With commodity prices low, in part due to the loss of the Chinese market, Rice County farmers are struggling to make up for a late planting season and middling growing conditions.
Claire LaCanne, agricultural extension coordinator for Rice and Steele counties, said that while soybean growth is relatively on track with the 5-year average, corn has fallen well behind. According to USDA statistics, just 25% of Minnesota corn is dented, compared with the 5-year average of 57%.
Dennis Inman serves as vice president for the Grain Central Farm Services, an agricultural co-op centered in southern Minnesota. Inman said that while farmers were able to plant some fields early enough to keep them on a proper growing trajectory, other fields were planted into late May and even June.
“About of our crop looks really good about a third looks OK and about a third doesn’t look that great,” Inman said, adding that for many area farmers, growing conditions last year were even worse.
In addition to getting a late start, fields have suffered with growing conditions that have been cooler and wetter than average. The difficult growing season comes after several years of lower prices, combined with inconsistent growing conditions, squeezed farmers.
Overall, USDA statistics rate 45% of Minnesota corn is rated as currently in “Good” condition, 33% in “Fair” condition, and just 10% in “Excellent” condition. For soybeans, 50% are rated as in “Good” condition, 33% as in “Fair” condition, and just 8% in “Excellent” condition.
The USDA recently decreased the corn export forecast by $1.2 billion to $9.2 billion due to lower than expected yields. U.S. corn has faced stiff competition this year due to a particularly abundant harvest in South America.
USDA also reduced its soybean export value by $600 million, to $16.4 billion amidst a nearly 20% decline in this year’s projected soybean harvest. Overall, the USDA’s estimates put the US ag trade surplus at just $5.2 billion — the smallest since 2006.
The soybean market has struggled to find alternative buyers after China officially pulled out of the U.S. agricultural market in August. U.S. soybean exports to China have become a leading casualty of the trade war between Washington and Beijing. China is the world’s largest consumer of soybeans and previously accounted for roughly 60% of soy exports.
With U.S. trade conflicts with China and other nations still unresolved, farmers are continuing to shoulder much of the blow from increased tariffs. An analysis from Colorado-based Ag lender CoBank analyzed the effects of 11 tariffs on U.S. producers. The analysis found that while a variety of factors can go into determining whether the exporter or importer has more bargaining power, U.S. farmers swallowed most of the cost of the tariffs cost in 9 of the 11 cases.
Worse, many countries that previously purchased large amounts of U.S. agricultural exports may not return to purchasing from U.S. exporters once tariffs are lifted. The longer the tariffs are in place, the longer those countries will have to build extensive supply chains with other exporters.
Northfield Area farmer David Legvold shares these concerns. Even though he’s worried that China has engaged in theft of intellectual property and unfair trade practices, Legvold is deeply concerned about the long term consequences of the trade war.
“It’s my belief that we have damaged relationships with a significant trading partner, and it’s going to take a long time to rebuild those levels of trust,” he said.
Just as concerning is the short-term hit to the pocketbook, especially for farmers with substantial debt. Legvold said when tariffs were first implemented in June 2018, the price he marketed soybeans on future sales decreased $3.50 within a few days. Had he raised 30,000 bushels of soybeans at that point, he would have lost more than $90,000.
Adding even more bad news to an already difficult scenario, Inman said that unreasonably high expectations of the corn and soybean harvest have led prices for corn and soybeans to fall below the cost of production for many farmers.
Inman was quick to add that many farmers were able to lock in stronger prices over the summer. Unfortunately, those who hesitated because they were unsure about their yield are now bearing the brunt of falling commodity prices.
“It’s one thing to have poor prices as long as you have big yields, but poor prices and poor yields is not a very good combo,” he said.