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

Eric SfiligojThe Resurgence Of Crop Protection
August 4, 2014
Plenty of new offerings over the next few years should see a rebirth for the crop protection products category in terms of market share. Read More
Eric SfiligojA Whole New Precision Ag World
June 2, 2014
Excitement and technology developments could make 2014 a year to remember for precision ag. Read More
Eric SfiligojOngoing State Biotech Crop Labeling Laws Could Receive Federal Stop Sign
May 19, 2014
Proposed legislation in Congress might prevent states from passing biotech crop labeling laws. Read More
Eric SfiligojAgriculture: A Need For The Long View
May 1, 2013
Members of the agricultural community might be tempted to take short-term fixes to problems, but only a long-term approach will ultimately prevail. Read More

Trending Articles

Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More
FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
CropLife 100CHS To Build $3 Billion Fertilizer Plant In North Dakota
September 5, 2014
The fertilizer plant in Spiritwood will be the single largest investment in CHS history, as well as the single largest private investment project ever undertaken in North Dakota. Read More
EquipmentNew Holland Acquires Miller-St. Nazianz
September 3, 2014
The assets of Miller acquired as part of the transaction will become part of New Holland Agriculture, a CNH Industrial brand, building on a successful four-year partnership between the two companies. Read More
CropLife 100Pinnacle Acquires East Kansas Chemical
September 2, 2014
Ranked 82nd on the CropLife 100, East Kansas Chemical will operate as part of Pinnacle's Performance Agriculture brand. Read More
MAGIE 2014 ShowStopper
EquipmentJohn Deere Again Wins MAGIE ShowStopper Award
August 25, 2014
For the second consecutive year, John Deere was honored at the Midwest AG Industries Exposition (MAGIE) for its new R4045 sprayer. Read More

Latest News

MicronutrientsVerdesian Acquires Micronutrient Supplier
September 30, 2014
Verdesian Life Sciences has acquired QC Corp., a producer and supplier of granular and dry micronutrients and ferrous sulfate products. Read More
Eric SfiligojHearing From Young Ag Voices
September 30, 2014
Potential future leaders in ag retail had the chance to shine at the recent Mid America CropLife Association meeting. Read More
Crop InputsSyngenta Appoints New Chief Operating Officer
September 29, 2014
Jon Parr will succeed retiring COO John Atkin at the end of the year. Read More
CropLife 100South Dakota Wheat Growers To Add Grain-Agronomy Facili…
September 26, 2014
Planned to be constructed in Kennebec, the facility will be located along the soon-to-be rehabilitated line of heavy-rail service from Chamberlain to Presho. Read More
CropLife 100GROWMARK Announces Vice President Appointments
September 25, 2014
Two individuals have been appointed Vice President positions on the GROWMARK executive team. Read More
FertilizerFertilizer Industry Organizations Join Global Alliance …
September 25, 2014
The Fertilizer Institute, the International Plant Nutrition Institute and the International Fertilizer Industry Association are encouraging the industry to promote the proper use of fertilizer products to minimize their environmental impact. Read More
Precision AgARA Organized Precision Forum Hits Capitol Hill
September 24, 2014
The Coalition for the Advancement of Precision Agriculture (CAPA) hosted its inaugural Precision Ag Forum, Sept. 18, in Washington, D.C. Read More
FertilizerFactors To Consider When Placing Fertilizer With Seed
September 24, 2014
The type of crop, fertilizer source, row spacing and soil environment all affect how much fertilizer can be safely applied with seed. Read More
FertilizerSidedressing Manure Into Corn Has Promising Results
September 24, 2014
Applying manure to growing crops can boost yields, reduce nutrient losses and give livestock producers another window of time to apply manure to farm fields. Read More
FertilizerWhen To Sample Manure For Analysis
September 24, 2014
Because the goal is to collect a sample that represents the manure actually being applied, the best time to sample is during loading or field application. Here's why. Read More
Syngenta
Seed/BiotechSyngenta Faces Second Lawsuit Over Agrisure Viptera Cor…
September 23, 2014
A second company has sued Syngenta AG over sales of genetically modified corn seed not approved by China. Read More
StewardshipCover Crops Field Guide For Farmers Expanded
September 23, 2014
Farmers interested in planting cover crops to improve soil health now have an updated and expanded resource in the second edition of the Midwest Cover Crops Field Guide. Read More
HerbicidesArysta LifeScience Launches Contest For Wheat Growers
September 23, 2014
The Flush after Flush Photo Finish contest encourages farmers across the U.S. to participate through Instagram or Twitter using the hashtag #FlushAfterFlush. Read More
FertilizerCF Industries Confirms Merger Of Equals Discussions Wit…
September 23, 2014
CF Industries Holdings, Inc. has confirmed that it is in preliminary discussions with Yara International regarding a potential merger of equals transaction. Read More
StewardshipProgram To Examine Ag-Related Practices, Policies To Pr…
September 22, 2014
A panel discussion on October 14 will include a significant discussion on key issues and solutions related to all aspects of harmful algal blooms. Read More
Eric SfiligojIt’s Product Of The Year Voting Season
September 22, 2014
Readers of CropLife IRON will choose 2014’s best new product over the next month. Read More
Palmer pigweed in soybean stubble
HerbicidesValent To Discontinue Gangster Herbicide
September 22, 2014
Valent will discontinue Gangster Herbicide after the 2015 growing season as growers can now deploy Fierce XLT herbicide in soybeans. Read More
Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More