Farmers worry over forecasts of another strong corn harvest
By Tim Barker, St. Louis Post-Dispatch | |
McClatchy-Tribune Information Services |
But for many of them -- particularly those who rent their farmland -- 2014 looks like it's bringing too much of a good thing.
It's a simple case of supply far exceeding demand, with corn prices rapidly falling to the point where growers may actually lose money, despite having fields bursting with corn.
"A lot of crop producers are nervous," said
Indeed, industry observers knew a correction was coming after several years in which rising demand and poor weather shoved prices into record territory, topping
Last year, prices slipped below
The problem is that many farmers can't sell corn at that price and make a profit. It varies from farm to farm, but typically a grower who rents land needs to make about
The picture is better for those farmers who own their land. That brings production costs closer to
So those farmers are in the uncomfortable position of watching as mild weather and strong harvest forecasts push prices ever lower.
It's a far cry from the 2010 to 2012 stretch, when rising demand and drought pushed prices upward. The drought of 2012, in particular, hammered fields, reducing the national average yield to around 120 bushels per acre -- well below last year's harvest of more than 160 bushels per acre.
"People who had a decent crop that year actually made some money," Westhoff said.
Some farmers have insulated themselves, somewhat, from this year's price plunge by using advance contracts -- agreements to sell corn at a set price. It's a gamble than can pay off in this situation for farmers who agreed to such deals when prices were still above
"If they haven't already sold it, there's not much they can do," said
One of the few options is to store the corn instead of selling it at losing prices.
It's an option that can work, but one that has its drawbacks, said
Stuever, who farms 1,000 acres near
And more importantly, he said, "That doesn't create cash flow."
That can make it tough when it comes time to pay land owners, seed merchants and other suppliers before the next planting season starts.
"They are businesses just like we are," Stuever said.
Farmers do have a safety net, of sorts, in the form of crop insurance and subsidies provided by the farm bill passed by
Crop insurance kicks in when yields or revenues drop 25 percent below a farm's average. The farm bill subsidies are triggered by corn prices falling below
Regardless, farmers are left worrying over how they will cope with the coming years, if things don't change.
"If we have prices below
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