coming in and saying,
okay, we see that there's all this
damage done.
So here's
a sandwich for your lunch pail.
We much prefer markets.
And we always have and we always
will.
That being said,
I don't know that either
administration is totally
gets a free pass
on this.
Clearly, there have been instances
in the past where it's been the
other side.
By and large,
Trump is a free market person.
However, he's
become a little bit protectionist
with this tariff approach.
And I think we're
concerned.
I think we're very concerned because
it's affecting our livelihoods.
Can we see past this?
It's pretty cloudy.
We don't know.
But we certainly want our markets.
We certainly want to markets alive
and robust.
So you were, when we were talking on
the phone, you were giving me some
numbers about the average
yield and the
loss that you're potentially seeing.
So can you run some of those by me
again and like talk about some of
the big numbers that some farmers
could be facing?
So if we
talk about one acre, it's difficult.
But let's talk about 1000 acres.
So a typical grain farmer probably
farms 1000 acres,
so we take 1000 acres of soybeans.
Let's just for easy math, say that
the average yield is 50 bushels per
acre. So we have 50,000 bushels
of soybeans of production
on 1000 acres in
a given year.
When the market price is $13.
Compared to the market price of
sub $10, let's just say 10 to
13. Let's say there's a $3 drop
in the value.
That's $150,000
reduction in his gross
income.
That didn't change his fertilizer
costs, that didn't changes feed
costs or seed costs, it didn't
changed his machinery costs, didn't
changing his labor costs, then
changes trucking costs, and change
any of his cost structure.
It just took 150,000 off the
top of 1000 acres of
beans.
That's, that's a lot.
I mean, can farmers absorb that?
I mean I most people don't know the
economies of scale that exist in a
farming operation of a farmer of
that size. Is that something that
they can absorb?
Absorb versus tolerate.
If you're financially stable
and you have working capital,
if you have equity and
you have a good relationship with
your lender, your lender will
probably loan you the money to
keep you in business.
If you are young and you don't have
a lot of equity or if you're already
highly leveraged,
the answer is no.
The bricks start to crumble.
And when they start to crumble, it
seems like it only gets worse with
time.
So the question is, can you take one
bad year?
Can you take two?
I would argue that a farmer that
doesn't have any debt certainly
has lots of ability to tolerate
some adversity.
He may be able to afford to put the
beans in the bin and wait for better
days.
There's probably a fair amount of
that.
I have two years of wheat in the
bend right now. I have some corn
left from last year in the been
right now because I haven't
been happy about the pricing.
Perhaps in wheat it's more of a
quality issue.
So we have all these adversity
things and we always will.
But marketing is still
the reason people survive
or people fail.
And this year is no exception.
And so when it's out of our control,
it's especially frustrating.
So one of the other things that's
happening in Wisconsin, and we kind
of touched on this, is there's the
crusher facility down by Evansville
trying to create a new place for
the beans to go, a new market.
How key are for things like that to
come on, whether that is for food
grade or if that's for fuel
grade or for any other purpose,
like having some place local instead
of having to barge it down the
river?
So Wisconsin is unique in that
we are one of the few
soybean states that does
not have a soybean processing
facility.
That means that all of the beans
that are produced here in Wisconsin
have to travel to
someplace else out of state.
In this part of Wisconsin, it's
usually Minnesota, to
a processor that makes soybean
meal and an oil.
Or it goes to the river at
Winona or St. Paul and is loaded on
a barge and goes for export.
Or perhaps it's loaded in a
container and sent by rail to the
PNW or LA Long
Beach or Norfolk,
Virginia, where it can find itself
on a container
ship with beans bound for
export.
Those are our only choices.
Even the beans that are fed here
locally, by and large, go
to a processing plant where they're
separated the oil and the meal.
The meal comes back.
Now the farmers here then pay
freight both ways.
It's freight to take the beans,
freight to bring the meal back.
That's a double tax for
livestock producer here in Wisconsin
for the
feed part of it.
Yes, those things are critical.
Those are crucial. Now it's a long
ways to Evansville.
It's probably still less miles to go
to Mankato.
So will that affect us up
here directly?
No. But indirectly,
you've heard it said that a rising
tide floats all boats.
So indirectly, as that demand
would come on, and that
plant is not being built yet, as you
know, it's kind of
in limbo, waiting for
clarity again from
policymakers that are,
and they're actively engaged.
They're working on these things,
but sometimes the speed
that these things happen are
painfully,
they really languish sometimes.
So you were telling me before that
you also grow some food grade
soybeans.
What's the difference in terms of
the market and the situation?
Does that change in your big
world picture, like for having those
different varieties?
Well, from a diversity standpoint,
it hasn't changed.
Food grade beans typically have
associated with them a premium.
So if the Chicago Board of Trade
price, we use $10 again
as a as a benchmark.
If our premium for food grade
beans is $2
above Chicago,
then that means that the price we
receive would be 12.
And the local market
would say that non food grade
beans, or what we call commercial
soybeans, if they're going
to crush or to export
and the local buyers are
probably currently bidding somewhere
around 80 under,
that would mean that they're paying
$9.20 for
that same bean that Chicago says
is worth $10.
So you can look at it a little bit
like that $2 premium is our basis.
That's what we can come to expect.
And typically, those are all
contracted.
Now they're contracted in terms of
that's what the premium is going to
be.
But that doesn't mean the price is
set. So we can
elect the price when
the board says, Oh,
this is a good time to sell.
If it's $10, then we'll lock in
our 10 plus 2, 12.
If we wait, and they drop to $9,
and we drop, we'd lock in 9 plus
2 is 11.
So the market still
treats us the same.
It's just that that premium for
food grade means that
we're going to experience.
Food grade beans are largely
non GMO.
Most of the buyers want non GM for
food production, tofu,
miso, soy milk,
tempeh, natto.
So there's a lot of and most of them
are Asian markets.
Mm hmm.
We love to have those markets, and
we've had them for a long time.
And our relationship with those
buyers are solid and strong.
But typically what we sell to China
has not been in the
food sector.
We've had Korean people come in
and look and take tours to try and
expand that market, right?
That's where some of those markets
exist, Korea, Japan.
Indonesia,
Vietnam,
Philippines, Thailand.
Really, the whole Asian sector is
where the food sector is,
is the most robust.
So in terms of
the storage, I didn't mention
Taiwan.
Taiwan's another really good, and
we have a good trade relationship
with Taiwan.
And we have an agreement with Taiwan
as long as they still remain Taiwan,
right?
We have an interest that they would.
In terms of your ability to store,
you said you're one of the few that
actually still like can store your
own soybeans.
Would you expect with the
uncertainty that exists from maybe
more people that have the ability of
the capital to build facilities to
start thinking, maybe this is what I
need to do to try and even out
some of the uncertainty over instead
of one season, maybe over two or
three seasons, if I can store some?
Well, again, we talked a little
bit earlier about the fact that
defer pricing or waiting
to price later is not always
a good thing.
If the bean is worth $10 and
the interest rate is for
a typical farmer, his operating loan
is probably going to be 7 to 8%.
So in a year's time, a $10 bean
is going to incur 80 cents cost just
in the interest.
Couple that with the fact that it
does cost something for electricity
and to service the structure and
to pay the insurance on it and
all the rest.
So your typical costs are probably
instead of being 8
cents or 80 cents per
bushel might be closer to $1.20,
$1 30 even.
So it's not free to store those
beans.
The trade off is, is the
upside potential enough
to take the risk on
not pricing?
How long does a carmaker last
if they don't sell any vehicles and
they just fill all their lots full
of vehicles?
It becomes a real top heavy
burden to carry the
inventory.
At some point in time,
the automaker will get
sales going.
They'll start to slash the prices.
Farm machinery manufacturers are the
same way.
If John Deere starts sitting on too
much machinery, the prices
will come down and that that will
have to move because if it doesn't,
all that burden of that
inventory just becomes unbearable.
And so we're the same way.
We produce more every year.
We have to stay current with our
markets.
Typically, you can't afford to build
a storage facility that it would
take to ride out these,
these dips in the market.
So you, you, we've been using the
kind of the, the numbers of 13 and
10.
What would the, in that scenario,
what would the input costs for next
year be in that scenario?
Is it above 10 or below 10 or
can you, will farmers be able to get
the money to actually put crops in
the ground next year?
Wow, that's going to depend.
That's going depend on each
individual farmer.
At $10,
every advisor
that I've read says we're below the
cost of production.
Cost of production is dependent
on achieving
an average yield.
So if your average yield is 50
bushels, you can't
produce 50 bushles of beans for
$10. Maybe your cost is 10.50,
maybe it's 11, but it's something
above 10.
If suddenly you produce 60
bushels...
Then you get closer.
Maybe you even get to breakeven.
And certainly if you drop to 40
bushels, now you really start
to bleed.
The answer is that it depends.
But on average,
our cost of production is higher
than $10 a bushel.
So you're on some of the
state boards looking at soybeans.
Is there anything at a state level
that can be done besides trying to
help create these markets and create
these relationships?
Or is most of this
in a broader network that exists
outside of that?
Yes, I serve on the Wisconsin
Soybean Marketing Board.
And that board has the
charge of using the check-off
dollars.
There's an assessment on
every bushel of soybeans that goes
into research,
market development, promotion,
education.
These kinds of things to help
build markets or
to help farmers be more
productive or more efficient in
growing soybeans. So our charge is
very simply...
Take a small amount of the money
from the soybean and
give the farmer, whose money it is,
a return on that investment by
building markets or improving
his productivity.
Improve the financial well-being,
the profits, if you will, for those
farmers.
Certainly what we're trying to do by
encouraging a plant to be built in
Evansville is an example of that.
We have supported that.
We have done some things with
the check-off money to help that
happen. It hasn't happened yet.
We can't force it to happen.
We invest regularly into
overseas exports.
And one of the boards that I serve
on is called the Soy Transportation
Coalition, which is made
up of farmers.
We are concerned with all things
transportation related within the
soybean industry.
So that's whether that's rail
traffic, whether that is
containerized traffic, whether that
truck traffic, whether that rural
bridges, whether it's our ports,
whether that overseas.
Anything that takes to move soybeans
is what we're focused
on. And so certainly there are
things that we can do there to
identify opportunities and
identify bottlenecks.
And
encourage and
help and facilitate
improvements in the
infrastructure that make those
things possible.
Anything else you want to add along
these lines that we've talked about?
No, I guess I remain optimistic.
I remain highly concerned about
our
trade and the
impediments to that trade.
I hope that we can reach
some kind of a solution sooner
rather than later.
We're running out of time.
Brazil's planting their beans.
They'll be ready for harvest next
winter.
When they start making a new crop,
if we don't have ours marketed,
guess what?
We're going to have a lot of beans.
And so whether it's biofuels
or whether it is exports or whether
its both or some combination,
we need to see these things happen.
Can you give me some details on
how many acres you have here
and what percentage of corn versus
soybeans?
So my total farm operation is about
3800, 3800.
That's broken down into,
you might as well say about 40%
corn and 40% soybeans.
There's also about 20%
into wheat.
So I practice typically a
corn-bean rotation, but we put wheat
in whenever we
start to struggle with weeds.
When we get wheat in the rotation,
we can...
We can really put a hammer on
the wheat.
So the wheat is kind of as needed,
but typically there's 500-600 acres
of wheat to eat.
Now you treat the wheat more as a
cover crop?
Or you said you stored some wheat?
No, it's a crop.
We also do cover crops behind
every acre if we can.
So typically after the soybeans,
if it's not going to winter wheat,
because it will be winter wheat.
It would be seeded to either cereal
rye or winter camelina.
So I'm fooling around with some
other crops a little bit to try to
see if I can find something else to
diversify.
Is there any consideration that
you've heard of people putting in
less soybeans next year?
Simply because soybeans aren't doing
as well?
Or is that too much to mess with
the rotation to try and do it that
way?
Typically the penalty for not
sticking with a rotation is bigger
than the market penalty.
Our corn prices are soft as well.
It's not just soybeans,
it's just that most farmers
understand the
agronomic benefits of a
rotation.
And you may be able to influence
a small percentage of
that market shift, but you
will not drastically change
it.
I think a classic example
of what we saw last year.
Corn acres were up, bean acres were
down. Why is that?
Market signals.
So farmers might increase
or decrease 3
or 4 percent from their normal,
but they're not going to change 30
or 40 percent.
Can I get you to say and spell your
name and give your title?
Sure.
Andy Benson, B-E-N-S-E
N-D.
I'm on the marketing board for the
Wisconsin Soybean Marketing
Board.
I also serve on the Soybean
Transportation Coalition Board,
which is part of the American
Soybean Association.
Does your farm have your name
on it?
So we go by AB Farms.
My custom harvest business goes by
AB Ag Services.
It's one company, but legally
it's separated.
Okay, great.