“We stand at a point of extreme price and policy uncertainty.”
No truer words have been uttered than those, written last week by a group of University of Illinois agriculture and policy economists as they attempted to summarize options open to farmers who are attempting to bail themselves out of a mess left by Mother Nature and the U.S. Department of Agriculture.
With corn planting late and far from complete, with flooded fields and many that need replanting, with cloudy USDA initiatives to compensate for lost markets, and approaching decision-making deadlines on whether to plant or take a crop insurance indemnity check for prevented planting, the typical Corn Belt farmer is utterly and completely flummoxed.
Every farmer will tell you, “Dad sure never told me there would be years like this one,” and that would be the truth. Tens of thousands of farmers who retired last year made the best decision of their lives, and currently are snapping their suspenders in pride for being as smart as they were.
Farmers have battled through wet Aprils, and wet Mays, but never in succession, which this year have pushed planting so far back that 31 million of acres of corn have not been planted, millions of which may not be planted this year. For Illinois farmers, we are at the point when the best that can be expected with corn planted today is 80% of the typical yield.
With rain forecast throughout the Corn Belt this week, dropping multiple inches of rain, many farmers will give up on their plans to plant corn. Economists and grain traders are penciling in the prospects of dropping 2019 corn production from the forecast 15 billion bushels to 13 billion, and possibly less. That not only reduces the price-depressing carryover, but raises corn prices to the point of rationing demand, and driving away export customers.
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But farmers will have to decide what to do with their farmland, much of which they have already paid to rent this year, not to mention pay taxes on and depended upon to pay family living expense.
The 80% of farmers who have crop insurance will have a choice of filing a claim for prevented planting or shifting to soybeans, which can still be planted, but with the prospect of only an 80% typical yield and income that may not pay the cost of production.
In the midst of the agronomic predicament is the USDA, wavering day to day on details that would help make those agronomic decisions. The White House promised a payment to mitigate the results of its trade decisions that have diminished market prices for the past 15 months. However, the USDA says it will not release details that might influence planting decisions, and will restrict any payments to only farmers who plant a crop.
Then Monday, the secretary of agriculture said maybe it will also be given to farmers who could not plant, or not.
Snap those suspenders again, boys!