Things are fine now, but some farmers are worried about the future crop revenues and the cost of producing.
Clint Boon with Ray-Carroll County Grain Growers spoke about the future of agriculture commodity prices with members of the Richmond Kiwanis Club last week.
In addition to working for Ray-Carroll, Boon is also a farmer. Boon owns and operates a farm near Chillicothe. He explained why commodities, such as grain, saw record highs this past summer to plummeting prices that have been cut in half since.
Boon said the main reason was investors or futures speculators.
“This summer when we saw the stock market decline, the investment money pulled itself out of nearly all commodities,” Boon said. “The same reason corn went from $2 to $7 the last four or five years is the same reason crude oil went from $48 to $148.”
Boon said a rising U.S. dollar is also bringing prices down. He said the U.S. Dollar Index, which measures the dollar against other currency, has risen from $70 to a two year high or $87 just in the last two months.
“With a weak U.S. dollar, our grain is cheaper than China, Japan, South Korea and other countries that buy our grain,” Boon said.
Boon said farmers are also getting hit on the other end as well. He said price gouging by companies who supply farmers with seed, fertilizer and equipment have raised prices some 200 to 300 percent over the last couple of years. He said farmers might not enjoy profits next year that they have the last couple of years because of the rising cost.
“Those times have come and past. Inputs have skyrocketed beyond anyone’s belief. Two years ago, it took about $210 to plant an acre of corn. It’s over $500 this year,” Boon said.
Boon said subsidies for farmers and government-backed guarantees of profit have been drying up the last couple of years. He said farmers have to produce about 130 bushels of corn per acre to break even, but farmers are only being insured for 90 to 100 bushels.
“It’s taking an extreme amount of money to plant an acre of corn or a bushel of beans and a lot of the risk is coming back on them,” Boon said. “It wouldn’t be so bad if they could sell that $5 or $6 corn. Very few farmers sold at those numbers.”
Boon said farmers and ethanol producers have taken a bad rap for food prices, although he did say that some speculators drove up the price of grain because of ethanol. Boon said the money isn’t going to the farmers or the ethanol producers.
“Here in the United States we have very cheap food,” Boon said. “We’ve seen the price of corn cut in half, but the costs in the grocery stores haven’t changed at all. Where’s that money going?”
Boon said he isn’t a fan of bigger government, but did say he would like to see the federal government provide more subsidies for ethanol producers and farmers.