U.S. farmers tighten belts to compete with cheap LatAm grain

When Kansas farmer Tom Giessel drove over a deer carcass and punctured a tire on his combine during harvest this fall, he did not have the time or cash to fix it. He borrowed his neighbor’s tractor to finish. U.S. farmers are cutting costs any way they can to compete against cheaper producers in Argentina and Brazil. Four years of global oversupply have pushed down grain prices, reduced agricultural revenues and put more expensive producers under financial pressure.In response, U.S. farmers have bought cheaper seeds, spent less on fertilizers and delayed equipment purchases as they seek to ride out the downturn. But more bumper harvest forecasts and rising energy prices herald another tough year for farmers in 2018.“The logical thing to do is stop farming,” said Giessel, 64, who farms about 5,000 acres and has worked on the land all of his adult life.Giessel has cut spending on what he can control - seeds, chemicals, fertilizer, rented land - and chewed through his farm’s savings. He stands to lose $93 an acre, or nearly $15,000, on one corn field alone this year. Farmers cut $40.20 billion to bring total costs down to $350.49 billion between 2014 and 2016, according to the U.S. Agriculture Department’s Economic Research Service.The downturn in spending has hurt farm equipment manufacturers.Sales in the agriculture division at Deere & Co (DE.N) and CNH Industrial (CNHI.MI) fell sharply during 2015 and 2016. Deere expects farm equipment sales in the United States and Canada to be down another 5 percent this year, and CNH said in July that sales in North America were down.