News From Terre Haute, Indiana

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  • Tribune-Star/Jim Avelis All ears: About 120 farmers showed up for a drought resources meeting Thursday at the Wabash Valley Fairgrounds. The Purdue Extension office had speakers in several fields talk on helping manage the effects of the current drought.

    MET080912drought ear corn.jpg

  • Tribune-Star/Jim Avelis Wilted: A soybean field in northern Vigo County shows the effects of the current drought. Some plants have died completely while other barley survive, for now.

    MET080912drought soybeans.jpg

  • Tribune-Star/Jim Avelis Money concerns: Chris Hurt talks with a group of about 120 farmers about the money/financial side of the drought at a drought resources meeting Thursday at the Wabash Valley Fairgrounds.

    MET080912drought hurt.jpg

  • Tribune-Star/Jim Avelis Tell tale signs: Jim Luzar, Purdue University Extension Educator talks about the procedure used to judge the level of nitrates in corn. He was one of several speakers at a drought management seminar Thursday at the Wabash Valley Fairgrounds.

    MET080912drought luzar.jpg

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August 10, 2012

Ag expert forecasts corn, soybean production down 25 percent

Howard Greninger The Tribune-Star

TERRE HAUTE — As the record setting drought of 2012 wreaks havoc on crops, how it financially hits individual farmers will depend on crop prices and insurance, said Chris Hurt, professor of agricultural economics at Purdue University.

Hurt forecasts that a report to be released today, from the National Agricultural Statistics Service of the U.S. Department of Agriculture, will show corn and soybean production nationwide is down 25 percent. Indiana’s production will be down 30 to 35 percent, Hurt forecasted Thursday at the Wabash Valley Fairgrounds before about 120 people attending a Purdue program on impacts of this year’s drought.

Rainfall has been vastly different across the state, with northern Indiana getting a very wet July, while areas like Vigo County have had little rainfall. Thus some farmers will have a near standard crop while others may have half of their normal yield

“This will not be one of the worst financial years for crop farmers overall in the United States,” Hurt said. “The range within individual farmers will go from all the way from a horrible, horrible year financially to some farmers that will say they will be better off with the drought than without it,” Hurt said.

The two economic compensations to restore farm income across the nation are crop prices and crop insurance, Hurt said.

Corn prices, up from $5 in May and now at about $8 per bushel, could raise to as much as $9 per bushel before lowering, Hurt said. “The total value of the corn crop has gone up $20 billion across the United States with this drought since May,” Hurt said

As the drought continues, some farmers may have no crops at all, but if they are insured, a farmer could still come out in the black financially, Hurt said. In Indiana, 65 to 75 percent of farmers have some form of crop insurance.

However, those without insurance will be hit hard financially, Hurt added.

As an example, at the start of the year, Purdue officials estimated a 500-acre farm, planted with half corn and half soybeans, with 35 percent sold on a forward contract, would generate an income of about $62,500, based on prices in May.

With the drought, that same farm may produce just 65 percent of its crop. However, with corn at $8 per bushel, the farm, assuming no forward contracts or crop insurance, would generate $14,000. If that same farm, with 65 percent of its crop, had 35 percent sold on a forward contract plus no crop insurance, it puts that farm in the hole at a $62,000 loss, Hurt said.

However, if that same farm, producing 65 percent of its crop, has 75 percent crop insurance and has no forward contracts, the farm income would be about $120,000, Hurt said.

Several farmers attending the program had mixed reactions.

One farmer, who declined to give his name, simply stated, “It will be a really, really bad year.”

Ervin Buse, who works for Hayhurst Farms in Vigo County, said he too thinks “it will be a bad year. Beans might save it but the corn is done for. [Purdue] thinks it will be 35 percent loss for corn, but I think it will be greater than that.

“It is really hard to tell now. A couple more weeks will tell a lot more,” Buse said.

Owen County farmers Ethan Wood and his grandfather, Paul Oberholtzer both said crops “will be bad.”

“In our area, I have seen some areas where it will be 80 percent down. They will not make enough money to even harvest it,” Oberholtzer said. It takes about $365 to produce one acre of corn with fuel costs and other costs, he added.

The two farmers are 100 percent insured, so “we will be [financially] OK,” Wood said.

Eddy Adams, district conservationist for Natural Resource Conservation Service, said the U.S. Department of Agriculture this week released $16 million to $20 million, of which Indiana would receive about $3.5 million, for a cover crop program aimed at helping distressed soils impacted from the drought.

“We discourage disking corn stalks and encourage no tilling and cover crops,” Adams said. The program is a three-year contract, but farmers must apply for the program by Aug. 20, as it is an emergency program.

More information on that program can be found at www.in.nrcs.usda/drought.html

As the drought continues, it has caused a shortage of hay to feed livestock, or priced some hay or other products out of reach. Some farmers are turning to grinding corn stalks or soybean residue as a feed additive.

Farmers must be careful to monitor nitrate levels, which at levels of 4,000 parts per million or higher can kill cattle, said David Redman, Lawrence County Purdue Extension educator.

Reporter Howard Greninger can be reached at (812) 231-4204 or howard.greninger@tribstar.com.

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