Nebraska corn farmers expect high yield, low prices
Read the World Agricultural Supply and Demand Estimates report
For more information on the corn supply and price projections, go to http://www.usda.gov/oce/commodity/wasde/latest.pdf.
When commodity prices fall and stay low, it’s usually the young and beginning farmers people worry about, said Nebraska Farmers Union president John Hansen. That’s changing now.
After three years of market lows, it’s the average farmer, the good businessman and the midsized operator that are at risk of getting buried in debt and even going under, Hansen said.
“We’re burning cash and equity right now,” Hansen said. “When does the bank throw in the towel?”
And when do farmers?
This year, American corn farmers are rolling toward their biggest harvest ever. According to the World Agricultural Supply and Demand Estimates report, released Aug. 12 by the U.S. Department of Agriculture, this year’s harvest is projected at a record 15.2 billion bushels. Hansen said most of Nebraska’s farmers are on par to hit high yields with good quality crops, so long as the season’s weather and conditions hold out. But the same USDA report said the average price for corn is expected to drop another 25 cents from its already low price to an average of $2.85-$3.45. That’s assuming the best of the markets — most of Nebraska’s elevators are already offering less than $3 per bushel, Hansen said.
According to the Nebraska Farm Business Association, in 2015, the average, mid-sized corn farmer in the state lost $110.68 per acre, and the average farm in Nebraska is about 900 acres. The average soybean farmer lost about $100 per acre. Wheat farmers lost nearly $200 per acre. That’s anywhere from nearly $100,000 to almost $200,000 depending on the crop, and this year, that will only get worse since market value for crops has fallen 20-30 percent, Hansen said.
“Rural America needs help,” said Chip Bowling, president of the National Corn Growers Association, in a news release following the release of the World Agricultural Supply and Demand Estimates report. “With prices for a number of crop and livestock commodities already below the cost of production, the potential losses in rural America will result in fewer family farms, fewer jobs and economic hardship. We need real solutions that help us access markets, expand biofuel use and ensure a more sustainable future.”
Those answers have to come in the form of public policy that keeps ag at the forefront, Hansen said. In Nebraska, that means lowering property taxes so landlords can lower cash rents and alleviate pressure on farmers, he said. That also means creating some way to manage the national food supply in a way that’s economically sustainable, rather than the status quo. As things are, economic conditions force farmers to overproduce crops to come close to breaking even, then the market is flooded and crop prices fall even further.
“What we have is a completely nonsensical system which causes booms and busts,” he said. “The economic crisis we’re facing is a failure that is directly tied to an unrealistic and dysfunctional national farm and food policy.”
Sam Hake, who farms corn and soybean and feeds cattle near Madison, said it’s going to be a challenge this year to get the harvest sold. In June, there was a slight uptick in prices, and some producers were able to sell their crops at a better market value. But Hake said since he grows on mostly dryland, he wasn’t comfortable taking that gamble with the futures.
That said, Hake said his harvest this year is looking excellent and most of the producers in his area will likely have above average harvests, so that will help offset some of the low prices.
“It’s going to be a challenge,” he said, “but I imagine we’ll get through it.”
If producers didn’t catch that June opportunity, there’s not much at this point they can do, other than hope for some luck and continue the best management practices already implemented, Hansen said.
“A lot of the management things that you can do when it comes time to look at the crops you raise and the inputs you use — most of those things have already been done,” he said. “Now, it’s trying to continue to keep a tight rein on spending and look at if the market ever perks up and looks like there’s some short term rallies later on. You have to really be a prepared and watchful marketer.”❖
Editor’s note: This story has been edited from it’s original version to reflect the correct estimates for the total amounts lost by Nebraska farmers in 2015.
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