FM: Do you feel customer confidence has come back?
PN: When you talk to the ag side, they’re just as brow-beaten over the last few years because of the smaller crops. We’re starting to hear that this year’s corn crop has really done well. That’s a new beginning, and a new dynamic of where prices may go. Last four years’ farmer always saw $7.00 corn. If you put a decent crop on top of this year’s crop, farmers will have to start looking at things differently, [like] valuation of land. From the ag side, the morale was down because we’ve had two to three years of unprecedented droughts. This year we’ll get back to normal, and elevators will have carrying charge markets. And we get back to a normalized industry of the early 2000s. But the last three years have been tough on the whole industry.
FM: Does the Farm Bill still have impact?
PN: The Farm Bill has turned into a political volleyball because [it’s] got food stamp programs and everything [included]. From the Farm Bill loan rates [view], corn is $1.95, soybeans are $5.00 and your target price within the Farm Bill is $2.63 for corn and $6.00 for beans. We’re so far above that it’s not even an issue. I don’t see [the government] increasing target prices.
When we went to Freedom to Farm in the Farm bill, it was a good move; it probably got exacerbated by the ethanol curve we talked about, but that’s settled down, unless they were going to mandate new bushels, new gallons that are corn-related, but, in this political environment, it would not pass.
[And] we are getting new areas of growth globally...if you look at the balance sheet, next year we probably [will] have to get rid of 4-5 million acres of corn because we have that big of supply on hand. At the end of the day it’s going to be about price discovery…and the relationship in the Midwest between corn and soybeans. Right now soybeans are gaining on corn quite a bit, and that will give farmers an indication of what they want to plant. Go back to Nov. 2012 and the ratio of Nov. 14 soybeans to Dec soybeans was 2.12 to 1; it’s now 2.44, so what you’re seeing is we’re incentivizing farmers theoretically to plant more soybeans next year and less corn.
FM: What new trends, U.S. or globally, do you see in the ag business in the next 5-10 years?
PN: Continuation of the global trade in respect to production that is not just U.S.-centric but global: Brazil corn, Black Sea wheat, etc. The U.S. will be a cornerstone but we now see other countries able to produce, not yet at the rate of yield per bushel the U.S. has, but growing. There also will be continued consumptive growth in China and other countries as dietary needs come more in line with first-world countries. And new and improved infrastructure in Brazil will be a huge factor to move product quicker to export. That will take time but will be huge down the road.