“I guess we’ll be out of the peanut business after this year,” Pelzel said recently over lunch in downtown Pilot Point, a rural community of some 3,500 that is, unfortunately, within commuting distance of downtown Dallas.
“Without the quota support price, it will be hard to make a profit,” he says. “And we’ve grown peanuts a long time. My father and grandfather both grew peanuts here but losing the quota will hurt. Peanuts do not make up the biggest acreage on the farm, but they have been one of our best profit options.”
Pelzel says the $355 per ton support price, compared to the $600 support for quota, leaves a gap in revenue too big to make up on dryland production that averages about 1,500 pounds per acre.
“We’ll have to look at market expectations for peanuts and other crops next year,” Pelzel says. If the farm bill had been passed soon enough this year, he may have switched acreage to something else for the 2002 season. “This fall, I’ll compare the $355 per ton support price with other crop options and see what offers the best profit opportunity. It costs a lot to grow peanuts and if the market price drops to $355 per ton, peanuts will disappear from this area. We don’t get enough rain to make high yields.”
In addition to the usual production expenses that go along with peanuts, real estate this near Dallas offers developers a significantly better profit opportunity than farmers can hope for, so competition for available land is intense.
“It’s hard to find land for lease any longer,” Pelzel says.
He says acreage may increase in West Texas, where irrigated acreage produces considerably more peanuts. “They may be able to make a profit at 355 per ton out there,” he says.
Except for the radical alterations to the peanut program, Pelzel says the farm bill is “better than the FAIR Act. The target price concept gives us a little more for our crops,” he says. “This legislation also addresses some issues and problems that existed in the 1996 law that kept farmers from being viable. But we still do not have a provision to deal with supply and demand imbalances.”
He says supply management worked well for peanuts for decades. “A similar program would work for all crops if not for the free trade arena. And the playing field is far from level for U.S. farmers. We can’t compete with countries that pay farm labor minimal wages.”
Pelzel says the cotton program looks good, overall, “but will not help me much. I’ve grown a little cotton all along but the past two years I’ve increased acreage because I foresaw the end of peanut production and anticipated cotton taking its place. I don’t have much of a history with the Farm Service Agency with cotton and any de-coupled payments I qualify for will be on a lower base acreage. But we’ll qualify for enough government payments to keep us viable.”
Pelzel says crop options will include cotton, grain sorghum and wheat. And he’s adopted a strip till system that eliminates plowing and helps control erosion. “I’ll need less equipment and I hope to improve yields with better moisture conservation.”
He’s determined that weed control will be more costly, but figures the increased productivity should make up the difference. He’s also interested in the conservation titles in the new farm bill and hopes funds will be available for practices he’s already incorporating.
“I’ll plant cotton into grain sorghum stubble and then grain sorghum into the cotton stalks. Roundup Ready cotton varieties make the system work. And I can control weeds in grain sorghum that Roundup may be weak on.”
He says rotating chemistry, as well as crops, keeps weeds from developing resistance.
“With larger operations, farmers can save a lot of labor with minimum till systems,’ Pelzel says. “I do everything myself, so labor expense is not a factor, but one big plus is that I will have more family time.”
With four kids, from 12 to 19, family takes a lot of hours and Pelzel expects reduced tillage to make more of it available.
He doesn’t expect any of his children to farm. “They are not inclined and they would have to move to another part of the country to find land. This area soon will be covered up with houses.”