The Demands Driving Prinsco’s Midwest Expansion
December 7, 2011
As 2011 quickly comes to an end, I have been reflecting on the last 12 months. What a crazy year it has been with earthquakes, tornados, winters that will not end, droughts in the south, an economy that continues to falter and commodity prices climbing to historic levels. With all of that, anyone in the agriculture industry has to feel blessed for the way things have gone in the last few years. Commodity prices have been high, yields have been reasonable, and the weather… well the weather is always a challenge!
As most of you know, Prinsco started manufacturing pipe in our new Beresford, South Dakota, plant in February of this year. We also announced the opening of a new manufacturing plant in Fargo, North Dakota, in January of 2012.
Why are we doing this?
First of all, farms in the Dakotas and Western Minnesota have always been underserved from a subsurface drainage perspective. In addition, we’ve recently seen new seed genetics allow crops such as corn and soybeans to be grown in climates which would never have supported them in the past, like the western-most parts of the Dakota’s and north into Canada. This new development has really changed the way land owners think. They can now grow crops they have never before attempted, cashing in on recent higher prices for those crops and bringing up their income levels from previous years.
With higher farm profits and a faltering stock market, farmers and investors are now looking to farmland as a safe place to park some cash. This trend has created a high demand for something that is in short supply – land.
As a result, agricultural land prices in parts of the Midwest are now double and even triple what they were just a few short years ago. North Dakota is a good example. In early 2000, you could buy decent farmland there for just $700 per acre. Now that same land is selling for upwards of $4,000 per acre. Those high prices have given farmers with a desire to increase yields a renewed incentive to improve their land versus buy new. When land was $700 an acre, it was considered more cost efficient to increase yields by simply purchasing more acres. At $4,000 an acre, it is now more cost efficient to invest in existing land with strategic water management systems geared to improving crop performance and lowering inputs.
In fact, with the Midwest’s diverse soil and changing climate conditions, subsurface drainage has proven to be the best way for farmers to ensure a good crop. Some areas of Iowa, for example, can grow 180 bushel corn without much help thanks to great soil and a long growing season. However, that land will also cost you $10,000 an acre! Farmland in the Dakotas, Western Minnesota, Manitoba and Saskatchewan will most likely be half that price, but will require drainage to be productive. Case in point… the past several years in the Midwest have been very wet. This, coupled with cool, rainy springs, have made it difficult for farmers to get into the fields for planting. In 2011, Midwest farmers with a working drainage system were not only able to plant sooner, but realize tremendous yield increases over those without drainage.
Prinsco understands the variety of factors driving demand for strategic water management systems. We are out in the fields, on the farms, spending time with customers and keeping our fingers on the pulse of the agriculture industry.
This personal connection to our market has helped us see one thing very clearly: maximizing and preserving the potential of our two most valuable resources – land and water – must be a priority for us all. If we do both well, then everyone will benefit from increased yields, improved farming conditions, expanded land use, decreased vulnerability to weather conditions and enhanced resource conservation.
We look forward to working with you in 2012 as we continue to grow, innovate and expand to meet the rising demand for quality water management products. Watch for more updates on the new production lines in our Beresford, South Dakota, manufacturing facility and the opening of our new Fargo/Moorhead plant this spring.