Bumper Midwest Crop Should Hold Down Prices for Consumers
A YEAR after flood waters caused unsurpassed devastation in the Midwest, United States farmers have bounced back and begun to reap a bumper corn crop and a record soybean harvest.
``Almost everywhere around us we are looking at a good crop this year,'' says Mark Schneidewind, who owns 160 acres planted in corn and soybeans near Marissa, Ill. ``It's there. It's just a matter of getting it out of the fields now.''
``There is a tremendous rebound in production [of these crops] over last year,'' says Paul Prentice, president of Farm Sector Economics Inc., a consulting firm in Colorado Springs, Colo.
A big harvest and prospects for low prices are good news for US consumers anxious about rising inflation, agricultural economists say.
Poor soybean and corn production overseas will stimulate exporting, usually a sure-fire route to profit for US farmers. Exports of both crops will rise 13.4 percent this year, according to a report released Monday by the US Department of Agriculture (USDA).
The harvest packs such promise that most US farmers are probably less vexed now by the Great Flood of '93 than by how the expectation for a silo-brimming harvest has depressed purchase prices, agronomists say. ``Prices are definitely too low, but they should start creeping up later in the year,'' Mr. Schneidewind says.
The estimated 2.32 billion-bushel soybean crop will exceed last year's harvest by 28 percent, while the expected corn harvest of 9.26 billion bushels will surpass the tally for last year by a barn-bursting 46 percent, the USDA reports.
The cheap and abundant grain, used in feed and processed foods, should help slow the price rise of meat, poultry, and other supermarket items. In August, food prices surged 7/10ths of 1 percent, contributing to a surprisingly strong 6/10ths of 1 percent increase in producer prices.
YET the biggest smiles are probably amid the rich fields across the Corn Belt - from western Ohio to eastern Nebraska and northeastern Kansas. ``The mood on the nation's farms is much better than last year,'' says Darrel Good, a grain-marketing specialist at the University of Illinois at Urbana-Champaign.
The high yields more than make up for the dramatic fall in the purchase price of corn and soybeans since early this year. Moreover, many farmers will withhold their crops from the market until prices jump in the winter, agronomists say.
``Financially, it is quite a boon because by rebuilding inventories and having stocks on hand, farmers have a valuable quantity to sit on and sell over the coming year when prices will go back up,'' Dr. Prentice says.
``As long as they have facilities to store the grain, I'd say quite a lot of farmers will be laying it away until prices go up,'' Schneidewind adds.
Although the national grain bin will probably overflow, not every grower is rejoicing. Harvests will be scant in some pockets of the Midwest, and many towns and counties will face financial hardship. The soybean crop, for example, is parched and meager across a large, drought-stricken swath from central Missouri through central and southern Illinois and into Indiana. Many farmers there are reeling from a one-two punch: terrible flooding one year; no rain the next.
In southern Illinois, many farms will probably yield just 70 bushels of corn per acre, a 42 percent decline from normal yields, Schneidewind says. Soybeans have also been hard-hit.
Schneidewind's land lacked rain for much of July and August and, instead, endured a withering heat. ``It's been very dry,'' he says, ``and when there's 98 degree heat, there's often 98 percent humidity, and it just zaps the crops.''
Beyond the dry patches, though, the vast majority of Corn Belt farmers this year have watched the sun, rain clouds, and crops act out an intricate, fruitful union between heaven and earth. ``The timing of weather, seed-planting, and seed-germination has just fallen together like the pieces of a Swiss watch,'' Prentice says.
Bureaucrats also helped sow abundance. Because of disastrous 1993 yields, the Agriculture department this year allowed farmers in its price-support program to till land that would have been left fallow. The policy accounted for 3 percent of the increase in the corn yield and 3.5 percent of the rise in soybean production this year, Professor Good says.