What Farmers Say and Ask

August 17, 2012 03:47 AM

via a special arrangement with Informa Economics, Inc.

2013 acreage intentions | Farmland values | Livestock safety net | Biggest question in corn RFS debate | Interest rates | Corn and soybean yields | SCO

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

I've been virtually nonstop on the speaking circuit and have found the following insights:

In a poll of farmers from 25 states representing around 2.5 million acres...

  • Most say they will have the same amount of corn and soybeans acres in 2013 as in 2012, with a few saying a bit more wheat acres

  • Most believe farmland values will continue higher in their individual locations, with a price rise of 5 to 10 percent

  • Most of the farmers believe hogs, cattle and poultry producers need a farm program safety net – despite opposition to such a development by groups representing those producers

Corn producers' big question regarding ethanol: Will the Renewable Fuels Standard (RFS) eventually be eliminated? That question comes up time and again. Answer I gave them: No, but it's under assault. A near-trend-line-yield crop is needed next year, with rising carryover. If there are any major problems with (1) Southern Hemisphere crops and (2) U.S. crops in 2013, then Washington officials who think they know better (they do not) will very likely be pressured to "do something." Washington, as history has shown, has the uncanny ability to really mess things up.

Other than the fate of this year's crops, the biggest issue among many farmers: What is the outlook for the next five years for interest rates? I told them to believe Federal Reserve officials who have said their interest rate policy will likely remain as-is through 2014. I would add another year to that. But the wild card smart farmers know could upset the interest-rate outlook is any continued inability for Washington to come to grips with "fiscal cliff" (economic) issues that will surface with gusto following Nov. 6 elections. If bond traders believe Washington cannot provide leadership on a host of fiscal matters, then interest rates could rise higher and faster than most now realize.

Could corn and soybean yields go above USDA estimates? A big majority of farmers and others do not think so, but those who do cite the newer seed varieties that they say may surprise people in how much they have helped avoid what would be even lower yields had those traits not been in their seed. Translation: it's a lot like Obama's hidden campaign message: "It could have been worse...."

SCO will be a very popular farm program option taken. When the proposed Supplemental Coverage Option (SCO) in both Senate and House farm bills is explained to farmers, they express more than passing interest. Whatever is the first year of the coming new farm bill, look for widespread participation in the SCO, especially by larger-acreage producers. Reasons: No payment limitation, and a 70 percent subsidy for program participation. Another reason: SCO is on top of a producers' crop insurance program, and not instead of. So more of their revenue potential can be protected.


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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