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

Cedar Country Cooperative
Eric SfiligojConsolidation In Agriculture: More Middle Movement
February 7, 2017
If you’ve regularly followed my column, you know I’m something of a movie junkie. Like many, one of my favorite Read More
Engenia soybeans
Eric SfiligojJust ‘Okay’ Isn’t Good Enough With Dicamba Cropping Systems
February 6, 2017
Thus far, crop protection product experts have a very simple message for custom applicators who plan to use the new Read More
Eric SfiligojNo Alternative Facts: Dicamba Cropping System Applicators Must Be Careful
January 23, 2017
During President Donald Trump’s inauguration, much fuss was made over the use of the term “alternative facts” vs. some of Read More
Trimble TMX-2050 In-Cab Display
Eric SfiligojPrecision To Lead Agriculture In 2017?
January 16, 2017
Another new year is upon us! And I’m certain I speak for many in the agricultural world when I say Read More
Trending Articles
Farmer and aptop
Matt Hopkins10 Warning Signs Your Website Is Grossly Outdated
February 8, 2017
Your Website is often a visitor’s first impression of your ag retail business. A positive first impression can set the Read More
AgriSync
Matt Hopkins17 Agriculture Apps That Will Help You Farm Smarter In 2017
December 9, 2016
Ag professionals are working smarter, not harder, than ever before. Smart farming technologies have enabled them to reduce costs, maximize Read More
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little 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
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
Latest News
Roy Blunt
LegislationARA Recognizes Blunt, Heitkamp For Legislative Efforts …
February 17, 2017
Agricultural industry continues to face federal regulatory challenges. Thankfully, agriculture’s allies in the U.S. Senate stepped forward. The Agricultural Retailers Read More
LegislationThe Fertilizer Institute Commends Senate On Confirmatio…
February 17, 2017
The Fertilizer Institute (TFI) President Chris Jahn issued the following statement on the Senate confirmation of Oklahoma Attorney General Scott Read More
Trump, Senate, Cabinet
LegislationBREAKING: Trump EPA Nominee Scott Pruitt Confirmed by S…
February 17, 2017
Scott Pruitt, who as Oklahoma’s attorney general spent years suing the Environmental Protection Agency over its efforts to regulate various Read More
ManagementFebruary Road Trip Edition
February 17, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss their recent visits to Indiana and Kentucky. Read More
Heritage Cooperative Finished Building Aerial
ManagementHeritage Cooperative, Agland Co-op Approve Merger
February 17, 2017
Agland Co-op and Heritage Cooperative stockholders have both approved the merger agreement between Agland Co-op and Heritage Cooperative. Now begins Read More
LegislationARA Fly-In: Ag Retail Descends on Capitol Hill, Lawmake…
February 15, 2017
More than 100 agricultural retailers, distributors and suppliers headed to Capitol Hill Tuesday morning for the Agribusiness Congressional Fly-in, according to a Read More
Untreated soybean seed Heartland Coop
Seed/BiotechMarrone Bio Innovations, Groundwork BioAg Bio-stacked M…
February 13, 2017
Marrone Bio Innovations, Inc. and Groundwork BioAg, Ltd have announced successful seed treatment field trials of the world’s first all-biological Read More
NL5000 With G5 Technology
SpreadersNew Leader Introduces NL5000 Dry Nutrient Applicator Wi…
February 13, 2017
New Leader, a division of Highway Equipment Company (HECO), has announced the next generation of spreading technology with the NL5000 Read More
Fertilizer Storage
Crop InputsThe State Of The Fertilizer Industry
February 9, 2017
He’s all hat, no horse.” It’s a humorous way of describing a person who tells a good story, but is Read More
CropLife 100Pinnacle Agriculture Agrees To Credit Agreement Amendme…
February 9, 2017
Pinnacle Operating Corp. has entered into an amendment (the “Amendment”) to its First Lien Credit Agreement that will provide for, Read More
ManagementUpdates on Upcoming Trips, Dow-DuPont, and the Des Moin…
February 9, 2017
Editors Paul Schrimpf and Eric Sfiligoj review a few future travels, along with the latest on big company mergers and Read More
Championship Tractor Pull
EquipmentNational Farm Machinery Show Highlighted By Championshi…
February 9, 2017
The scream of monster engines, the stench of burning rubber and the ground-pounding vibrations of the country’s largest, loudest and Read More
Farmer and aptop
Matt Hopkins10 Warning Signs Your Website Is Grossly Outdated
February 8, 2017
Your Website is often a visitor’s first impression of your ag retail business. A positive first impression can set the Read More
Corn Field
InsecticidesArysta LifeScience, DuPont Collaborate On Rynaxpyr Prem…
February 8, 2017
Arysta LifeScience recently announced that it has entered into a global collaboration with DuPont Crop Protection for the development of Read More
Industry NewsThe Fertilizer Institute Board Elects New Chairman, Vic…
February 8, 2017
The Fertilizer Institute’s (TFI) Board of Directors has elected Chuck Magro, President and CEO of Agrium, and Tony Will, President Read More
Sonny Perdue
ManagementARA Joins More Than 600 Organizations In Support Of Per…
February 8, 2017
The Agricultural Retailers Association (ARA) recently joined with more than 600 agricultural groups on a letter of support for Governor Read More
World Agri-Tech Innovation Summit Panel 2016
Crop InputsWorld Agri-Tech Innovation Summit To Be Held In San Fra…
February 8, 2017
“Breakthrough Applications and Business Models for Sustainable Farming” is the theme of the World Agri-Tech Innovation Summit to be held Read More
Cedar Country Cooperative
Eric SfiligojConsolidation In Agriculture: More Middle Movement
February 7, 2017
If you’ve regularly followed my column, you know I’m something of a movie junkie. Like many, one of my favorite Read More