Market potential for feed grains and alfalfa hay produced on reclaimed phosphatic clay in Florida

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Title:
Market potential for feed grains and alfalfa hay produced on reclaimed phosphatic clay in Florida
Physical Description:
Book
Creator:
Rahmani, Mohammed
Degner, Robert L.
Publisher:
Department of Food and Resource Economics, University of Florida
Place of Publication:
Gainesville, Fla.
Publication Date:
Copyright Date:
1991

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University of Florida Institutional Repository
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University of Florida
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All rights reserved, Board of Trustees of the University of Florida
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Market Potential For Feed Grains and Alfalfa Hay
Produced on Reclaimed Phosphatic Clay In Florida







Mohammed Rahmani
and
Robert L. Degner'






































'Paper presented at Southern Agricultural Economics Annual Meeting, Fort Worth, Texas,
February 4-6, 1991. The authors are Assistant -In and Professor, respectively, Food and Resource
Economics, University of Florida, Gainesville, FL 32611.















ABSTRACT


This study examined the economic feasibility of producing corn, milo, soybeans, wheat and
alfalfa on reclaimed phosphatic clay lands in Polk County, Florida. Livestock and poultry feed
requirements were estimated for several geographic zones around Polk County and compared with
production estimates. These comparisons indicate a ready market for these feedstuffs. Production costs
(excluding land costs) on reclaimed phosphatic clay lands were estimated and compared with recent
market prices. Alfalfa and corn generated the largest net returns per acre, follow by milo, wheat, and
soybeans, respectively.


Key Words:


land reclamation, phosphatic clay lands, economics, feed grains, corn, milo, wheat,
soybeans, alfalfa


ACKNOWLEDGEMENTS


This research was partially funded by the Florida Institute of Phosphate Research (FIPR) as

a part of the Polk County/IFAS Mined Lands Agricultural Research/Demonstration Project. We

appreciate FIPR's financial support, and are pleased to be part of the multi-disciplinary research team.













MARKET POTENTIAL FOR FEED GRAINS AND ALFALFA HAY

PRODUCED ON RECLAIMED PHOSPHATIC CLAY IN FLORIDA


INTRODUCTION


As the largest domestic producer of phosphate, the state of Florida accounts for an annual

average of 75 percent of total U.S. production (McHardy, 1983). Approximately 200,000 acres of mined

land in Polk County will be left after mining activities cease about the turn of the century. More than

60 percent of this land will be in the form of clay settling areas (Wood, 1986). Phosphate companies

are required under state law to reclaim the mined lands. The main objective of this study is to explore

alternative uses for this reclaimed land in order to compensate for the loss of approximately $2.5 million

annual tax revenues currently generated by the phosphate industry (Stricker, 1987).

Preliminary research conducted by the Institute of Food and Agricultural Sciences of the

University of Florida and large-scale field trials managed by several phosphate companies indicate that

reclaimed phosphatic clay lands in central Florida have the potential to produce several important feed

grains and high quality alfalfa hay if cultural problems unique to reclaimed phosphatic clay soils can be

overcome. In field trials conducted by phosphate companies, tropical field corn has yielded about 80

bushels per acre and, in smaller test plots, University of Florida researchers have obtained yields of

approximately 100 bushels per acre. Wheat and triticale yields of 40 bushels per acre have also been

achieved. Test plot yields of milo (grain sorghum) have been very good, producing approximately 5,000

pounds per acre. These yields are indications that production of these crops on phosphatic clay lands

is technically feasible.

This study examines the economic feasibility of producing the most promising feed grains and

hay crops and estimates their market potential. Issues relevant to the marketing environment for feed

grains and alfalfa hay produced on phosphatic clay and the extent to which these crops can compete with

those shipped to Florida from other states are also addressed. In order to address the major objective











of this research, specific objectives were to estimate the total quantities of selected feed crops consumed

annually in Florida counties by major classes of livestock, examine the long-term trend of prices as well

as the seasonal price behavior for each of these feed crops, estimate the cost of producing these feed

crops on phosphatic clay lands in central Florida on a commercial scale, and assess the attitudes of feed

manufacturers and major livestock and poultry producers toward feed crops grown on phosphatic clay

lands in central Florida.





DATA


To meet the aforementioned objectives of this research, both secondary and primary data were

collected. Feed consumption for individual counties in Florida was estimated by analyzing secondary

data on livestock and poultry numbers, along with feed consumption parameters for the respective

livestock and poultry species. Data on livestock and poultry were obtained from the 1982 and 1987 U.S.

Census of Agriculture, and recent estimates by Florida Agricultural Statistics Service. Estimates of feed

consumption by species were provided by researchers in the Animal Science, Dairy Science, and Poultry

Science departments at the University of Florida. Seasonal price patterns and long-term price trends

were ascertained from weekly and monthly price data for the selected feedstuffs for the 1976 through

1988 period.

Primary data were augmented through a survey of licensed feed manufacturers in Florida, and

several major livestock and poultry producers with their own feed mills. A detailed questionnaire was

pretested on several firms and revised prior to full-scale implementation. Fifty firms were contacted for

personal interviews. Owners or managers of feed manufacturing plants and farms were interviewed in

person or by the telephone during August and September of 1989. A total of 30 survey questionnaires

was completed. Data obtained included composition and quantities of feedstuff purchases, geographic

sources, delivered prices, sources of price information, and predominant grades or specifications of











feedstuffs. Respondents were also queried as to the likelihood of purchasing selected feedstuffs

produced on phosphatic clay lands.

Finally, production costs for corn, milo, wheat, soybeans and alfalfa hay produced on reclaimed

phosphatic clay land in central Florida were estimated using a partial budgeting technique. The

production cost estimates were based primarily on experience gained by growing these crops on research

sites of the Polk County Mined Lands Agricultural Research/Demonstration Project. The budgets were

constructed using cost data for north Florida as a base and adjusting these data to reflect production

cost differences experienced on reclaimed phosphatic clay lands.


RESEARCH RESULTS


Production and consumption estimates of feedstuffs in Florida were made to determine the

annual production shortfall of these crops. The estimates of the quantities of feedstuffs utilized annually

in Florida were derived using both secondary and primary data. The production deficits for the various

feed crops are assumed to approximate the market potential for the respective crops. This assumption

requires that relative prices for the various feedstuffs remain constant and that current producers within

the state are at least as efficient as potential producers on reclaimed phosphatic clay lands.


Production of Selected Feedstuffs


The production of field corn and soybeans in Florida has sharply declined over the last ten years.

However, production of wheat and hay has increased. Florida's corn production in 1988 was only about

one-fifth of the production in 1979. During the same time, soybean production dropped to only a

quarter of 1979 production. Hay production increased slightly over the past decade, but wheat

production increased nearly five fold. Nevertheless, wheat production is still relatively small compared

with corn and soybeans. Further, in absolute terms, the increase in wheat production was dramatically

overshadowed by the declines in corn and soybean production. The total tonnage of these major feed

items decreased by over 70 percent from 1979 to 1988 (Table 1).











Table .--Production of selected crops in Florida, 1979 and 1988.


Crop Unit 1979 1988 Percent change


(----------1,000--------) (Percent)

Corn bushels 17,967 3,770 -79
Soybeans bushels 13,137 3,335 -75
Wheat bushels 432" 2,035 +371
Hay, all tons 619 729 +18

"Data for 1978; data from 1979 through 1988 not available.

Source: Florida Agricultural Statistics, Field Crops Summary. 1988.


Livestock and Poultry Numbers


Secondary data also indicate a decrease in all major livestock classes except sheep, but sheep

represent an almost infinitesimal proportion of animal units statewide. Also, there was a decrease in

three-month-old or older chicken inventory, but an increase in broilers and other meat-type chickens

sold (Table 2). Secondary data for horses were not available on the county level for historical

comparisons.


Table 2.--Livestock and poultry production in Florida, 1987 and 1982.

Livestock and poultry 1982 1987 Percent change

(---------Number------------) (Percent)
Cattle and calves:
Inventory 2,178,552 1,879,124 -14
Beef cows 1,098,152 995,250 -9
Milk cows 194,550 176,993 -9
Sold 1,108,300 1,025,178 -8
Hogs and pigs:
Inventory 203,231 156,137 -23
Sold 328,150 266,652 -19
Sheep and Lambs:
Inventory 7,360 8,867 +20
Chickens (3 months and older):
Inventory 15,374,588 12,964,760 -16
Broilers and other meat-type chickens:
Sold 76,220,724 93,224,832 +22

Source: 1982 and 1987 Census of Agriculture, U.S. Department of Commerce, Bureau of the
Census, Washington, DC, April 1989.










Overall, the increases in sheep and broiler production and the declines in cattle and hogs represents

a significant reduction in the demand for most feedstuffs. Even so, comparing production data on

selected feedstuffs and livestock and poultry production in Florida for the time period 1979 to 1988

shows that the rate of decrease in supplies of major feedstuffs has been considerably greater than the

rate of decrease in livestock and poultry.


Consumption Estimates


Annual consumption of feed grains and alfalfa hay in Florida were estimated using livestock and

poultry numbers from the 1987 Census of Agriculture. Consumption estimates were made for dairy and

beef cattle, horses, swine and poultry. The estimates were based upon livestock and poultry numbers

from the Census and the composition of typical feed rations provided by livestock and poultry

production specialists at the University of Florida. Feed consumption was estimated by county and

categorized into three geographical areas based upon distance from the greatest concentration of

reclaimed phosphatic clay lands in Polk County: counties within a 100-mile radius, counties within a

100- to 200-mile radius, and counties outside a 200-mile radius (Figure 1). These classifications were

made in order to identify the potential geographic markets for feed grains and hay because of the

economic importance of transportation costs. Tables 3 shows consumption estimates, production, and

the resulting estimated shortfall for corn, soybeans, alfalfa hay and Bermuda hay in Florida for each of

the aforementioned geographical areas.

Corn production in Florida supplies only 17 percent of the estimated consumption for the state.

In 1987, the statewide shortfall of corn was 32.6 million bushels, with the greatest shortfall within a 100-

mile radius from phosphatic clay lands. In this geographic zone, the shortfall of corn was over 17

million bushels; in the 100- to 200-mile zone, an additional 14 million bushel shortfall was experienced.

Thus, there is substantial market potential for corn and close substitutes such as grain sorghum relatively

close to the reclaimed phosphatic clay lands, affording a significant transportation advantage. Soybean

production and soybean meal consumption was also examined for each of the geographic regions. While



























































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the shortfall (in soybean bushel equivalents) exceeds 5.6 million bushels, it is still substantially less than

the quantity required by an economically efficient processing mill. Thus, soybean production from

reclaimed phosphatic clay lands would have to be marketed through terminal markets, be transported

directly to a soybean mill, or roasted and fed locally. Because the nearest terminal markets are in north

Florida and the nearest soybean mills are located in Georgia, soybeans produced on reclaimed lands

would be subject to substantial transportation cost disadvantages if the first two marketing alternatives

were used. However, since processed whole soybeans can be fed to dairy, beef, poultry, and swine it is

likely that soybeans produced in central Florida would be processed and fed locally.

Although the hay production in Florida provides for almost three-quarters of the estimated

consumption, virtually all of the hay shortfall in the state is within a 100-mile radius from phosphatic

clay lands. Also, it is quite likely that the shortfall is particularly acute for high quality hay such as

alfalfa. Thus, it appears that there is significant market potential for alfalfa hay on phosphatic clay

lands.

The primary data collected from firms surveyed was generally consistent with the findings derived

from secondary data. Estimates of consumption derived from survey data also indicates that poultry is

the largest consumer of feedstuffs in Florida. The survey indicated that over 42 percent of volume or

44 percent of the value of the feedstuffs is consumed by poultry. Dairy cattle consume about 26 percent

of the volume and value, followed by horses, accounting for 13 and 10 percent of the tonnage and value,

respectively. Beef cattle and swine consume about six to seven percent of all feedstuffs. Feed

consumption estimates based on secondary data show the ranking, but somewhat different percentages

for some of the major classes of livestock and poultry; part of the differences arc due to the lack of

estimates for the miscellaneous category. Despite these differences, the survey of feed manufacturers

and large farms tends to confirm the large feedstuff deficits estimated using secondary data. Corn, with

an annual consumption of over 710,000 tons (more than 25 million bushels), is the most important feed

ingredient used by the 30 Florida feed manufacturers interviewed. Other major ingredients include











soybean meal with about 252,000 tons, wheat mids with 140,000 tons, and alfalfa pellets and cubes with

41,000 tons annually. Significant quantities of alfalfa hay, milo and wheat bran


Table 3.--Feed grain and alfalfa hay production and consumption in Florida

Corn Soybeans" Hayb..


Distance from 1000 Percent of 1000 Percent of 1000 Percent of
Polk County Bushels consumption Bushels consumption Tons consumption
Less than 100 miles:

Consumption 17,541 100 3,065 100 636 100
Production 130' 1 2cd 0 3600 57
Shortfall 17,411 99 3,063 100d 276 43

100-200 miles:

Consumption 17,186 100 3,257 100 209 100
Production 3,158' 18 630( 19 208' 100
Shortfall 14,028 82 2,627 81 1' 0

Greater than 200 miles:

Consumption 4,535 100 844 100 64 100
Production 3,333C 73 1,625' 193 104' 163
Shortfall/Surplus 1,202 27 (781) (93) (40) (63)

State totals:

Consumption 39,262 100 7,166 100 909 100
Production 6,621' 17 2,257 31 672' 74

Total Shortfall 32,641 83 4,909 69 237 26

aSoybean meal consumption in the study area was converted to whole soybeans using a 1:1.27
conversion factor.

bProduction includes all types of hay, whereas consumption estimates are only for alfalfa hay and
Bermuda hay. Thus, estimates of the hay shortfall are conservative.

'Adjusted for counties with data withheld to avoid disclosing individual farms.

dProduction represents less than 0.1 percent.

'Shortfall represents less than 0.5 percent.











are also used by these manufacturers and livestock producers (Table 4). Over 96 percent of the total

feedstuffs tonnage handled by the firms surveyed is resold to customers. The implication is that there

is little vertical integration between the mill and user level for the firms interviewed.


Table 4.--Ouantity of feedstuffs purchased by the firms surveyed.


Feedstuffs Tons" Percent"


Corn 710,933 61.1
Soybeans 252,449 21.7
Wheat mids 140,184 12.0
Alfalfa pellets/cubes 41,020 3.5
Wheat/bran 8,094 0.7
Milo 6,646 0.6
Alfalfa hay 4,147 0.4

Totals 1,163,473 100.0

aResponses based on data from 30 firms.


Feedstuff Prices


Several price series were used to provide insights as to the potential profitability of feedstuff

production on reclaimed phosphatic clay lands. Long-term trends and seasonality of price fluctuations

were analyzed using Atlanta prices because adequate data for major Florida markets were unavailable.

However, recent price series for Tampa or for Florida production regions were used whenever available.

Analysis of annual price series for corn in Atlanta and Tampa, and annual average prices received by

Florida farmers, indicates a high degree of correlation among these series ( Figure 2). Thus, it is likely

that Atlanta prices for corn and the other feed items examined provide a reasonable indication of long-

term price trends. Also, because of a lack of Florida-based data, the Atlanta price series were used to

estimate seasonal price patterns as well. More recent monthly F.O.B. prices for Tampa or Florida farm

prices were used as an indication of current price levels and were used to estimate net returns for the

crops produced on phosphatic clay lands in Polk County.














Weekly F.O.B. Atlanta prices for corn, milo, wheat, soybeans and alfalfa pellets were analyzed for

a period of 13 years, 1976 through 1988. Alfalfa pellets were used as a proxy for alfalfa hay because hay

prices were unavailable. Weekly prices (unwcighted) were aggregated into annual averages. Real prices

(adjusted for inflation) were calculated using the 1982-84 Consumer Price Index (Table 5).


Table 5.--Average annual real" prices for selected crops, 1976-1988.

Corn Milo Wheat Soybeans Alfalfa pellets
Year Dollars Dollars Dollars Dollars Dollars
per bu. per cwt. per bu. per bu. per ton


1976 4.96 8.29 5.64 12.30 223.61
1977 4.03 6.36 4.43 9.90 183.92
1978 4.02 6.31 4.81 10.43 162.95
1979 4.16 5.96 5.37 9.09 181.81
1980 4.08 5.87 5.29 9.59 174.42
1981 3.83 5.53 4.45 5.72 170.41
1982 3.03 4.28 3.34 5.65 137.76
1983 3.70 5.34 3.71 8.18 136.60
1984 3.55 5.98 3.62 5.96 131.81
1985 2.83 4.24 3.12 4.82 104.63
1986 2.33 3.77 2.68 4.47 104.47
1987 1.89 2.45 2.45 4.89 99.76
1988 2.30 2.45 2.95 6.32 104.62

aReal prices are calculated by deflating nominal prices by Consumer Price Index, 1982-84=100,
taken from the Survey of Current Business, United States Department of Commerce, Bureau of
Economic Analysis, various issues.

Source: Southern Dairy Review. various issues.
Feedstuffs, various issues.


Over the 13-year period, all five commodities showed significant downward trends in real prices,

with most declining by 55 to 70 percent from 1976 to 1987. Milo and alfalfa pellets show sharper price

decreases than soybeans. While real prices in 1988 for milo have dropped to less than a third (from

$8.29 per cwt. in 1976 to $2.45 per cwt. in 1988) and for alfalfa pellets to less than one-half of the 1976

levels (from $223.23 per ton in 1976 to $104.62 per ton in 1988), real prices for soybeans dropped by

about 50 percent, $12.30 per bushel in 1976 to $6.39 per bushel in 1988. Although real prices for most

10


Long-term trends










of the commodities showed a slight increase in 1988 and 1989, these recent increases were attributed

to the 1988 drought On a national basis, there is little evidence to indicate that real prices for the

major feedstuffs examined will regain the levels experienced in the late 1970s and early 1980s. Over the

next few years, prices are likely to be similar to those experienced in the late 1980s, barring unforeseen

catastrophic events.


Seasonal price patterns


Weekly prices for No. 2 yellow corn (F.O.B. Atlanta) for the 1976-1988 period were aggregated

into monthly observations and analyzed to determine seasonal price patterns. Atlanta prices were

selected because it is the nearest major market for which weekly prices were available; as mentioned

previously, annual corn prices for Atlanta and Tampa were found to move together, and monthly prices

probably do so as well (Figure 2).

Seasonal prices for corn tend to rise steadily in the months following harvests in the major corn-

producing states. Thus, prices typically begin to increase in November, continuing throughout the

remaining winter and spring months, with peak prices occurring in May. As substitute feedstuffs become

plentiful, and as new crops of feed grains begin to be harvested, corn prices usually begin to drop in

June and July, reaching seasonal lows in October.

Early planting (February) of corn for grain on phosphate clay lands in Polk County is not

recommended, due to the fact that harvest coincides with the summer rainy season. A new practice,

which is currently being explored, is to grow a crop of wheat or triticale from mid-November to late

April and then plant tropical corn in June in the wheat stubble with a no-till planter and harvest it in

November. This system permits harvest of both crops in the dry season and does not require irrigation.

The harvest of tropical corn in November is when prices are about five percent below the annual

average. Adequate data were not available to evaluate the economic potential of this system.

Because of the high degree of substitutability between corn and milo and a great deal of overlap















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in their harvest seasons, the seasonal price patterns for milo are similar to those of corn. Peak milo

prices in Atlanta typically occur in June and July, and seasonal lows in October and November.

Unfortunately, harvest on reclaimed phosphatic clay lands would most likely coincide with the seasonal

low prices.

Seasonal prices for wheat indicate a more favorable situation for production in Polk County.

The expected harvest period on the phosphatic clay lands would be April, nearly two months prior to

harvests in major production regions of the U.S. An-April harvest would result in prices that are near

seasonal highs.

Alfalfa hay production in Polk County appears to be technically feasible during two distinct

periods, March through June and October through November. A limited data series for alfalfa hay

prices in Tampa indicates that the spring harvest would probably be sold at prices that are somewhat

below the annual average, but the fall harvest would command prices that are likely to be above the

annual average.


Costs of production


The costs of production estimates for the selected feedstuffs were based primarily on data from

research plots of the Polk County Mined Lands Agricultural Research/Demonstration Project in Bartow.

Land costs have been excluded from these budgets because, at the present time, there is no good means

for establishing rents or amortized development costs for phosphatic clay lands for agricultural use. Due

to the adequate amounts of phosphate, potash and lime in phosphatic clay soil, fertilizer costs are lower.

Further, the water-holding capacity of the clay reduces or eliminates the need for irrigation. However,

machinery costs will probably be higher than state averages because the heavy, sticky clay requires more

time and energy for most cultural practices, resulting in greater wear on machinery. Thus, it seems that

the fertility and irrigation advantages are going to be offset by higher labor and machinery costs.














Estimated returns


Recent market prices and estimated production costs were analyzed for corn, milo, wheat,

soybeans and alfalfa hay. Estimated net returns for each of these crops appear below (Table 6).


Corn.--In order to incorporate the effects of the Polk County area's transportation cost

advantage, recent Tampa F.O.B. prices were used as the anticipated market prices for corn. Because

of limited data and price volatility during the 1987-89 seasons, prices for each year are shown rather

than a mean price. Tampa F.O.B. price for 1989 for the month comprising the likely harvest period for

corn on the reclaimed phosphatic clay lands was $3.31 per bushel. At a conservative yield of 80 bushels

per acre, production costs are approximately $2.34 per bushel, resulting in estimated net returns of

$77.60 per acre. It is likely that the 1989 prices were somewhat elevated due to the 1988 drought; if

future prices revert to 1987 levels, net returns would only amount to $8 per acre.


Milo.--Milo prices were not available for the Tampa market, so Tampa F.O.B. prices for No.

2 yellow corn were adjusted to reflect the historical price differential between No. 2 yellow corn and

milo in the Atlanta market for the 1976-1988 period. On a weight-equivalent basis, the milo price is

typically about 82 percent of the corn price. Thus, the estimated market price of milo in the Tampa

market in the October-November 1989 harvest period was about $4.63 per hundredweight. At a yield

of 4,000 pounds per acre, production costs were estimated at $3.82 per hundredweight, resulting in net

returns of slightly over $32.00 per acre. However, at 1987 corn prices, milo production would result in

a net loss of nearly $12.00 per acre.

Wheat.--Local (Tampa) market prices were not available for wheat. However, published price

estimates of season average prices received by Florida farmers were available. Although most Florida

wheat production occurs in the Panhandle region and in north Florida, it is assumed that Polk County

producers could obtain similar prices because wheat grown in the central Florida would be treated as










a feed grain and utilized locally. In 1989, the average price received for wheat by Florida farmers was

$3.50 per bushel. Production costs on the Polk County phosphatic clay lands, at a yield of 40 bushels

per acre, would be approximately $2.96 per bushel, resulting in net returns per acre of $21.60. If wheat

prices drop to pre-drought 1987 levels, returns would be negative. Triticale, a wheat-rye cross, also

appears to have similar or even better potential as a feedgrain. Production research on triticale is

currently underway.



Table 6.--Estimated net returns per acre for corn, milo, wheat, soybeans and alfalfa hay.

Estimated
yield per Production Market Estimated
Crop acre/units costs prices net returns


(-------Dollars per unit-------------) (Dollars per acre)

Corn 80 bu. 2.34 3.31' 77.60
Milob 40 cwt. 3.82 4.63b 32.40
Wheat 40 bu. 2.96 3.50c 21.60
Soybeans:
local sales 30 bu. 4.96 5.45C 14.70
N. Florida delivery 30 bu. 5.60 5.45 (4.50)
Alfalfa hay 4 tons 69.64 167.50' 391.44

1989 Tampa F.O.B. price for harvest period, Southern Dairy Review (various issues).

"Estimated average price for Tampa for 1989 for the harvest period. The milo price is based upon
82 percent of the corn price on a per-pound basis. This is the price differential experienced in the
Atlanta market for the 1976-1988 period.

'Season average prices received by Florida farmers in 1989, Florida Agriculture: Field Crops.


Sovbeans.--Dccause soybeans are neither grown in the Tampa region in commercial quantities

nor widely consumed in an unprocessed state, there is no local market and hence no local price series.

However, unprocessed soybeans can be incorporated into cattle rations, and a relatively low-cost

"roaster" used to increase their feed value to livestock. Thus, it appears that a local (south and central

Florida) market could be developed for whole soybeans. The only other market alternative would be











to haul the soybeans to the nearest north Florida terminal markets, which would add approximately

$0.75 per bushel in marketing costs.

If soybeans can be sold to local users at the 1989 state farmer price of $5.45 per bushel, the

estimated net returns per acre are $14.70, assuming a yield of 30 bushels per acre. However, if the

beans have to be transported to a north Florida buyer, a net loss of $4.60 per acre is likely.


Alfalfa hav.--Monthly price estimates for alfalfa hay (F.O.B. Tampa) were available for several

years. The weighted average price for 1989 for the anticipated harvest periods was $167.50 per ton.

When establishment costs are prorated over a three-year period and yields are conservatively estimated

at four tons per acre, production costs for alfalfa hay are just under $70.00 per ton. At these costs and

prices, the net return per acre is just under $400 per acre.

Even if market prices were to decline to the 1987 levels, net returns would approach $250 per

acre. Thus, alfalfa hay appears to be one of the most promising crops for the reclaimed lands. It

should be noted, however, that there are still many unresolved land reclamation and cultural practices

that could adversely affect the estimates of net returns.


Quality considerations


Most of the feed mill operators expressed their interest and willingness to purchase any of the

selected feedstuffs produced on phosphatic clay lands in central Florida. However, their expressed

likelihood was subject to two main conditions: quality, and price competitiveness of the feedstuffs

produced on phosphatic clay lands with those shipped to Florida from other states. Almost all of the

feed mill operators were extremely concerned that Florida-produced corn would have high levels of

aflatoxin because of climatic conditions. They were also adamant about getting high quality alfalfa hay

with low moisture levels. Interestingly, only one of the interviewees brought up the matter of

radionuclides, and wanted to know the radionuclide levels on crops grown on reclaimed phosphatic clay

lands. Others did not seem very concerned, or did not know anything about this issue.











SUMMARY AND CONCLUSIONS


Florida is a feedstuffs deficit state. Annual consumption far surpasses the state production for

most of feed grains and alfalfa products. Statewide, there is a shortfall of over 32 million bushels of

corn, almost five million bushels of soybean, along with shortfalls in alfalfa products and other feedstuffs.

The production deficits are particularly large within a 200-mile radius of Polk County, indicating a

potential market for these crops if produced on the reclaimed phosphatic clay lands. However, it should

be noted that, due to the homogeneity of the competitive environment in the feedstuff market, producers

will be required to compete on quality and price with crops from other parts of the nation. In assessing

the economic potential of the production of feedstuffs on the reclaimed phosphatic clay lands, the

following items should also be considered:


There have been unfavorable long-term price trends for virtually all hay and grain
crops. Further, technological advances such as genetic engineering may result in
increased production efficiency in traditional growing areas, with little benefit accruing
to growing areas like Polk County. This could increase feed supplies and lower market
prices.

Phosphatic clay lands provide several production advantages for feedstuffs, but some
disadvantages as well. Richness in plant nutrients and reduced need for irrigation may
be offset by higher labor and machinery costs bur research with minimum tillage has
been successful and offers promise of holding costs down.

Transportation costs enhance the competitive position on most items. However, the
transportation advantage is lost for soybeans if they must be transported to a crushing
mill for processing into soybean meal because the nearest terminal market is in north
Florida. It is feasible to "cook" or "roast" soybeans to enhance their feed value and this
may be a viable alternative for some Florida feeding operations.

Quality is another significant factor in determining market opportunities. Aflatoxin
and moisture levels in Florida-produced corn and alfalfa hay are concerns to feed
manufacturers. Most were not concerned with radionuclides. However, radionuclide
may emerge as a negative factor even though most evidence to date indicate that food
and feed products produced on reclaimed mined phosphatic clay lands pose virtually
no health risks. Future production research should also attempt to objectively measure
the quality of hay and grain products from reclaimed phosphatic clay soils.

Total production costs discussed in this report are understated because land
reclamation and preparation costs allocable to agricultural production or rental rates
are not addressed. For milo, wheat and soybeans, imposition of a modest land charge
would result in negative returns.











Production costs and yields should be viewed as tentative because they were derived
from relatively small research trials over a relatively short time period. Expansion to
a commercial scale and adoption of no-till or minimum tillage system may yield
different results.


In conclusion, this study indicates that there is a ready Florida market for the feedstuffs

examined. Based upon the limited cost and yield data, there appears to be greatest promise for

economical production of corn and alfalfa. However, as cultural problems on reclaimed lands are solved

and as additional data are obtained from research, costs and returns should be reexamined for all feed

items.










REFERENCES


Degner, R. L. "Livestock," The Florida Handbook: 1989-1990. Florida people and their government,
compiled by Allen Morris, The Peninsular Publishing Company, Tallahassee, Florida. 1989. p. 530.

Florida Agricultural Statistics Service. Florida Agricultural Statistics: Field Crops Summary. Orlando,
Florida. Various issues.

Florida Agricultural Statistics Service. Florida Agricultural Statistics: Field Crops. Orlando, Florida.
January 24, 1990.

Florida Agricultural Statistics Service. Florida Agricultural Statistics: Prices. Orlando, Florida. January
4, 1990.

Florida Department of Agriculture and Consumer Services. Feed Registrant List as of February 1989.
Tallahassee, Florida. 1989.

Florida Feed Association, Inc. List of Membership of the Florida Feed Association. Tampa, Florida. May
1989.

Harris, B. Jr. "Feed Facts," Southeastern Dairy Review. Dairy Farmers, Inc., Orlando, Florida. Monthly
issues, 1976-1990.

McHardy, J. C. "Future Trends in Florida Phosphate Mining, Beneficiation and Trailing Disposal," Mining
Engineering. August 1983. pp. 1196-1200.

The Miller Publishing Company. "Ingredient Market," Foodstuffs; The Weekly Newspaper for Agribusiness.
Minnetonka, Minnesota. Weekly issues, 1976-1990.

Rahmani, M. D. P. Shibles, J. A. Stricker andT. G. Taylor. Preliminary Cost Estimation for Selected Crops
Grown on Phosphatic Clay. Staff Paper 353, Food and Resource Economics Department, Institute
of Food and Agricultural Sciences, University of Florida. April 1989.

Stricker, J. A. "Final Report: Mined Lands Agricultural Research/Demonstration Project, Prepared for
Florida Institute of Phosphate Research." July 1987.

United States Department of Agriculture. Agricultural Prices. National Agricultural Statistics Service,
Washington, DC. Various issues.

United States Department of Commerce. Survey of Current Business. Bucau of Economic Analysis,
Washington, DC. Various issues.

United States Department of Commerce. 1982 Census of Agriculture. Bureau of the Census, Washington,
DC. July 1984.

United States Department of Commerce. 1987 Census of Agriculture. Bureau of the Census, Washington,
DC. April 1989.

Wood, C. "Reclamation: Can Agriculture Fill Economic Vacuum Created by Polk County's Declining
Phosphate Industry?" The Citrus Industry. July 1986. pp. 17-18.


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