Fri July 27, 2012
Regional farmers say worst drought since 1980s forces tough choices
A new report from the United States Department of Agriculture shows the ongoing drought has caused the nation's cattle herd to shrink by more than 2 million head so far this year.
Analysts project the dry weather will impact prices in the checkout aisle.
Today, we have two reports on the effects of the 2012 drought. In this combined feature, Adam Allington takes a look at the region's corn farmers.
But first, St. Louis Public Radio's Tim Lloyd reports on the agonizing choices faced by Missouri cattle ranchers.
Ranchers out of options
Jerry Moody is sitting halfway up the bleachers at the Eastern Missouri Commission livestock auction in Bowling Green.
The soft-spoken rancher with a pipe in his breast pocket is going to watch a quarter of his herd sold off today.
“That’s your income that’s your livelihood, you know; if you sell that, what’s next, you know?” Moody says.
With the cost of feed so high, no fields to graze and water running low, Moody is out of options.
It’s a narrative that’s playing out in Missouri and the rest of the corn belt as ranchers thin their herds to get through the drought.
And that’s projected to impact prices at the grocery store.
Cheaper meat now, but that wont last
Many cows are going directly to slaughter, so, a pound of hamburger is expected to be cheaper in the coming months.
But USDA analyst Ricky Volpe says the flip side is that supply will ultimately bottom out and prices will go up.
“This drought can only exacerbate the situation, and it can only raise prices and it can only increase our outlook for retail prices,” Volpe says.
Overall, the US herd has slowly declined to its lowest level in 60 years, and it took a major hit from droughts in Texas and Oklahoma last year.
It could take at least three years for some cow-calf operators to rebuild their herds and level out supply and demand.
Things could get worse, too, as rising feed costs and a terrible hay crop might lead to even more selloffs in the coming months.
Using winter's hay, now
Just outside of Pacific Missouri, rancher Bill McLaren fills a bucket with increasingly expensive feed.
This time of year cows should be grazing fields that have been in his family for almost a century.
Nevertheless, McLaren counts himself lucky because, for now, he has plenty of hay.
“Generally, we start feeding hay in December; we started feeding hay the Fourth of July this year,” McLaren says.
That’s a big problem because hay is typically used to get through the cold winter months.
“Today’s the first day this week I haven’t had a phone call from somebody wanting to buy hay,” McLaren says.
State officials are doing what they can to help out, working to open up conservation land for grazing.
Even the Missouri Department of Transportation is getting involved, waving the fee farmers pay to haul wide loads of hay down country roads.
Facing agonizing choices
But the sense desperation is deepening as many of the state’s cow-calf operators continue to face agonizing choices.
Back at the auction in Bowling Green most ranchers are looking to ride out the drought by selling less marketable cows.
But for some, the brutal summer has cost them their entire herd.
Justin Angell runs the auction with his brother and is standing in the pens where cattle wait before entering the auction ring.
“There’s a guy named Bobby Jansen and his cows are right over there," Angell says. "He’s from a little town called Leopold, he’s got individual records on every cow at his place for twenty years, and they’re all here. He said, ‘Justin, there’s just nothing left.’”
The rancher he’s talking about isn’t at the auction today.
Angell got the feeling the small producer from southeast Missouri didn’t want to see a herd he’s built over twenty years sold off in a single day.
Crop insurance, the weather, and the strength of agriculture
This part of the story is about weather, farming and the role federal crop insurance plays in softening the problems caused by Mother Nature.
Steve Turner farms about 2,700 acres in Cass and Mason counties in Illinois. About one-third of those acres are irrigated, but the rest he says are parched and effectively dead, just like the field we’re currently standing in.
“That planted just literally died,” says Turner as he reaches down to pluck a small, stunted ear from a withered stalk. “See that? That’s about 25 percent of the size of an ear.”
Turner says this summer is the worst drought he’s seen since the 1980s, and the two-tenths of an inch of rain that’s fallen means what little corn survives will be of poor quality. With much of his corn already toast, Turner says if he doesn’t get some rain over the next couple weeks, his soybean crop might also be wiped out.
Thankfully for Turner, and 85 percent of corn farmers, crop insurance will compensate him for most of his losses.
“It acts as a stabilizing agent,” says Nathan Field of the National Corn Growers Association. “It’s what allows us to move through years like this and still have a viable and functioning food production system.”
Fields says it’s years like this which prove the necessity of the crop insurance program, which rely on hefty federal subsidies to both farmers to pay the premiums and to the crop insurance companies to cover losses.
“When you have large weather events like this,” says Field, “if the insurance companies are hit with this number of claims all at once, it threatens the viability of that industry as well."
As bad as the drought is, Fields estimates that national corn production will only be down around 12 to 15 percent over 2011. But even that small of a decrease could translate in to additional tens of billions in payouts from taxpayers, which is how the system is designed to work.
“Well, it’s working if you’re a farmer…I’m not sure it’s working if you’re a taxpayer,” says Iowa State Economist Bruce Babcock.
Competition for land fierce, agriculture never better
Despite the drought, Babcock says high prices for grain and meat mean the overall strength of the agricultural sector has never been better and the argument that our food security depends on crop insurance just isn’t true, even if some farmers are forced out of business.
“The competition for land right now is fierce,” says Babcock. “There would be so many people bidding on that land next year because the prices are so high, that it’s not like agriculture is going down because of this drought. You know, that’s what people who justify these subsidies want you to believe.”
Babcock claims crop insurance should be treated like any other farm expenditure, say, fertilizer or diesel fuel.
But back in Illinois farmer Steve Turner says removing all safety nets for farmers would only take agriculture back to the boom and bust of the Dust Bowl era, and the idea that farmers aren’t vested in the outcome of their harvests is just ridiculous.
“This is an insurance product; the government might have subsidized it and paid a little bit of it out here for me, but I’m also writing a check for an insurance policy right here,” says Turner. “And when you write a check for an insurance policy you’ve got to have the coverage and you’ve got to have it come through on a year like this.”
Earlier this week Missouri Governor Jay Nixon announced a cost share plan to help farmers pay the additional cost of deepening wells to get more water to livestock and crops. More than 600 Missouri farmers submitted applications in the first two days.
Follow Tim Lloyd on Twitter: @TimSLloyd
Follow Adam Allington on Twitter: @aallington
Economy - Agriculture