Hurt: Gov't Aid Makes a Big Difference
Published: Friday, January 25, 2019
Chris Hurt, Extension specialist and ag economist at Purdue University, spoke last Wednesday at the Fort Wayne Farm Show. He covered a broad range of agricultural topics.
Hurt believes that farm income will begin to improve. He said the high yields this year helped offset the lower commodity prices. The market facilitation payments also helped farmers' income this year. The $1.65 per bushel of aid helped put soybeans over $10.
"That's a lot of money," Hurt said. "That's a lot of billions of dollars across the United States."
Indiana expected a state average of about 172 bushels of yield for the 2018 crop. The average was 194 bushels of corn, 22 bushels more than expected. 2018 corn crop is 15 percent above the trend.
"That's already in the past," Hurt said. "As we think about the future, are we going to plug in these kinds of yields in 2019 crop? We can't count on high yields every year to give us these stronger revenues."
For soybeans, Indiana averaged 14 percent above the expectation. Hurt said, with the expectation of $10 beans with normal yields, that would generate about $8.60 (per bushel) beans with these kinds of yields.
Hurt said with the trade assistance, farmers received almost $90 more revenue per acre on corn in Indiana because of the higher price and yields. He said trade assistance was a big deal for farmer revenue.
"I don't know that we're happy," Hurt said. "But it could have been a lot different season had we had more normal yields and had we not had the trade assistance."
Hurt praised ag leaders for pushing for trade, not aid. He acknowledged that there have been issues with agricultural trade and previous leaders tried to address it. The administration has cracked down and put the pressure on, but he said it is difficult to know how it will turn out.
Looking to 2019, Hurt said we are seeing further improvements in prices for corn, and some for soybeans. Hurt said we have dug a hole when it comes to soybeans by missing the opportunity to sell to China in October, November and December. With inventory as high as it is, Hurt said it will be difficult to get out of the situation in just one year. Low soybean prices may last about two years as a result.
"Once you get so much in storage it's hard to deal with it in just one year and get over that problem," he said.
Projections for this year, according to Hurt, is that soybean acreage will go down. Weather in South America could be a factor if soybean production suffers in that area.
Since 2012, the big growth in demand has been for soybeans being bought by China. The acreage in the United States went from 74 million, up to nearly 90 million in 2018. He said if farmers would have known about the drop in demand, they wouldn't have increased the acreage of soybeans.
"You have to put the seed in the ground before you know all the information about what the value of that is going to be," Hurt said.
According to Hurt, pork producer income could be closer to the cost of production this year. In 2018, producers lost around $12 per head on average. Beef is fairly stable, and prices seem to be improving as well.
"We obviously are in a time period of great uncertainty about our trade situation and how that's going to work out," Hurt said.
According to Hurt, the U.S. buys $500 billion worth of goods. China buys only $130 billion from the U.S. The Trump administration is fighting for more equality in the exchange of trade. Hurt remains hopeful that a conclusion to the trade war is coming.
"Our hope in agriculture is that it will work out as the administration has suggested to us," Hurt said. "We're going to narrow that deficit we just talked about, and we're going to get a better deal for U.S. farmers."
Ryan Martin, chief meteorologist with Hoosier Ag Today, talked about the weather forecast through the winter and into spring. Martin said although we have been experiencing warmer than average temperatures, he expects cold weather to persist from now through the end of January.
He predicts that February also will be cold, but not as bitter as the end of January. Martin expects March weather to be around normal, but April should bring warmer than average temperatures.
"That means we should see soil temperatures react relatively nicely to good solar radiation," he said. "My concern in April is if we put together a very cold second half of January, full February and really haven't done much in March, we could see soil temperatures be slower to react."
According to Martin, the last half of January will be snowy. He believes snow will continue throughout February. Precipitation is predicted to be lower than normal in March. May is expected to be dryer than normal. Martin said the weather he predicts does not give him reason to be concerned about any long-term planting delays in spring.
"That tells me, if soil temperatures are trying to come up in April like they should and we're going to be dry, I don't foresee a huge planting delay problem widespread," Martin said.
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