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Commodity Corner author Alan Brugler presented a marketing seminar during OFBF's annual meeting. Following are portions of a Buckeye Farm News conversation with him.

BFN: Grain prices are lower, interest rates are higher, energy prices are up. That has bankers worrying a little about cash flows in the coming year. Are you seeing any evidence that cash flow concerns are affecting farmers' marketing plans?

Brugler: "I haven't heard a lot of forced selling yet. I think the main reason for that is we've got pretty good cash coming out of the LDP program right now. We've had almost 6 billion bushels of LDPs redeemed at a very high price, an average of 45 cents a bushel, so in the short run the farmer's got some cash. But he's in a situation where he needs the markets to rally in the first quarter because he'll have to sell the inventory.

"The bankers are nervous, the farmers are being very cautious about their spending. Yes, there are some concerns, but we're coming off two excellent years for farm income so farmers' balance sheets, at the moment, are in pretty good shape. There's a shock tolerance built into the system now but bankers are not wanting to let that improved balance sheet get away from them."

BFN: It's significant that when asked about cash flows, your first comment was that we have a lot of LDP money coming in now. If you listen to people in Washington, they're saying after we get done with the new farm bill, some of those payments may go away. We always hear that farmers want to make their money from the marketplace. Are we prepared, as a whole, to become more reliant on market prices and less reliant on the government?

Brugler: "I would say as a group, the answer is probably no. I think we have some cost disadvantages as we look at the U.S. versus some other countries. Labor cost is certainly a big factor, land costs (in other countries) is a lot cheaper. Regulatory costs are a lot cheaper in some of the countries we're competing with. To a degree, the safety net that we have with the farm programs insulates us from those competitive factors.

"Now, the U.S. producer is the most efficient guy; he can do the most acreage with the least manpower and produce a very high quality product. But we see this particularly in the cotton market, that the world cotton producer can grow that stuff for 40 cents or less and the American guy needs 55 or 60 cents a pound to show any kind of profit. If we go to the world rate, there's going to be a lot of cotton produces here that will be in trouble."

BFN: What about corn and soybean growers in Ohio? Are they in trouble too?

Brugler: "If we were to dump all subsidies, yes. I think there would be some stress, because as you and I both know, producers tend to bid whatever money they do make into the land cost, and we've got very high priced land, particularly here in Ohio. We've got to find a way to pay for that with crop production. And that implies a higher price, and you can't just levitate the price. You've got to match the supply to the demand if you want to get that price intersection up there anywhere that's profitable for the grower. The challenge is to do that without opening the door for some other county to come in and sell underneath you."