There is a lot of uncertainty in the world, but one thing is clear for corn farmers: The days of selling corn for a lucrative $5 a bushel won’t return anytime soon.
The U.S. and Ohio farm economies, predicated upon the prices of corn and soybeans, has been in a rut for three or four years as the price of corn fell from record highs in 2012 to a stagnant $3 to $4 a bushel. Soybeans have fared better, but not great.
“Is 2018 going to be better? No,” said Barry Ward, an Ohio State University Extension assistant professor in production management, during a talk on Wednesday at the annual Farm Science Review in London.
“I feel like a broken record up here the last few years. Five-dollar corn is not in the picture, and it’s another year of tight, low or negative (profit) margins for everyone.”
The break-even point for many corn farmers is about $4 a bushel, and current prices are a bit below that level. That has some farmers wishing for something to help give them a boost.
Corn prices soared to more than $8 a bushel in 2012, and many farmers and experts at the Farm Science Review pointed to that heyday as something that may never come again.
“The days of 2012, that’s over,” said Jerry Weaver, who farms 900 acres of corn, soybeans and wheat in Miami County. “(Margins) are getting thin. We have to be a lot more careful (about costs).”
Although farm income is way down from four to five years ago, the outlook isn’t as bleak as some of the rhetoric. This isn’t the 1980s, when prices plummeted, debt soared and scores of farms went bankrupt.
“We are in a very different situation,” said Ani Katchova, an associate professor in the Department of Agricultural, Environmental, and Development Economics at Ohio State University.
Interest rates topped 17 percent in the ’80s, she said, and other indicators are nowhere close to the levels seen then.
For example, during the last quarter, two out every 10,000 farms were in bankruptcy. At the height of the farm crisis in the ’80s, the number was 20 out of every 10,000, according to Bob Dinterman, a postdoctoral researcher at Ohio State.
Although the farm economy isn’t at its lowest point, it isn’t great, either.
“Obviously, these are challenging times for grain farmers,” said Chris Hurt, an agriculture economist with Purdue University. “The problem with coming off of high prices is that costs rise as well.”
The price of needed farming supplies, such as fertilizer and seed, don’t fall as fast as prices for the crop do, Hurt said. They can take years to balance out.
Supply costs are starting to fall, however, which has Hurt thinking that we’re nearing the bottom of the trough for the overall health of the farm economy.
He is predicting slim profits this year, but an improving farm economy in 2018 and ’19.
Hurt offers one caveat. President Donald Trump has been talking tough on trade, especially with China, the largest buyer of U.S. soybeans.
“If we get into a trade war with China,” he said, “it would be devastating to (agriculture) markets.”
Ohio’s farmers also know that they are but a small part of the corn and soybean market, so the prices they get are often driven by what is happening somewhere else, such as Illinois, Iowa and Indiana.
The U.S., and the world in general, is swimming in corn and soybeans because of several consecutive years of record-breaking crops.
“Our crops look pretty good. We’ll have a good yield,” said Brent Clinehans, who grows corn, soybeans and wheat in Shelby County. “But our income is going to be down.”