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The best days for farmers might be behind them.

This is the opinion of Jerry Gulke, a marketing analyst who operates Strategic Marketing Services in Rockford, Ill. Gulke spoke at the recent farmer outlook seminar at Southwest State University in Marshall.

Making a living from farming was tough when he first entered the business, and it is getting tougher, Gulke told a crowd of more than 250 people.

"It was a lot easier then, but we didn't realize it," Gulke said. "Either we're getting old, and it's just as easy to make money now, or times have changed."

Consequently, farmers need to operate their farms as businesses and to make aggressive marketing decisions.

The current squeeze comes in large part from shrinking exports and high production, Gulke said.

For years, farmers heard about exporting themselves out of low prices, Gulke said. However, economic forecasts grossly underestimated the ability of South America to produce vast amounts of cheap food. Additionally, Eastern European countries that once bought grain from the U.S. now export it.

"The WTO (World Trade organization) wasn't the end all that we thought it would be; some of the trade agreements aren't the utopia we thought they would be," Gulke said.

At the same time, U.S. production keeps rising regardless of low prices, Gulke said.

"I'm beginning to believe that the economic system that we try to place upon agriculture doesn't work as well as it might with some other industries," Gulke said. "You have to wonder whether having the government involved in agriculture, ever, is a good thing in the long run."

As things stand, farmers must produce as much grain as possible as cheaply as possible while maintaining price supports, Gulke said. They also must use marketing tools such as hedging and insurance to their advantage.

Gary Kellen, executive president of the First Independent Bank in Russell said he has been talking to farmers about marketing and risk-management issues for 15 years.

"The key is looking far enough ahead to get the right pricing. The best marketers are selling 12 to 15 months in advance," Kellen said. "The only way [farmers] can't make money is if the market stays flat."

Risks of a flat market are greater today because of international players like Argentina and Brazil, coupled with better equipment and genetics that generate consistency, Kellen said.

"You're not going to see the price rise where you have the income level for the farmers the way you used to," Kellen said. "You're going to operate on smaller margins and higher risk."

Paul Swift increasingly uses marketing tools, which he said often boil down to acts of faith. However, Swift, who owns 600 acres and 46 head of cattle in Coon Creek Township in Lyon County, suspects it might take more than good marketing in the future.

"We're maybe going to have to get into value added, but that takes a lot of years to get your money out of that, too, and you've got to have money to invest in it, or you have to have a good banker to sit behind you," Swift said. "It's like buying land or anything else -- you can't borrow your way into prosperity. People tried it in the late 70s, and they found out it didn't work."

Recent bumper crops of corn and soybeans have helped keep Gary Peterson farming 500 acres in Shetek Township in Murray County. However, with South America expanding production he expects competition to tighten.

"It's really not very encouraging right now," Peterson said.

The shakeout has only started, said Fred Rabaey, who farms less than a section in Eidsvold Township in Lyon County.

"People complain all the time, but the fact of the matter is land prices and rents are going up," Rabaey said. "Farmers are making money in some way or in some fashion, either by being more productive or by getting government money.

"I'm not going to blame the government because I wasn't smart enough to sell at the right time, or to hedge off, or to buy inputs. People can whine all they want, and I will whine with them. But the reality is there are plenty of opportunities there for young farmers, for anybody who's smart enough and willing to work hard enough to make money."

On another front, ever-tightening environmental regulations also create new obstacles for farmers, said Dennis Engles, who raises hogs in Westerheim Township in Lyon County.

"We need to watch the environment, but when it's too strict, you loose livestock operations," Engles said.

Hog and cattle breeding in Minnesota dropped five percent last year, said Michael Sands, vice president of Sparks Companies Inc. in Memphis, Tenn. Nationwide, breeding dropped 11 percent.

Positive community attitudes toward livestock are vital, said Erv Sether, who handles up to 40,000 hogs annually and grows corn and soybeans in Christiania Township in Jackson County. He believes more livestock on southwest Minnesota's landscape would give farming a needed boost.

"Our crop yields [this year] were considerably lower than the prior two years, but the hogs keep us going," Sether said.

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