Monday, November 07, 2016

Rural towns feeling pinch of low crop prices; some farmers will make up with record production

"The doldrums caused by lackluster prices for crops and livestock have started to ripple onto the main streets of rural Minnesota," Tom Meersman reports for the Minneapolis Star Tribune, doubtless describing the situation in other parts of the Corn Belt.
Star Tribune chart by CJ Sinner; data from National Agricultural Statistics Service
"Thousands of Minnesota farmers have withstood stubbornly low crop prices during the past 27 months, and farmers’ average net income has been dropping steadily for the past three years," Meersman writes. "When farmers have less money to spend, it affects anyone who is selling farm equipment, marketing fertilizer, or building new barns, bins and sheds."

David Preisler, executive director of the Minnesota Pork Producers Association, told Meersman that weak crop and livestock prices can be felt quickly in small towns: “The first ripple effect you see is going to be any sort of capital purchases that are more discretionary in nature,” he said.

University of Minnesota economist Bill Lazarus found that Minnesota farmers' spending on machinery, other equipment, farm buildings, fertilizer and land rent peaked with crop prices in 2012 and 2013 at about $117,000 per farm and "plummeted to about $67,500 in 2014 and $48,000 in 2015," Meersma reports.

Some farmers will make up the price losses with greater volume. John Hart of Lee Newspapers reports that "a near-perfect growing season that has experts predicting record corn and soybean yields throughout much of" Wisconsin.

UPDATE, Nov. 10: The U.S. Department of Agriculture says the nation's corn crop will be a record 15.226 billion bushels, "larger than the 15.057 billion bushels predicted in October," Agri-Pulse reports. "Yields will average a record 175.3 bushels per acre, up from the 173.4 bushels projected a month ago, the department said The expected record crop is keeping downward pressure on prices, which USDA says will average around $3.30 a bushel for the crop year that began Sept. 1, down from $3.61 a bushel in the previous year."

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