Greensburg Daily News, Greensburg, IN

July 9, 2012

As crops wilt, so do profits

Tess Rowing
Greensburg Daily News

Greensburg — Dust flies while driving down a country road under the glare of a hot summer sun, and crop fields appear to be trying their best to stay green.

While people across the Hoosier state are coping with the heat by putting tin foil in their windows, swimming, and placing ample water outside for animals, Decatur County farmers are feeling the heat of their fields in their pocketbooks.

This year's drought is being compared to the drought in 1988, the costliest natural disaster in the history of the United States. While some areas in Decatur County received minor relief several weeks ago, two inches of rainfall does not appear to be enough to sustain crops throughout the summer.

Some farmers, such as Albert Armand, maintain hope for what remains of the season. He attributes his current success to the quality of soil and a lucky rainfall, but also says there's plenty of time left to lose what he has, "Farming's such a gamble," Armand said. He does not expect to suffer much on profits compared to last year's crop, though Armand also has crop insurance on which to rely.

Dan Wilson, County Extension Director, estimates that 40 percent of farmers are insured. The remaining 60 percent will have a direct loss from this year's drought by that estimation. Fall crops are also expected to have an undetermined amount of reduced productivity. Soybean production is down 12 percent, while corn is down 14 percent from 2011. Those numbers are expected to increase.

It's pollinating season for corn, but corn stops growing once the outside temperature surpasses 90 degrees. The dry ground also puts corn at risk for nitrate poisoning, according to Wilson. With corn failure planned for the future, prices are expected to skyrocket to more than $8 a bushel.

Farmers who took advantage of this year's early warm weather are attributing root disease to stress from the cold and wet weather which followed an early spring. The early planting also means moisture is being consumed faster than can be produced because water from earlier in the year has already been used.

A report from April may prove to be correct with soybeans being about $25 per acre, more profitable than corn. Corn was expected to have the second-highest revenues in history, however, the cost from production was up 15-20 percent, meaning that net returns were down from last year. If the drought continues, returns may be much lower than projected.

According to Perdue's extension website, Farmers may have three options to help lessen the blow on delivery contracts, the first being to buy back from local sellers and avoid further loss.  

The second would be to buy futures, which would offset losses. Lastly, farmers would need to institute call contracts, which would make set prices and delivery dates optional. Those rights come at a premium, but offer protection against rising prices.

Contact: Tess Rowing 812-663-3111 x7004