Louisiana sugar cane farmers, fresh off a decent 2014 harvest amid good 2015 prices, were in a healthier, wealthier mood at this week’s annual industry fête in Lafayette than they were a year ago.
But an agriculture economist warned the hundreds of farmers at the annual American Sugar Cane League not to get too comfortable.
One year ago, farmers attending the annual event had just finished harvesting an outstanding 2013 crop, only to have to bring their sugar to a market fetching rock-bottom prices. Income was low due to the influx of millions of tons of imported Mexican sugar, which crashed prices to around 19 cents per pound.
“Last year our prices were really in a ditch,” said Jim Simon, president of the Sugar Cane League. But toward the end of 2014, U.S. officials agreed to temporarily charge a duty on imported sugar, and the price bounced to its current level of 25 cents to 26 cents.
Simon said a more binding decision will be made on Mexican sugar imports in April.
American sugar futures on Tuesday hovered in the 24-cent to 26-cent range.
It was enough of a price gain to make a difference to the lives of Monte Vallot and his son, 17-year-old Andrew Vallot. The Vallots, third- and fourth-generation sugar cane growers, farm 2,700 acres near their home in Erath.
“It was the biggest crop we ever made. It was excellent,” said Monte Vallot, who was in Lafayette for the Sugar Cane League event.
Machinery parts salesman Erik Rathcke, who works for Allied Bearing & Supply, said he, too, was feeling better now this year compared to how he felt last year.
The company Rathcke works for makes money selling parts and supplies to sugar mills, which he said were struggling to survive one year ago but which are now looking to the future and putting money back into their facilities.
“We’re not scared this year,” Rathcke said. “Last year we were.”
Agricultural economist David Kohl told a packed conference room of hundreds Tuesday that all farmers should look to the future if they want to survive.
Kohl, a professor emeritus at Virginia Tech University and guest speaker at the Sugar Cane League event, told the farmers the best operations will recruit youth and minorities to bring fresh eyes, energy and outside-the-box thinking.
“You’re not going to believe what’s coming in the future,” Kohl said. “In the future we’re going to see extreme (economic) cycles.”
The world’s economic climate is changing, he said, and local economies will be affected by market disruptions from Ukraine to China, Argentina to South Korea. He said the U.S. agriculture industry is emerging from a “commodity super cycle” in which it was relatively easy to make money.
Kohl said successful farmers will be those who embrace technology, and those who learn how to read market influences such as interest rates and the price of oil.
“Every one of you better have an oil strategy,” Kohl said, such as locking in a supply of diesel at low prices.
Kohl said there are other reliable economic indicators: the price of copper, which is used in the manufacture of everything from building materials to electronic motors to pumps to printing presses, is a telltale measure of the world economy.
Even talking to shoe-shine operators in airports, Kohl said, can give an indication of the local economy: the bigger their tips, the better executives and others are feeling about business in the region.
Source: www.theadvocate.com