Why Farmers Aren't Cheering This Year's Monster Harvest
U.S. farmers are bringing in what's expected to be a record-breaking harvest for both corn and soybeans. But for many farmers, that may be too much of a good thing.
Farmers will haul in 4 billion bushels of soybeans and 14.5 billion bushels of corn, according to USDA estimates. The problem? Demand can't keep up with that monster harvest. Corn and soybean prices have been falling for months. A bushel of corn is now worth under $4 — about half what it was two years ago.
That has farmers like Gene Trausch worried. From the cab of his John Deere combine, Trausch watches the machine churn through a field of soybeans. His irrigated soybean fields are showing big yields. So did the corn he recently picked.
"We out-produced ourselves," says Trausch, who raises raise corn, soybeans and wheat near Minden in central Nebraska.
When prices started booming around 2007, farmers planted millions more acres of corn and beans — much of it in places where they would normally grow wheat or cotton. Even land set aside for conservation was plowed up to grow corn. Trausch jokes that Mother Nature usually keeps things in check.
"You always hope your neighbor burns up, hails out, whatever, dries up, but you have a good crop," he says. "You know, that's just the way it works. But everybody had a good crop this year. "
That means a glut of corn and soybeans and the lowest prices in at least five years. To make matters worse, the oil boom in North Dakota is tying up the railways used to ship grain. Trains for things like coal or imports are also running behind. Bruce Blanton at the U.S. Department of Agriculture says the wait means some of the harvest could go to waste.
"If there's not enough storage, and the rail service problems persist, grain could be stored on the ground and run the risk of spoiling," Blanton says.
Some farmers will have so much grain to sell, they'll still manage to make some money. Others will lean on saving or subsidized crop insurance. Low prices could even trigger a new set of government safety nets in the Farm Bill.
Cory Walters, an agricultural economist at the University of Nebraska-Lincoln, says rising costs for everything from seeds to fertilizer make these low commodity prices harder to handle.
"Does that mean we're going to have multiple years of low prices and it's all doom and gloom? No, I don't buy that right now," Walters says. "Because there's a lot of changes could happen from year to year on acreage, weather."
Indeed, in 2013 American farmers reported their largest net incomes in 40 years.
But that was last year. And until prices move up again, farmers like Gene Trausch who had cash to burn a couple of years ago are saving, not spending.
"It's going to hurt," Trausch says. "Because the store fronts in town like in Minden, Kearney, Hastings, Grand Island, wherever - they're going to be hurting. And then also, your implement dealers. They're just not going to sell nothing."
Farm machinery companies have noticed. John Deere plans to lay off 1,000 workers at plants in Iowa. Another company, AGCO, says it will cut around 100 jobs in Kansas.
Trausch says he'll stick with the same giant, green combine he bought used five years ago.
"I looked at replacing it, and they wanted $400,000 for a new one. Well, that don't work at $3 corn," he says.
While Trausch and some other farmers remain on solid ground financially, others will likely struggle as they try to figure out what crop to plant if commodity prices stay low.
But in agriculture, that's often how the cycle goes.
Grant Gerlock reports from Nebraska for NET News and Harvest Public Media, a public radio reporting collaboration that focuses on agriculture and food production issues.
9(MDE1MTIxMDg0MDE0MDQ3NTY3MzkzMzY1NA001))
Transcript
AUDIE CORNISH, HOST:
Farmers in the Midwest are hauling in huge crops of soybeans and corn, which will be used to make everything from animal feed to fuel. It's been a near-perfect growing season, and it could be a record-breaking harvest. But for many farmers, that might be too much of a good thing. Grant Gerlock of NET News in Nebraska reports.
GRANT GERLOCK: Gene Trausch is churning through a field of soybeans in his combine. He also grows corn and wheat near the town of Minden in central Nebraska. As he cuts down row after row of dry, brown stalks, the round, yellow beans pour into the hopper behind the cab where we sit.
GENE TRAUSCH: Good year for beans - the little bit of corn I've picked is going to be real good also.
GERLOCK: Trausch is hauling in his share of a monster harvest nationwide. The USDA predicts 14.5 billion bushels of corn, 4 billion bushels of soybeans. Those are new records for both crops, but that means farmers liked Trausch could be the victims of their own success. Corn and soybean prices have been falling for months. A bushel of corn is now worth under $4, about half of what it was two years ago.
TRAUSCH: We overproduced ourselves, in so many words.
GERLOCK: When prices started booming around 2007, farmers planted millions more acres of corn and beans, much of it in places they would normally grow wheat or cotton. Even land set aside for conservation was plowed up to grow corn. Trausch jokes that Mother Nature usually keeps things in check.
TRAUSCH: You always hope your neighbor burns up, hails out - whatever - dries up but you have a good crop. You know, that's just the way it works. (Laughter). But everybody had a good crop this year.
GERLOCK: That means a glut of corn and soybeans and the lowest prices in at least five years. To make matters worse, the oil boom in North Dakota is tying up the railways used to ship grain. Trains for things like coal and imports are also running behind. Bruce Blanton at the U.S. Department of Agriculture says the wait means some of the harvest could go to waste.
BRUCE BLANTON: If there's not enough storage and the rail service problems persist, grain could be stored on the ground and run the risk of spoiling.
GERLOCK: Some farmers will have so much grain to sell they'll still manage to make some money. Others will lean on savings or subsidized crop insurance. Low prices could even trigger a new set of government safety nets in the farm bill. Cory Walters, an agricultural economist at the University of Nebraska Lincoln, says rising costs for everything from seeds to fertilizer make these low commodity prices harder to handle.
CORY WALTERS: Does that mean we're going to have, you know, multiple years of low prices and it's all doom and gloom? No, I don't buy that right now because there's a lot of changes that can happen from year to year on acreage - weather. So there's a lot of stuff moving around here.
GERLOCK: But until prices move up, farmers like Gene Trausch, who had cash to burn a couple years ago, are saving, not spending.
TRAUSCH: It's going to hurt 'cause the storefronts in town - like in Minden, Kearney, Hastings, Grand Island, wherever - they're going to be hurting. And then also your implement dealers - they're just not going to sell nothing.
GERLOCK: Farm machinery companies have noticed. John Deere plans to lay off a thousand workers at plants in Iowa. Another company, AGCO, says it will cut around a hundred jobs in Kansas. Trausch says he'll stick with the same giant, green combine he bought used five years ago.
TRAUSCH: And I looked at replacing it, and they wanted 400,000 for a new one. Well, that don't work at three-dollar corn.
GERLOCK: While Trausch and some other farmers remain on solid ground financially, others will likely struggle as they try to figure out what crop to plant if commodity prices stay low. But in agriculture, that's often how the cycle goes. For NPR News, I'm Grant Gerlock.
CORNISH: That story comes to us from Harvest Public Media, a public radio reporting project focused on agriculture and food production. Transcript provided by NPR, Copyright NPR.
300x250 Ad
300x250 Ad