Drought 2012: No ‘Heat Of The Moment’ Decisions

No matter what way you look at it, the now-officially christened Drought of 2012 has been a marketplace shaker. For many grower-customers, their corn crop will end up being a total loss. Already there are reports of growers in states such of Indiana and Southern Illinois simply giving up, plowing their dead stalks into the ground while applying for crop insurance. In all, analysts expect the nation’s corn harvest this fall to be off 10 million to 15 million bushels. Meanwhile, crop insurance pay-outs to growers could top $20 billion – almost double from the 2011 total and, coincidentally, virtually the same amount ag retailers in the CropLife 100 earned during calendar year 2011.

As a result of these kinds of numbers, particularly anything that relates to crops has skyrocketed in price. Commodity prices for corn are at all-time highs, with some market watchers predicting $9 and $10 bushel corn will be the norm come late fall. Naturally, feed and food prices are poised to jump as well, with various government agencies expecting 7% to 8% jumps for most items, with meat prices increasing in the 10% to 15% range.

On the flipside, ag retailers are concerned this lack of crops in the field will translate into fewer input and application sales once the fall season gets into full swing.

Of course, when things are this bad across the board, fear isn’t the most prevalent emotion making the rounds. Anger also runs high, which inevitably leads to the need to blame something tangible for such an intangible factor as Mother Nature. And has been the case for the past few years, it seems as if ethanol will be this crisis’ scapegoat of choice.

It seems like one million years ago now that America’s desire to find alternative fuel sources to power the energy needs of the future gave rise to corn-based ethanol’s growth. As recently as 2007, demand for corn to use in ethanol’s production was heralded as a good thing for U.S. agriculture – keeping crop demand (and the prices paid to growers) high and opening up plenty of new market opportunities for those who support this marketplace, i.e., the ag retailers. For a time, everyone was happy with this arrangement.

Then, however, came the fertilizer demand crash of mid-2008. Suddenly, ethanol was the bad guy, leading to out-of-control prices that ultimately kept grower-customers from applying ANY fertilizer during the fall of 2008. For many, the debate regarding food vs. fuel never went away after that.

Now, in 2012, there are very loud cries among those hurt by the Drought of 2012 to virtually destroy the corn-based ethanol market. Ranchers and poultry producers, looking for some relief on grain supplies, have called on the U.S. government to suspend or repeal its ethanol blame mandate. They have been joined in this effort by 30 U.S. Senators and Representatives and the United Nations, which fears corn diverted to ethanol production will lead to massive food shortages in certain parts of the globe.

But will killing ethanol’s use of corn really make that much of difference? Many remain unconvinced. “This year’s weather has been more than challenging for farmers and ranchers across the country,” says Renewable Fuels Association President and CEO Bob Dinneen. “However, waiving the RFS will not make it rain in Indiana, bring pastures to life in the Plains, or meaningfully lower corn prices.”

I tend to agree with this argument. In my mind, turning back the alternative energy quest clock 15 years for some maybe temporary relief seems very short-sighted. If the Drought of 2012 stretches into 2013 or 2014, then it might be time to re-visit this effort. But that time is not just yet.

Topics:

Leave a Reply

Eric Sfiligoj Stories

ARA
Eric SfiligojTaking The Industry’s Pulse At ARA
November 28, 2016
When most of you read this particular column, many of the industry’s key folks will probably be spending at least Read More
Bayer Monsanto
Eric SfiligojCrop Protection Mergers: Will They Or Won’t They?
November 14, 2016
Fall is in full swing and many sports fans probably spend the better parts of their time looking at the Read More
Eric Sfiligoj2017 Agricultural Outlook Not As Dire?
November 7, 2016
As 2016 heads towards its conclusion, there are many of us in the agricultural marketplace already looking forward to what Read More
Eric SfiligojThe 2016 CropLife 100 Preview
October 28, 2016
Fall is in full swing and we at CropLife magazine are busy putting the finishing touches on our end-of-the-year stories and Read More
Trending Articles
Precision AgTrimble Debuts End-to-End FMIS Platform
November 28, 2016
October’s inaugural PrecisionAg Vision Conference left this author with many thoughts and things to ponder in the coming months. Probably Read More
CHS Primeland
CropLife 100The 2016 CropLife 100 Report: Reviewing The Many Bulls And Bears Impacting This Year’s Marketplace
November 28, 2016
For virtually all of 2016, the nation was wholly focused on the big Presidential election. Some folks aligned themselves with Read More
Monsanto sign
Crop InputsMissouri Governor Meets With Bayer CEO To Discuss Monsanto Merger
November 21, 2016
Missouri Gov. Jay Nixon visited Bayer AG global headquarters in Leverkusen, Germany, on November 18 to discuss the proposed Bayer-Monsanto Read More
STS16 2017
SprayersHagie Manufacturing Releases 2017 STS16 Sprayer To Market
November 16, 2016
Hagie Manufacturing LLC’s largest full season applicator is now available with enhancements for the 2017 model year. Hagie is officially Read More
Wilco
CropLife 100Valley Agronomics, Wilco-Winfield To Form New Agronomy Joint Venture
November 11, 2016
Valley Agronomics LLC, headquartered in Rupert, ID, is a joint venture between Valley Wide Cooperative and Winfield Solutions, LLC. Wilco-Winfield, Read More
FertilizerThe Fertilizer Institute Issues Statement On The U.S. Elections
November 10, 2016
The Fertilizer Institute (TFI) President Chris Jahn has issued the following statement on the results of the 2016 elections: “TFI Read More
Latest News
ManagementCorn and soy planting update; Takeaways from Climate Co…
December 2, 2016
AgriBusiness Global Editor Dave Frabotta Joins Paul Schrimpf for a discussion of global corn and soybean planting trends, and a Read More
Radish cover crop taproot
Crop InputsSoil Health Institute, Datu Research Receive Grant To E…
December 1, 2016
The Soil Health Institute (SHI) and Datu Research has announced a $626,000 grant from the Walton Family Foundation to quantify Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More
ManagementAg Industry Comes Together To Address Climate Change
December 1, 2016
Addressing climate change — and more specifically, decreasing greenhouse gas emissions from agriculture — can only be achieved through collective Read More
Young soybean field
HerbicidesLiquid Formulation Valor EZ Herbicide Available For 201…
December 1, 2016
Valent U.S.A. Corp. has released Valor EZ; a liquid formulation of the company’s leading herbicide, Valor. Named Valor EZ Herbicide Read More
Key Cooperative Marcus Construction Steel Building
ManagementThe Value Of Cooperatives In Modern Agriculture
December 1, 2016
Editor’s Note: Jaxon Mullinnix of  Lone Tree, IA, was recently named the Iowa state winner of the 2017 GROWMARK essay Read More
AGCO Operator of the Year Tony Kornder
SprayersAGCO Names Tony Kornder Operator Of The Year
December 1, 2016
AGCO Corp. names Tony Kornder with Genesis Growing Solutions in Le Sueur, MN, the 11th annual Operator of the Year. Read More
Chris Henney OABA
ManagementOABA Industry Conference To Provide Outlook For Future …
November 29, 2016
The upcoming Ohio AgriBusiness Association Industry Conference is packed with widely-respected speakers and industry professionals, sharing their expertise on a Read More
Corn
InsecticidesMajor Review Finds Neonic Poses Low Risk To Aquatic Inv…
November 28, 2016
A major new ecotoxicological review and risk assessment has been published in the peer-reviewed literature and concluded that registered crop Read More
EquipmentGSI Details New Grain Drying Efficiency System for Coop…
November 28, 2016
Grain elevators and ag co-ops are always looking for ways to increase their energy efficiency to help improve profitability. For Read More
Precision AgTrimble Debuts End-to-End FMIS Platform
November 28, 2016
October’s inaugural PrecisionAg Vision Conference left this author with many thoughts and things to ponder in the coming months. Probably Read More
AGCO AgControl system
Precision AgPrecision Ag Technology: Rate Control For The Times
November 28, 2016
It’s not surprising that the need for more economical, effective application is driving the demand for the latest rate controllers Read More
ARA
Eric SfiligojTaking The Industry’s Pulse At ARA
November 28, 2016
When most of you read this particular column, many of the industry’s key folks will probably be spending at least Read More
CHS Primeland
CropLife 100The 2016 CropLife 100 Report: Reviewing The Many Bulls …
November 28, 2016
For virtually all of 2016, the nation was wholly focused on the big Presidential election. Some folks aligned themselves with Read More
FertilizerNutrient Management, Conservation Among Topics Covered …
November 23, 2016
Certified crop advisers, consultants, farmers, agribusiness professionals and students will learn more about nutrient management, soil and water conservation, pest Read More
Monsanto sign
Crop InputsMissouri Governor Meets With Bayer CEO To Discuss Monsa…
November 21, 2016
Missouri Gov. Jay Nixon visited Bayer AG global headquarters in Leverkusen, Germany, on November 18 to discuss the proposed Bayer-Monsanto Read More
Arysta LifeScience
Crop InputsArysta LifeScience Forms Alliance With Beem Biologics
November 21, 2016
As part of its recently announced strategy to become a leader in high-value, high-growth specialty market segments in the crop Read More
DuPont sign
Crop InputsDuPont To End Pension Contribution For Active Employees
November 18, 2016
DuPont will no longer contribute to active employees’ pension plans, a move that will affect the retirement of 13,000 workers, Read More