Economy

Profit from U.S. farms will sink to its lowest point since 2009 this year if Agriculture Department predictions are correct.

U.S. net farm income is expected to drop for the third-straight year in 2016, dropping 17.2 percent from the 2015 estimate to $66.9 billion, according to projections from the U.S. Department of Agriculture released on Wednesday.

The livestock sector is expected to be particularly hard hit.

As another harvest season wraps up, Midwest farmers are once again facing low commodity prices amid enormous supplies. And when they recover from the long days bringing in the grain, they will eventually sit down with their books and try to figure out how best to farm again next year.

The current run of down times for farmers are only going to get worse, according to many farmers.

Nearly 80 percent of the 400 farmers and agricultural producers surveyed in October by Purdue University researchers said they expect bad financial times in the next year, a jump of 11 percentage points since a September survey.

The massive industry that supplies farmers with the tools to raise crops is on the brink of a watershed moment. High-profile deals that would see some of the largest global agri-chemical companies combine are in the works and could have ripple effects from farm fields to dinner tables across the globe.

Five of the six biggest companies that produce and sell seeds and chemicals to the world’s farmers are pursuing deals that could leave a market dominated by just three giant, global companies. They say getting bigger means bringing more sophisticated and innovative solutions to farmers faster, but opponents say consolidation has irreversible downsides.

Like most farmers, Mark Nelson, who grows corn, soybeans and wheat near Louisburg, Kan., is getting squeezed. He's paying three times more for seed than he used to, while his corn sells for less than half what it brought four years ago.

"It's a – that's a challenge," Nelson says. "You're not going to be in the black, let's put it that way."

Low commodity prices are rippling up and down the farm-economy food chain — from the farm to the boardroom — and it has many of the huge companies that control farm inputs looking to a new future.

Frank Morris / Harvest Public Media

Like most farmers, Mark Nelson, who grows corn, soybeans and wheat near Louisburg, Kansas, is getting squeezed. He’s paying three times more for seed than he used to, while his corn sells for less than half what it brought four years ago.

“It’s a – that’s a challenge,” Nelson says. “You’re not going to be in the black, let’s put it that way.”

Low commodity prices are rippling up and down the farm economy food chain from the farm to the boardroom, and it has many of the huge companies that control farm inputs looking to a new future.

Amy Mayer / Harvest Public Media

The path to normalized relations between the United States and Cuba made a stop in farm country Friday.

U.S. Agriculture Secretary Tom Vilsack and his Cuban counterpart, Gustavo Rodriguez Rollero, toured Aaron Lehman’s corn and soybean farm in central Iowa. They talked about water, soil, and energy and compared strategies for managing hog manure, which has been a problem in Iowa.

Vilsack said he hopes Cuba can increasingly be an export market for farm products like soybeans, rice and, eventually, poultry.

Kansas farmers may be facing some of toughest financial times they have experienced in three decades, largely thanks to low prices for the state’s biggest crops.

The average net farm income for farmers in the state plummeted in 2015 to just $4,568, according to a report released this week by the Kansas Farm Management Association (KFMA). The figure is less than 5 percent of the previous year’s average of $128,731.

At the grocery store, processed foods like cereal, crackers and candy usually maintain the same price for a long time, and inch up gradually. Economists call these prices “sticky” because they don’t move much even as some of the commodities that go into them do.

Take corn, for example, which can be a major food player as a grain, starch or sweetener.  

Corn prices can fluctuate widely, so why don’t products containing corn also see price changes? Why does your cereal pretty much cost $3 per box every week?

It’s partly thanks to the futures market.

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