Colorado industry confronts challenges
June 01, 2001
Editors note: Pressures are mounting on Colorados bean industry. This industry leader wonders if the state will abandon dry beans or come up with new ways to compete.
By Howard Schwartz
Colorado State University
Dry edible beans, especially pintos, have been an important crop in Colorado since production statistics were first compiled in 1909 for dry beans. At that time, 500 acres averaged 580 lbs/a with a price of $3.60 per cwt. The industry enjoyed steady growth through the 20s and saw a record high in 1943 with 460,000 harvested acres, with an average yield of 525 lbs/a and a price of $5.70/cwt. Since 1970, acreage has fluctuated between 120,000 to 225,000 acres, yields have steadily increased to more than 1800 lbs/a and price has varied from $8.60 to $31.20/cwt.
Average gross income/acre has fluctuated from $87 in 1971 to $514 in 1988. The past five-year average is $325/a with declining returns noted each year from $405 in 1996 down to $298 in 1999.
In northeastern Colorado, irrigated pinto bean crop production estimates were $285 for pre-harvest operating costs (more than 35% related to irrigated expenses), with an additional $70/a penciled in for property and ownership costs at a total of $358/a.
CSU agricultural economist Dennis Kaan estimated that a pinto grower needed to yield at least 30 cwt/a @ $15/cwt or 25 cwt/a @ $18/cwt to break even. Therefore using 1999 statistics, a Colorado grower with an average yield of 18.5 cwt/a and a price of $15/cwt grew pinto beans at a net loss of $7/a with no return for property and other ownership costs.
Our regions bean industry continues to face increasing production costs (energy, chemicals, equipment, labor) and stiff competition from other production regions such as MinDak, Canada and even China These new areas have exploded in recent years and have brought literally millions of new production acres (mostly rain fed) into the picture as their growers work to improve their fortunes, which were based primarily upon low input crops such as wheat.
The Canadian provinces (e.g., Alberta, Saskatchewan, Ontario) are committed to an aggressive program and long-term investment in the development of adapted, productive and high quality pulse crops such as dry bean, field pea and lentils for their growers. They are focusing on reduced inputs (fertility, pesticides, irrigation) to give their growers an economic advantage so they can net a few more dollars per acre from large acreages.
This competition from Canada has the MinDak and Michigan bean industries worried. Trade and transportation advantages (e.g., provided by NAFTA) allow Canadians to ship quality beans through the United States to U.S. domestic and Mexican markets at the disadvantage of U.S. and certainly the High Plains bean industries.
And the Mexican government and industry have even sent experts to China to help them improve bean quality and secure future markets for exports to demanding consumers in Mexico.
What is our future?
So where does this leave us in Colorado and the High Plains? Based on production trends outside Colorado during the last 10 years, it is unlikely that bean prices (especially for pintos) will exceed $20/cwt very often. We know that we can count on increasing production costs (especially energy, equipment and labor) and expanding competition for limited export and even domestic markets, as cheap Canadian beans continue to stream into the U.S. for packaging and marketing even at the local scene.
So with this bleak outlook do we throw in the towel and watch our Colorado bean industry dwindle down to a non-functioning level in the next few years?
Or can we improve net economic returns to our bean growers and industry by reducing inputs and costs, while maintaining acceptable yield and seed quality? Can we improve access to a larger share of existing or new pinto markets willing to pay for high quality beans? Can we pursue new bean classes with domestic and/or international market opportunities?