By Kirk Maltais
The U.S. farm belt is headed for a bumper crop. Few farmers are celebrating, though.
Grain prices, under pressure since the Covid commodity boom crested, have fallen further in 2024. Rainfall has been ample across farm country for the first time in years, staving off the drought that has plagued the central U.S. and putting Midwestern corn and soybean harvests on track to set records.
That is intensifying what was already shaping up as a dismal year financially on the farm. Budgets drawn up in the spring are no longer viable. Persistently high costs for farm essentials such as seeds and fertilizer are gobbling up revenue.
It is a return to leaner prepandemic times for many farmers. Prices for corn and soybeans were rangebound in the second half of the 2010s, weighing on farm returns. The record-high prices in 2021 and 2022 gave farmers a boost, but momentum has once again turned against them.
Now, some farmers are being forced to consider actions they would rather avoid. That can mean using less fungicide and fertilizer—and accepting more issues with pests and lower crop yields—or delaying capital investments that would boost productivity and profits over time.
“The way the market is now, I think most people are pretty nervous,” said Steve Nightingale, who farms 1,700 acres of corn and soybeans in Henry County, Ill.
Corn and soybeans are both trading at levels last seen in 2020. The producer-price index for corn, reflecting the change in the selling prices received by domestic producers for their output, has halved since hitting a recent high two years ago, thanks in part to strong production in Brazil.
Nightingale is in the process of selling leftover crops from last year to make room for what he expects to be a bountiful harvest. But at his local grain elevator, he recently got $3.69 a bushel for last year’s corn—14% below the $4.30 he needs to break even.
He isn’t alone. The sharp decline in crop prices is the chief reason that budgets drawn up by farmers at the start of the spring planting season are now blown, with lower commodity prices no longer offsetting higher production expenses.
Fertilizer prices soared to record highs in the wake of the Russia-Ukraine war, following a big uptick in prices for natural gas. Other costs include hiring workers, purchasing seeds and paying for fuel.
“We’re using up the reserves we have,” said Mat Muirheid, who farms 1,600 acres of corn and soybeans in Macon County, Ill. Muirheid said that he plans on tightly budgeting for planting next year, limiting the supplies he purchases and planting more soybeans than corn because they are less fertilizer-intensive.
He’s also delaying buying new machinery. Muirheid said that he will continue to use his 15-year-old combine and his 20-year-old planter. Deere & Co.this month reported that third-quarter equipment sales in its production and precision agriculture division fell 25% from a year earlier.
The cost to rent land to farm on has also climbed in recent years, becoming a bigger portion of farm expenses. “Rent has gone up every year for a long time,” said Muirheid.
In February, the USDA forecast that net farm incomes would drop by a quarter this year. Economists at the University of Illinois say farmers in the state are likely to lose as much as $118 per acre of corn and $81 an acre for soybeans. The pain could be even worse if prices don’t rebound.
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