CALIFORNIA — Despite record yields, American corn growers are losing money and are on the verge of a farm crisis, says the president of the National Corn Growers Association. Meantime, Ontario producers have been saved by a much lower Canadian dollar.
Kevin Skunes told the Commodity Classic in California that the average Iowa farmer was making a net profit of US $20 an acre 25 years ago, but losing US $10 an acre in 2017 (all dollar amounts below are in U.S. dollars).
“Time is running out to avoid a significant farm crisis,” the Western Producer quoted Skunes as saying.
In 1993, an Iowa farmer was paying $74 per acre in machinery costs, $113 per acre in input costs and $92 per acre in land costs, while the average corn price was $2.25 per bushel and average yields were 133 bu/ac.
In 2017, that farmer was paying $117 per acre in machinery costs, $250 per acre in input costs and $230 per acre in land costs, while the average corn price was $3.36 a bushel on 177 bu/ac yields.
The September, 2018 corn futures hovered around $3.90 a bushel on March 22.
Corn growers are hoping a potential upcoming U.S. farm bill will have better crop insurance programs, risk management programs and research programs. A farm bill is passed about every five years, with the last one passed in 2014.
The problem isn’t just limited to corn. Ron Moore, chairman of the American Soybean Association, said net farm income has dropped almost 50 per cent the last five years.
“You don’t create a farm bill for good times. You create it for bad times,” Moore told Illinois’ Farm Week Now news. “That’s why we need a 2018 farm bill. We can’t afford dramatic cuts.”
American soybean growers are concerned about trade as almost 60 per cent of soybean products are shipped to foreign markets.
The corn growers association is pushing for no changes to the Renewable Fuels Standard program, which requires renewable fuel to be blended into transportation fuel. The oil industry is pushing for a cap on renewable fuel credits at 10 cents a gallon. The price of the credits fluctuates, but ranged from 70 cents to 90 cents last fall.
The National Corn Growers Association estimates a cap on credits would devastate American farmers, as a cap would reduce ethanol demand by more than 750 million gallons, would lead to a 25-cent-per-bushel drop in corn prices, and would cost farmers $4 billion per year for the next two years.
In 2017, ethanol accounted for 30 percent of U.S. corn production.
But Ontario farmers don’t face a crisis because producers here benefit from a lower Canadian dollar and lower transportation costs as Ontario farmers are closer to the St. Lawrence Seaway to transport to global markets, said Frank Backx, of Hensall District Co-op in Western Ontario.
“If our dollar was par with the U.S., our farmers here would be hurting big-time too,” Backx said. “That’s kind of what’s saving our butts here at the moment.”
Farmers in North Dakota, for example, are a long way from a water transportation corridor and get way less money for their crops than farmers in Illinois, even though the North Dakota farms don’t yield as much.
Ontario farmers’ input costs — for items like fertilizer, gas and energy — are in American dollars, but “the advantage we get from the grain prices with our cheaper dollar more than offsets the increased inputs we encounter,” said Backx.
