It’s a paradox in the heartland. Farmers are looking at silo-busting harvests and thin wallets.
If the U.S. Department of Agriculture’s estimates hold true, Ohio farmers this year will reap more soybeans, by any measure, than ever before at 58 bushels per acre and 286.5 million bushels overall.
Corn could shatter the record for bushels per acre — a record broken four times in the past 10 years — at a projected 188 bushels per acre. Meanwhile, overall corn production of 622 million bushels would rank second of all time, behind only the 2013 harvest, when farmers planted hundreds of thousands more acres compared with this year.
Across the country, the USDA expects farmers to set production records for corn and soybeans.
In a normal year, this would be good news, but in so many ways, 2018 has been a strange one.
“We are setting up for a record crop,” said Ben Brown, manager of the Farm Management program at Ohio State University, “but prices are low.”
Last year, experts believed the farm economy was pulling out of years of declining income and 2018 looked even better, if not yet bright. Then came this year’s trade wars and China slapping soybeans, the biggest U.S. export to China, with a 25 percent tariff. Prices for soybeans dove, corn prices dipped, and meanwhile, due to a hot U.S. economy, interest rates are rising.
Brown was blunt during a series of talks at Ohio State’s annual Farm Science Review this week: The farm economy is in a downturn. Five or six years ago, farmers were coming off record high prices for corn and soybeans and brought bumper crops to harvest. Now, the bumper crops remain but the prices are just happy memories.
Soybean farmers rely on export markets to buoy prices. With the loss of their largest customer — China is buying beans from Brazil instead — soybeans have fallen to below $8 a bushel in some cases, territory farmers could not have imagined even a year ago.
Bret Davis, who farms more than 3,000 acres of corn and soybeans in Delaware County, markets his crops months to years ahead of harvests to find the best prices, but this year he isn’t finding anything to his liking.
“I can’t sell beans at a profit next year,” Davis said. “The big crop will help because we have more to sell, but it is not going to make up what we lost in the exports.”
Farm incomes have declined more than 50 percent since 2012, even though farmers have set new production records three times in the years since, according to the USDA. Incomes are going to decline again this year, due entirely to the damage done by the trade wars and tariffs.
The USDA estimates that farm incomes will fall 13 percent from 2017 to 2018. Ohio farm income is expected to follow the national trend, according to Ani Katchova, a professor at Ohio State and a farm income expert.
While farm income, adjusted for inflation, is at levels unseen since the worst years of the 1980s, farm balance sheets remain in much better condition than during that period, Katchova said.
The USDA’s recently announced program of payments to help mitigate the pain of the tariffs won’t be much help given the steep decline in soybean prices this year. The program will pay $1.65 a bushel for half of a farm’s production. It is a one-time shot, and it won’t make producers whole, according to experts.
Bumper crops also weigh on next year’s prices. With American silos full of soybeans and corn, and China’s market walled off, prices could continue to tumble.