As you and I go to the grocery store to buy food, we have a stake in the fall harvest of grain and the yields and prices farmers are getting. We need to be interested in what is happening out there on the farm, because that is where our food ultimately comes from.
Grain farmers this fall are experiencing a double blow. With soybean and corn harvests in full swing, market prices are a real concern. And they are not good when farmers consider the costs they have in their crops.
Last spring, fertilizer and fuel prices were sky high. Some fertilizer prices had doubled from a year earlier. Diesel and gasoline prices were $4 a gallon and higher which impacted the cost of tilling the land and planting the crops. For those who rent land, rental prices had shot up considerably. Put these together and it creates high costs to plant corn and beans.
When the crops were being planted, prices for soybeans were around $11 to $12 a bushel and corn in the $7 to $8 range. Farmers were optimistic that they could make a decent profit it those prices held, even with high costs.
But what happened? Currently soybean prices are in the $7 to $8.50 a bushel range and corn around $3 to $3.50, drastic drops in prices. This will make it tough for grain farmers to make a reasonable profit.
Why the sharp drop in grain prices? There are several reasons. Speculators are always a factor in prices. Ethanol use is not as high as anticipated. Good yields and an abundance of grain across the United States and in some foreign countries push prices down. The world economy enters into the picture.
For livestock farmers who have to buy a lot of grain, these lower prices are a bright spot. They like them because they lower feed costs. Dairy farmers have been hit with considerably lower milk prices, about $4 a hundred pounds in the past 12 months, so they like lower grain prices. But their other costs remain high, so they also have tight budgets and lower incomes.
Let's come back to why you and I should be interested in what is going on out there on the farm. With grain prices dropping dramatically and lowering milk prices, we should be seeing lower prices in the grocery store, right? After all, retailers and food processors said their prices had to go up because farm prices were higher.
Actually, the price of oil impacted food prices much more than farm prices, but it was easier to blame farm prices. Now, with oil prices down sharply, that should also help lower food prices.
What happens is that it is easier to raise food prices and then keep them up, even with lower costs. Processors and retailers like to pocket that extra money while they can, even at the expense of consumers. With the economy like it is today, there should be some real pressures on these groups to lower prices. We can hope so.
Another thing that is always part of the picture is the weather. Local farmers, and those across the U.S., like dry weather with sunshine to get crops harvested. Rains this past week have not made it easy for local farmers. Wet weather means a muddy harvest and high moisture in the crop that requires artificial drying, another expense.
So, it is an uncertain picture for local farmers. But you and I, as we approach Thanksgiving, will be able to find all kinds of food to fill that dinner table. Let's thank our farmers!
Parker grew up in Trumbull County, is retired from The Ohio State University and works with the local Farm Bureau Board.