Goshen News, Goshen, IN

Business

January 19, 2013

Ag community feels effects of drought

FORT WAYNE — The impact from the crop-withering drought of 2012 was still being felt Wednesday at the Fort Wayne Farm Show.

Thousands of farmers spent the day browsing the new combines and field equipment and then crowded into a conference room to hear popular Purdue Agriculture Economist Chris Hurt tell them to not manage their farms for last year’s drought.

“It (the drought) is not a predictor,” Hurt said while looking out at a sea of seed corn caps. “There is no relationship from last year to this year.”

He told several stories of farmers he has talked to who are overreacting to last year’s drought and making bad crop planning decisions. Hurt told of one farmer who decided to switch to red wheat instead of corn. He outlined the yields and revenue from each crop. “That’s a $42,000 decision,” he said of the expected revenue loss.

But, as with every year, farmers should pay close attention to weather patterns, Hurt said. Right now 60 percent of the United States remains in drought. Much of that drought area has moved west of Indiana, yet a sliver of drought still stretches across the northern tier of Hoosier counties. After getting adequate rain in August and September to boost the soybean harvest, drought returned to northern Indiana in November and December, according to Hurt.

He said the U.S. Weather Service is forecasting that the northern Indiana drought will soon begin to ease and disappear by the end of March.

But many farmers aren’t taking a chance on the forecast being accurate.

“We have had a number of inquiries from folks rethinking their need for it,” said Rick Goshert about the crop insurance his insurance agency sells in seven states from its Warsaw office.

He said statistics show that 87 percent of farmers usually have some form of crop insurance. The remaining farmers self-insure or are willing to gamble on the weather, he said.

Crop insurance is part of the agriculture bills passed by Congress, Goshert said.

Last year’s drought meant losses for the insurance program covering corn crops were high. “As far as corn, it is going to be a gigantic loss, Goshert said.

But for some ag businesses, it means boosted revenue.

Dan Glenn works for multinational ag company T-L Irrigation Co. based in Hastings, Neb. As a district sales manager covering seven states he attends farm shows to man the company’s booth and pitch products, great customers and talk to dealers who stop by.

“New orders have just been increasing,” Glenn said. “I have never seen it like this before.”

He said T-L was doing good business before the drought because as corn prices rose to record highs, farmers who never considered irrigating marginal land re-did their math and found they could boost yields enough to pay for the equipment.

“On $3 (per bushel) corn, those people would have said, ‘Ah, just forget it,’” Glenn said.

The drought simply reduced the corn supply and kept corn prices high, extending the economics of irrigation even farther, Glenn indicated.

The boom in irrigation is also a benefit to other ag-related jobs. He said well drillers, pipe suppliers are all seeing an increase in business.

He said there were a lot of irrigation rigs sold in the fall after the harvest and the mild winter has allowed workers to get into the fields and begin installing them.

And who would think the drought was good for the timber business? It was, however.

Nick Brown, a buyer for Shipshewana Hardwoods, said the drought dried up ground in the floodplains.

“We were able to work in a lot of places we previously were not able to get timber out of,” Brown said.

He said crews are working now in the Tippecanoe River floodplain harvesting soft maple, ash and some swamp oaks.

The downside to the drought was that trees did not grow as much as is normal, Brown said.

Frank Martin of Wakarusa felt the impact of the drought as a dairy farmer and continues to deal with it as a feed dealer.

He and his sons Dwight and Dwayne milk 400 cows and farm 800 acres to supply grain to the dairy herd.

“We chopped our poor corn and shelled our irrigated acres,” Frank said. “That (irrigation) was huge. If we wouldn’t have had those irrigated acres it would have been a lot bigger detriment to us.”

He said the drought is continuing to impact his feed mill business and it’s hard to keep a steady supply of animal feed products, especially glutens and distillates that come from corn byproducts.

He said corn products are still short but soybean products seem to be adequate. And Elkhart County-area farmers who he deals with are telling him they expect to have enough feed and byproducts on hand until the next harvest.

And like all farmers, Frank believes the next harvest will be better.

“We are looking forward. We have the potential for a good year,” he said.

 

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