Trade turbulence, wet weather and sick pigs have Michigan corn and soybean farmers struggling to raise a profit.
“2019 is going to prove to be the most challenging year for agriculture that we’ve seen,” said Jim Zook, executive director of the Michigan Corn Growers Association. “It’s maybe worse than what people think at this point.”
The effects of a rainy spring that delayed planting were felt at harvest, Zook said.
“There isn’t anything that (farmers) can do at this point. The maximum yield had already occurred probably four months ago,” he said.
Michigan farmers harvested probably just more than 60% of the corn. The five-year average currently is 83%, according to the U.S. Department of Agriculture. The wet fields compact the soil so that air or water can’t infiltrate it. That prevents an exchange of nutrients for the following growing season.
“The impacts of this fall and the conditions that we have for harvest will actually have an effect on next year’s growing crop, as well,” Zook said.
The outlook is even bleaker for soybeans, he said. “It’s not as critical in corn as what it would be in soybeans because the fruit of the soybean is within inches of the ground.”
Wet corn and soybeans have to be dried for processing, an additional cost passed on to the farmer, said Theresa Sisung, an associate field crops specialist for the Michigan Farm Bureau. That shrinks them, which eventually produces less revenue.
“You’re not going to get paid on the weight they come in at. You’re going to get paid on the total weight you have once those soybeans are dried down to that acceptable level,” she said.
“Because everything got planted later, it didn’t have time to dry. We had some challenges with wet soybeans last year and we’re having them again (in 2019), but I think (it) is probably more widespread than what we had in the past.”
And those are just the hurdles on the production side of things. Federal trade and environmental policy have further burdened markets, experts say.
Corn and soybeans are both processed into ethanol for fuel. And the EPA under the Trump administration has exempted some petroleum companies from biodiesel ethanol requirements. That dampens demand — and lowers prices — for corn and soybeans, said Mark Seamon, research coordinator for the Michigan Soybean Promotion Committee.
“The capacity that’s been built in this country for both of those products is not being used, so there’s a slowdown,” Seamon said.
And China trade policy has a significant impact on markets for Michigan’s farmers.
“Soybeans are one of the commodities that were hit the hardest with all the trade challenges because we do export a lot of soybeans, so the prices were impacted pretty dramatically,” Sisung said.
Before the Trump administration levied tariffs on Chinese products, farmers could get about $10 per bushel, Seamon said. Now the price is about $8.50, a 15% drop.
Initially, the price drop was 20%, but lower production prompted a price rebound, he said.
Better access to China’s market may not help much, Sisung said.
African swine fever has taken out half of China’s pig population, the equivalent of all pigs traded worldwide.
“Now that they don’t have those pigs, they don’t have the need for the soybean meal,” Sisung said. “There’s not as much of a market for soybeans just because the pig numbers have declined.”
“We talk about losing a country that has 1.3 billion people,” he said. “That’s a terrific market that’s hard to replace with anybody else on Earth.”
Farmers had some relief from federal trade aid payments as a part of a USDA program, Sisung said.
The future isn’t entirely bleak, either. Soybean markets could expand to South Korea, Vietnam, Indonesia and other Asian countries, although not enough to replace China’s market, Seamon said. And China’s pig population could recover with the development of a vaccine for the deadly African swine fever.
Innovations in efficiency also may assist in production.
Combines and satellites can collect data that more precisely determine planting dates and fertilizer and pesticide rates for optimal production, Seamon said.
“For the farmers, it’s kind of like the saying of the (Chicago) Cubs, ‘Let’s wait for next year,’” Zook said.
“In 2020, we hope for it to be better.”