Plunge In Grain Prices - 3/17/15
While much of the economy is now steadily improving, circumstances for many grain farmers have become deeply problematic. Across the Midwest and elsewhere, a plunge in grain prices to near four-year lows is making it difficult for tenant farmers to make their rent payments. As reported by the New York Times, many rent payments, which vary from a few thousand dollars for a tiny farm to millions for a major operation, were due on March first.
It is likely that many of those payments were not made. The US Department of Agriculture recently estimated net farm income, which peaked at one hundred and twenty-nine billion dollars in two thousand and thirteen, could fall to seventy-four billion dollars this year, a decline of forty-three percent over two years.
While the costs of inputs like fertilizer and seed have remained stubbornly high, a stronger U.S. dollar has diminished export growth and grain prices are expected to remain low. Some farmers are walking away from their leases. In Iowa, the nation’s top producer of corn and soybeans, analysts believe that of the estimated one hundred thousand farmland leases in the state, one thousand or more could be breached by this spring.