Impact of low grain prices being felt by farmers
The latest World Agricultural Supply and Demand Estimates report indicates a promising harvest, particularly for corn and soybean farmers, but where will the crops go?
Corn production is forecast at 16.8 billion bushels and even with a 2.1-bushel per acre reduction yield WASDE pegs a yield of 186.7 bushels per acre because of more than 1.3 million acres being harvested. The season-acreage corn price received by producers was set at $3.90 a bushel.
The soybean picture is similar as the outlook includes higher production, higher crush, lower exports and higher ending stocks when compared to August’s report. Soybean production is projected at 4.3 billion bushels, up slightly with higher harvested acres being offset by a lower yield. The soybean yield was forecast at 53.5 bushels per acre. The soybean export forecast was reduced 20 million bushels on increased competition, particularly from Russia, Canada and Argentina.
The U.S. season average price is forecast is $10 a bushel.
It could be a long winter and ag state lawmakers know farmers are anxious. With President Donald Trump’s tariff strategy, China has retaliated and is not purchasing U.S. soybeans. China is continuing to purchase soybeans, but they are finding other buyers.
Crop farmers need markets to be profitable. With government support programs it is a daunting task. If a farmer owns his land with a $4.15 a bushel price for corn with higher yields, Daniel O’Brien, a professor in agricultural economics from Kansas State University based in Colby, said the farmer at that level could an opportunity to cover break-even costs. That’s tough math though.
Michael Langemeier, director with the Center for Commercial Agriculture with Purdue University, said current prices for a corn-soybean farmer who owns 30% of his land and rents the remainder with a fixed cash arrangement from landlords in western Indiana, even with a strong balance sheet is going to struggle.
After averaging over $325 per acre in 2021 and 2022, net farm income per acre dropped to $115 in 2023 and was negative in 2024. Net farm income per acre is expected to remain negative for 2025 and 2026, putting a strain on the farm’s ability to cover operator and family labor, repay debt, and replace machinery.
Farm-state lawmakers are feeling the pressure. Republican lawmakers have voiced support for Trump’s policies as a way to improve trade opportunities in the long term globally and with hopes that China would return to the market for U.S. ag commodities. However, that door remains closed and other markets have not filled that vacuum.
Several veteran ag lawmakers have asked the Trump administration to press China to return to the market for U.S. farm products and to resolve the situation soon as they know time is of the essence with a large harvest on tap.
Other lawmakers say today’s dilemma can provide an opportunity to reformulate current and future markets by advancing value-added products like biofuel that have a valuable global market. They also say the world wants more protein from meat and dairy products and that provides an outlet for crop farmers.
Both arguments make sense, but in the short run there is going to be pain without federal government support. Farmers prefer to receive their income through the marketplace, which includes global outlets.
All of this makes a good argument for Congress to finish a bipartisan five-year farm bill that can provide certainty and take into account a new reality with tariff policy. Farmers and rural communities are watching closely to see how it all will unfold.
Dave Bergmeier can be reached at 620-227-1822 or [email protected]
