Article published May 11, 2008
Corn loses glow with farmers
High planting costs offset per-bushel price surge
By JON CHAVEZ
BLADE BUSINESS WRITER
WHEN CORN prices surged to $6 a bushel last fall because of higher demand for the fuel additive ethanol, Henry County farmer Dan Durham thought about planting more corn this spring and reaping a bigger payday.
He didn’t think about it long.
“You know, $6 corn is nice but the inputs are a lot more too. It’s tempting, but it isn’t,” said Mr. Durham.
He will plant about 380 acres of corn this season near Napoleon, the same as last season.
“You have to look at the whole picture,” he added.
For farmers in northwest Ohio, this year’s picture includes skyrocketing prices (because of $120-a-barrel oil) for fertilizer and pesticides, surging costs for diesel fuel and gasoline to run machinery, a lengthy winter, and an extremely wet spring that is hampering efforts to get corn planted.
Those factors and others have dampened enthusiasm this season for corn and will lead to a decrease in the state’s corn crop, experts said.
Instead, more land will be in soybeans, which are fetching better prices and cost less to plant.
“Corn planting is down and soybeans are up. I think it’s a combination of rotating crops, and your production input for corn is now greater than for soybeans,” said Wayne Matthews, deputy director of the U.S. Department of Agriculture’s Ohio field office.
“Corn already was up 15 percent last year over the previous year. There wasn’t that much more land out there to have an increase like that anyway,” he said.
Bill Frankart, a farmer near Clyde, said that although adding more corn might have brought a bigger profit in the short term, it would have been more harmful to his 1,500-acre farm in the long run.
“I like to keep a rotation on things,” he said.
Last fall he sowed 450 acres with wheat, and this spring is planting corn and soybeans equally in the remaining 1,050 acres.
“It’s about the same as I did last year. We try to keep our rotation in line. It’s just better that way for yield potential,” Mr. Frankart said.
Ohio had 3.15 million acres of corn in 2006, according to the U.S. Ag Department.
But with ethanol demand rising and prices on the commodity market jumping from $2.25 a bushel two years ago to $6 last year, Ohio farmers planted a record 3.85 million acres last year.
Corn prices are still pushing $6 a bushel, but the cost to raise it has gone way up.
Prices for fertilizer, specifically potassium, phosphate, and liquid nitrogen, have more than doubled in the last two years, according to the marketing firm Farmers National Commodities Inc.
Maumee agribusiness The Andersons Inc. raised its price for diammonium phosphate farm fertilizer by 177 percent in the last 1½ years.
A short ton, which cost $260 in October, 2006, was $721 in February.
“Fertilizer prices continue to soar. It seems like they just keep going up and up and up,” Mr. Durham, the Henry County farmer, said.
As a result, a March 1 survey by the Ag Department’s Ohio office showed state farmers will plant 3.35 million acres of corn this year, a decrease of 13 percent from last year.
Meanwhile, planting of soybeans, which produce their own nitrogen, will be up 8 percent.
In 2006, Ohio farmers planted 4.65 million acres of soybeans, but that dropped to 4.15 million acres last year as corn prices began to soar. Estimates put this year’s planting at 4.5 million acres — not surprising given that soybeans currently are fetching $12.50 a bushel on commodity markets.
The current rainy weather could thwart farmers from planting as many corn acres as they intended and force them to plant more soybeans, said Mr. Mathews, of the Ag Department.
Mr. Frankart, like many farmers in the region, had to forestall more planting last week when storms rolled in. “I only have just a little bit of it in the ground. It’s been too wet,” he said, estimating that he’s planted 20 percent of his corn crop and only 10 percent of his soybeans.
Other farmers have been stymied as well.
“We’re behind in our planting, very much so,” said Beverly Ayers, of Wauseon, who with her husband, Carl, farms 550 acres. Usually, planting would start April 20 and it would be done by last week, she said.
The Ayerses grow only about 80 acres of corn because they dry and store their own crop. The rest of the land will be soybeans and wheat.
They looked at the higher corn prices but decided quickly it wasn’t worth the effort and expense.
“We don’t like to be out in the fields at Thanksgiving. Besides, I don’t know if we could have found the seed we wanted,” Mrs. Ayers said.
One farmer adding corn is Jan Bernath, of Tedrow in Fulton County. But he is doing so only because he no longer wants to grow potatoes, which are even more difficult and expensive to grow than corn.
He has planted about 200 acres of corn, but not because of the ethanol demand.
“With all these ethanol plants going in, then I don’t think even the economists really know for sure what’s going into the prices,” Mr. Bernath said. “Before, you kind of knew what you’re going to get for your crop, but now, it’s changed a lot.”
Hal Reed, president the grain and ethanol group for The Andersons, said the firm is preparing for lower corn output based on government estimates, which forecast 86 million acres, down from 92 million last year.
Last year farmers were trying to plant all the corn they could. “This year, it’s a mixed bag,” Mr. Reed said.
Other last-minute changes could favor soybeans, The Andersons executive said.
Over the winter, wheat prices soared to nearly $13 a bushel, but lately they have dropped below $8. With soybeans still high, that could be another factor pushing some farmers away from planting corn, Mr. Reed said.
Matt Roberts, an agri-economist at Ohio State University, said crop planting estimates gathered at the end of March could look very different by June 1, in part because of the weather.
More soybeans were likely to be planted regardless, “but we will see more than we would have seen three weeks ago, and that’s due to the weather,” he added.
Meanwhile, Mr. Roberts said a reduced corn crop will affect consumers next fall. “Inventories are extremely tight, so right now I’d hate to see interruptions to any of our crop production that could drive corn prices higher than they already are.”
It is beyond dispute that ethanol — which uses a fifth to a quarter of all corn produced in the United States — is contributing to the higher food prices, Mr. Roberts said.
But other factors are exacerbating the situation. China formerly was a large corn exporter, but has decreased its shipments. Australia’s wheat production was cut by 50 percent because of drought, and foreign markets that used that wheat as animal feed now are buying U.S. corn as a substitute.
“Lower inventories mean higher corn prices,” Mr. Roberts said. “The reality is, we don’t have a lot of excess corn or soybeans lying around right now.”
Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.
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