Sunday, April 22, 2007

First the drought, then the auction

By Tony Spilde/Bismarck Tribune

NEW SALEM - Chrome glinted in the midday sun from all the pickups lined up on both sides of Ash Avenue.

You don't see that many vehicles in small-town North Dakota unless something big is afoot. This was, by all accounts, a to-do.

"I never thought I'd see this day," said Dave Kautzman, who was moving a pallet of tractor parts from his shop to an outside staging area. "At least it's sunny."

A wry smile spread across his mug. Of course it was sunny. It was always sunny, and that was a big part of the problem.

It was ironic, then, that Kautzman had to push the pallet jack through a puddle. It had rained a few days earlier. Now the rain comes. Now.

An ongoing drought has altered the lives of thousands of people in western North Dakota. For some it has meant spikes in their water bill or driving a few extra miles to find a boat ramp that's still wet. But for so many others the ramifications have been much more severe.

Kautzman, co-owner of D&K Farm Equipment Inc., had to help shut down the 46-year-old family business last weekend.

"We had a really good working relationship here with a lot of people,"Kautzman said. "But business was getting to be less and less every year. I think in the last few years the drought has had a lot of impact on things. People didn't use their equipment, so we didn't have to service it."

The family got together in December and decided to sell. They held an auction here on April 13-14.

In a few cafes in the southwestern part of the state, farm-auction bills have been plastered up this year like wallpaper.

"We have had a very busy season; there's no doubt about that," Lyle Steinmetz, a Carson-area rancher and auctioneer for Weishaar Auctioneer Service, said. "Our (farm auction) business has been busier than normal. We have probably seen 20 percent more sales this year than we anticipated."

Steinmetz said the spring farm sales have been held for a number of reasons. Some farmers are retiring. Some are cutting back. Some are cutting and running.

"I wonder if we've had even one sale where the bank said, 'This has got to happen,'" Steinmetz said. "There have been some financial considerations in the sales we've handled, but some have been for other reasons. Ithink bankers and sellers have sat down and talked about what's in their best interests."

Weishaar has run 22 farm auctions this spring, and has four to go. Steinmetz, a rancher all his life, said there's plenty to be concerned about out on the prairie. From a lack of moisture to the skyrocketing prices of fertilizer, fuel and land, many producers could be facing a tipping point.

"In the rural America I'm familiar with, the slipshod operators are gone and the people looking for a handout are gone," Steinmetz said. "The next tier that tips over will have a long-term impact here and throughout the country."

Changing times

Jody Fuchs had to rearrange his work schedules just to make it to his own auction sale Friday and Saturday.

The Grant County rancher sold most of his farm equipment this weekend, but will still run about 150 head of Angus cattle. To make ends meet, he's taken jobs at Double R Meats in Carson and as the field man for the local Farm Service Agency office.

"It's hard to make a living on the land," Fuchs said. "I've had to take all kinds of odd jobs so I can eat and take care of my family. Anymore, to survive out here in the farm and ranch business isn't hardly feasible without having another job or someone to help you. It's just tough."

Fuchs wanted to have his sale earlier this spring, but had to settle for late April because Weishaar was booked each weekend before that, going back to February.

Other auctioneers in western North Dakota, including Vincent Bitz in Bismarck and Gordon Krance in South Heart, have noticed only minor increases in the number of farm auctions this year. For some reason, Grant County - as well as Weishaar outposts in Sentinel Butte and Lemmon, S.D. - has been hit harder.

In the most recent agriculture census, conducted by the National Agricultural Statistics Service in 2002, there were 548 farms in Grant County. The average farm was 1,928 acres.

In the 1987 census, Grant County had 688 farms, with an average size of 1,483 acres.

In 15 years, the county lost 20 percent of its farms, and those that were left grew in size by nearly a quarter of their previous acreage.

"What we're seeing is continued consolidation and expansion on the farming and ranching side - fewer, bigger farms," Steinmetz said. "There's not any of this land that won't be farmed. It's all going to get seeded, and if landowners choose to rent their land, there's ready takers."

But Steinmetz said the cost of buying or renting more land to make up for reduced production caused by the drought has been a losing proposition for several producers. It's been particularly tough on the younger ones, he said.

"Idon't think a lot of people here, myself included, like to see the trend that's obviously going on,"Steinmetz said. "The average age of the operators is going up, and the weather isn't cooperating. All these guys are not broke, but they're probably frustrated and just don't see that it's going to get a lot better soon. I'm sure that weighs into their consideration to sell."

Under pressure

People are buying up land like crazy in Emmons County, in south-central North Dakota.

Just none of them are farmers.

Or at least not many of them are. Brian Bosch sells real estate in rural areas, and said the market rarely has been better. But he's also not selling to too many of his Linton-area neighbors.

"In the last week I've sold 3,000 acres of land to guys from Georgia, Pennsylvania, Virginia and Minnesota," Bosch said. "Everyone was from out of state. No local farmers can buy the land here anymore because these hunters are driving the price up. We had a real big push last year in land sales, and I'd guess it was 90 percent recreational hunters."

Bosch said land that was selling for $400 an acre three years ago is now in the $700 to $750 range.

That's just for the canvas. Paint and brushes cost extra, and they're also near record highs.

In 1987, back when there were 20 percent more farms in Grant County, a gallon of diesel fuel cost 95 cents a gallon. Apply inflation to that, and it would cost about $1.80 today.

Instead, it's at $2.87.

Likewise, anhydrous ammonia - which is tied to the fluctuations in natural gas prices - is selling for a whopping $470 per ton, according to the Agrilliance Agronomy Center in Mandan.

Throw a drought on top of that, and you've got some bad conditions.

"It's almost impossible right now for a young farmer to start a farm from ground zero," Steinmetz, the auctioneer and rancher, said. "But you live in the times you're in, so what can you do? This is a business that's fed on optimism. If people want to be negative, they can be negative. It's certainly not all roses, I'm not trying to say that, but there are still a lot of people making it out there."

But there are fewer people making a living on the land than there used to be.

In 2006, there were 30,300 farm operations in North Dakota. That's down nearly 40 percent from 1966, when there were 49,000 farms. Land being used for agriculture is down only 6 percent in the same time period, from 42 million acres to 39.4 million. Again, there are fewer farms, but they're bigger. That means more up-front costs, and more money going into the ground each season. Fortunately, good crop prices - including a new demand for corn - appear to be mitigating some of the bad news.

Still, farmers and ranchers here say they could use some assistance.

"I'm going to stay ranching, but I know a lot of people who aren't,"Fuchs, the Carson rancher who had a sale this weekend, said. "There's the high price of fuel and seed, and it don't rain. The government programs don't seem to want to help the people that are surviving out here on the land, trying to give them food."

An 11th-hour agriculture-disaster bill could be in the offing in Congress, which would send an estimated $200 million to North Dakota. It's never been more needed, Steinmetz said.

"I went through the disaster payments that came down in the '80s and '90s, but if there was ever a need for a disaster program, this is it,"Steinmetz said. "We haven't seen all the fallout (from the ongoing drought) yet. A lot of the conservative farmers and ranchers have been doing OK, but with the combination of things that have gone on in southwestern North Dakota in the last couple years, it's pretty critical for some kind of disaster assistance. If the weather conditions change, and you combine that with disaster assistance, things could heal up pretty quick."

If nothing comes down the pike, Steinmetz fears lenders could be unwilling to bend further.

"Most of the bankers are really trying to go along with things, doing what they can to keep everybody in business," Steinmetz said. "But they won't be able to keep it up. The bleeding is going to have to stop. Meanwhile, if we lose one young farmer in Grant County, that's too many."

(Reach reporter Tony Spilde at 250-8260 or tony.spilde@;