Midwest corn and soybean producers saw margins too low to cover all their costs in 2016, according to a new report from the Rabobank Food & Agribusiness Research and Advisory Group.
What does that have to do with the Mid-South? If farmers in the Corn Belt states can’t make a go of it with current corn and soybeans prices, then growers in the South with their much higher weed and insect costs could really be up against it.
The Rabobank findings are mirrored in a survey of agricultural lenders conducted by the Federal Reserve Bank of St. Louis in late September. The majority of the lenders reported lower farm income levels compared with a year earlier. Most said those will remain lower in the fourth quarter.
Rabobank economists say the outlook for all agricultural commodity prices is flat for 2017, which means farmers are likely to have some interesting conversations with their lenders this winter. Those “talks” may be more difficult in cotton and rice country because it costs more to produce those crops.
Last spring, after considerable prodding by the cotton industry, USDA provided a cotton ginning cost-share program that eventually put about $400 million in cotton producers’ hands. Getting the new administration to follow suit could be challenging from both an organizational and philosophical standpoint. Southern growers could be well into planting season before USDA’s new political leadership is in place.
The next step would be writing a new farm bill in 2018, but that could be problematic, as well. As one observer said the other day, “If you liked the 2014 farm bill, you’re going to love the one the Heritage Foundation writes for you.”
The Heritage Foundation, some of you may recall, is the Washington think-tank that earlier this year distributed a 73-page report that said farm programs were no longer needed, in part, because most farmers were doing well economically.
No one knows how much stock to put into anything coming out of Washington these days, but there are reports of Heritage Foundation representatives meeting with members of the Trump transition team. If that’s the case, ag groups need to demand equal time.