But American corn and soybean farmers aren't suffering because they're struggling to grow corn and soybeans; rather, they're seeing the repercussions inherent in producing too much of them. "If you look around the country, it's pretty hard to find a bad corn crop right now," Gregory Ibendahl, associate professor of agricultural economics, said in an interview. This year's corn crop, as it turns out, is going to be the largest in history, according to USDA estimates. The same is likely to be true of 2014's soybean output (paywall)....Broadly speaking, record harvests are rarely bad news. "As a farmer, you can't do anything about prices," Ibendahl said. "All you can do is try to produce as much as you can in any given year." Large stockpiles of corn today should give way to commensurately large cash piles of profit down the road, even if it means storing much of it until prices recover.Yeah, I may take some of the stories in the Bible at less than face value (Genesis and Revelations, for instance), but the story of Joseph and the seven years of plenty followed by seven years of difficluty rings true. We recently had our seven years of bounteous harvests.
But low prices can be devastating, especially if they sustain themselves over long periods of time. "If you're a farmer facing continual low prices, you might have to take some land out of production." Ibendahl said. "Somewhere along the line you might even reach a point where you have to go out of production."
The U.S. farming sector is not quite there yet—the point at which those farms that are most affected can no longer afford to stay in business—but that doesn't mean there isn't potential for such a scenario. "I think it [low prices] will continue for a lot longer than most people think it will," Ibendahl said.
Wednesday, August 20, 2014
Things May Get Ugly
Wonkblog looks at the dark side of our probable bumper crop: