A return to normal weather means normal crop production

2013-04-27T12:00:00Z 2013-04-29T10:25:11Z A return to normal weather means normal crop productionMelanie Csepiga Times Correspondence nwitimes.com
April 27, 2013 12:00 pm  • 

Dan Roeske has been in the farming business for 25 years, since he was 19 years old and took over the family's rural Hebron farm in Porter County.

His years of experience have helped him weather the whims of nature and global markets to provide a good life for his family.

"I target the third week in April to get in to plant," Roeske said. He's not one to jump in early, as did some farmers when warm temperatures and sunshine bathed the fields in late March. "I don't try to outguess the weather or outguess the markets. I'm like a Cubs fan. You start out optimistic," he said.

Roeske farms 1,000 acres – half in soybeans and half in corn – on land he owns and acreage he rents.

Recent rains will delay planting a bit, Roeske said.

"It'll be the end of the week before we can get in the field. ... The big thing now is the heat. We need the ground to warm up," he said April 21. It takes a soil temperature of 55 degrees for corn to germinate, for example. Too cold, the seed will eventually rot.

Planting is at least a week away if rains hold off, West Creek Township farmer Dan Sutton said April 21.

"The rains put a lot of moisture into the ground. It was beneficial," he said.

The rains also pushed Sutton and his tiling and trenching business out of the fields in southwest Lake County. He shut down April 15.

Christopher Hurt, a professor and agricultural economist with Purdue University West Lafayette, said there will be planting delays, but they may not be severe if most of the corn can be planted in the first half of May.

"If the weather does not improve by the first of May, then there will be more grave concerns as some shifting away from corn and towards soybeans will occur," he said.

If production levels in the corn and soybean belt to the west of Indiana and Illinois return to normal as expected, Hurt said corn and soybean prices will be sharply reduced.

"My current estimates with normal production are for the U.S. corn price to average $5 a bushel versus $6.90 a bushel for the 2012 crop. Soybeans would drop to $11.75 a bushel from $14.30 for the 2012 crop," Hurt said.

While lower crop prices will affect the bottom line for grain farmers, it will be a boost for those with beef cattle and dairy farmers, Hurt said.

"As corn prices move below $6 a bushel, the animal industries will begin to return to profitability with the lower feed costs," he said. Should corn move at or below the $5 mark, he predicted a "robust expansion" in late summer and fall for livestock and dairy operations.

"Most farm managers are in a better financial position today than five years ago," Sutton said. "The bubble farming has been in has been profitable the past three to four years. ... Farming is countercyclical to the general economy," he said.

Roeske agreed. "Personally, I've had some pretty good years lately. ... I got some debt paid down," he said.

Still, costs for supplies and equipment have gone up dramatically in that time. "There's not much competition," he said.

Hurt said he expects normal grain crop yields this year will greatly reduce crop insurance payouts. Crop farmers' revenues will be down more than animal producers' profits will be up, he said.

Hurt predicts U.S. farm income will drop from the current record high of $128 billion.

"The point is that even if incomes fall $10 (billion) to $15 billion in 2014, that is still very good income from the historical levels. ... That compares with an average annual income of $75 billion for the years 2004 to 2010.

"This means the theme will be moderation in crop prices and incomes, not a collapse in income," Hurt said.

Hurt expects consumers could feel a slight benefit by late summer when he expects the cost of such foods as cereals, fats and sweeteners will lower somewhat. "Lower inflation on food can actually modestly help stimulate economic activity as consumers can spend more of their incomes on products and services," he said.

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