Mid-Missouri farmers may begin to feel the heat, financially, as farmers harvest corn following a severe drought this summer.
Henry Westhues, Randolph County Farm Service Agency executive director, said that Missouri farmers are likely to be hurt by corn prices. The drought did not have as large of an effect on other areas of the country, and as a result, the prices will reflect the national yield and not compensate for the crop loss in Missouri.
Roy Massey, College of Agriculture, Food and Natural Resources professor at the MU Extension, said something similar.
“For the state of Missouri, this is the worst kind of drought,” Massey said. “If you look at the drought monitor, it only sits over Missouri, not Iowa, Kansas, Illinois, Minnesota. It’s only really on top of Missouri. Because of that, our corn yields are going to be down significantly, but the prices are not going to be down. Production for both exports, soybeans and corn will be unique this year.”
Massey said that while the 2012 drought was bad for farmers across the country. This year’s drought, he said, will disproportionately affect Missouri famers.
“In 2012, all the corn belt was under drought, so the prices shot up,” he said. “This year, Missouri is a minor corn producing state compared to Nebraska and Iowa, therefore our low yield will not drive prices up. We are suffering from decreased revenue so it will hit Missouri farmers pretty heavily. It is not affecting the rest of the market so it’s kinda a localized situation, so it’s bad for us.”
A representative of the Audrain County United States Department of Agriculture Farm Service Agency said that impact on U.S corn and soy exports sparked the USDA’s Market Facilitation Program.
“There’s a reason why Trump implemented the Market Facilitation Program,” the FSA representative said. “Because the prices took a dramatic decrease after the tariffs went into effect.”
The representative said that the MFP program is meant to aid farmers after the market loss. Farmers will certify their crop production for the year to the FSA, and then they will be issued two payments to help cover their losses.
“They are going to certify 100 percent of their production to us, and then we’re going to make a payment for half of that,” the FSA representative said. “Then, come December, they are going to announce that there is going to be a second payment.”
The FSA representative said that, while market losses are expected, it is too early to tell what the corn yield will be, but it will likely be down from last year.
“Last year was a good year, so I don’t think we’ll see nearly the yield we did then,” the representative said. “It just depends on where you are in the county. … If you aren’t counting these past few weeks, there are parts that hadn’t seen two inches of rain since March.”
Massey said, along with the crop yields being lower this year, the crop quality will most likely be lower as well, due to extreme heat.
“We will probably have lower quality corn this year,” Massey said. “I anticipate soybean quality will be similar to last season. On the flipside, we probably won’t have as many diseases, because diseases like moisture.”
Massey said the economic effect of the losses may not be immediate, but that farmers and communities may see the impact in the early part of 2019.
“So in March, April, May of next year, input suppliers in an area that have a depressed yield, they are going to sell less,” Massey continued. “And if they didn’t make enough profit, they will have less money to buy new equipment. So for the most part, their cost of living in the community probably isn’t going to change that much. It’s going to be in six or eight months you will really see a decrease in economic activity beyond the agricultural sector.”
Although market and yield losses are likely, according to the sources, many farmers and crop producers will have some insulation, due to insurance payouts.
“On a drought year, you’re going to have a lot of guys that have a lot more claims in insurance,” the FSA representative said. “I think insurance is going to see a lot heavier traffic through the door, than compared to last year.”
Audrain Insurance Agency owner Terry Dungan said he has not seen any claims yet from famers this harvest season, but expects to see an increased number of claims this year.
“I kind of figure we would be (getting more insurance claims),” Dungan said. “But I don’t know yet, until we getting going into harvest. Right now it’s hard to say…. It just depends if it comes up short on their APH (Actual Production History). If it does, it’s a claim.”
Massey said that, luckily, most crop producers will have some sort of crop insurance to help cover their losses. But, they may still lose some money because of the deductible that will have to pay on their claims.
“The yield of corn came down, the revenue will come down, and all the cost was put in when it was high, so people will be losing money,” Massey said. “The silver lining is that most Missouri farmers purchase crop insurance and revenue insurance. But insurance, covers your loses only after you’ve lost a deductible.”