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 SfiligojWar And Green Peace
October 11, 2014
A one-time member of Green Peace recently explained why he left the organization after 15 years. Read More
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

Top 100 Articles

CropLife 100CHS: Driving Momentum To Help Farmer-Owners Grow
December 11, 2014
CHS Inc., the nation’s leading farmer-owned cooperative and a global energy, grains and foods company, must capture new opportunities to Read More
CropLife 100BRANDT, Verdesian Ink Distribution Agreement
December 9, 2014
The agreement grants BRANDT the exclusive right to sell and market Verdesian’s patented Steric chemistry in the Turf and Ornamental and eastern U.S. ag markets under the BRANDT Reaction product line name. Read More
CropLife 100CropLife 100: The Colors Of Custom Application
December 5, 2014
Although many color spray rigs are in the yards of the nation’s top ag retailers, the majority of them still come in only a few shades. Read More
CropLife 100Pinnacle Invests In Meridian Agriculture Distribution
December 4, 2014
Meridian will provide retailers with supplier-branded products and numerous opportunities to differentiate themselves from their competitors. Read More
CropLife 100CropLife 100: Entering A New Seed Era
December 4, 2014
The seed category has been re-vitalized during the past few years, and more good news (and varieties) are headed the industry’s way in 2015. Read More
CropLife 100CropLife 100: The Depressed State Of Fertilizer
December 3, 2014
Following downright giddy growth earlier this decade, fertilizer sales have fallen back down to earth the past two years. Read More

Latest News

Crop InputsNufarm Fills Regulatory VP Position
December 18, 2014
Nufarm announced today that Rob Schwehr has been promoted to the position of Vice President of Innovation & Regulatory Affairs for Nufarm Americas. Read More
Seed/BiotechReport: China Approves Viptera Corn, U.S. Officials Awa…
December 17, 2014
Chinese authorities have informed some agriculture industry officials the government has approved U.S. imports of a type of genetically modified corn developed by Syngenta. Read More
FertilizerMonty’s Plant Food Brings In New Sales Rep
December 16, 2014
Monty's Plant Food Company has hired Warren Kearns as its newest Sales Representative for the South Carolina area. Read More
EquipmentHagie Wins 2014 CropLife IRON Product Of The Year Award
December 15, 2014
The self-propelled sprayer maker has a hit on its hands with the new STS Series model. Read More
Syngenta
Seed/BiotechSyngenta Sees China Approving Contentious GMO Corn Soon
December 15, 2014
Syngenta will make an announcement when it receives official documentation from China that Agrisure Viptera corn, known as MIR 162, has been cleared for import. Read More
Crop InputsVerdesian Life Sciences Names Vice President Of Communi…
December 15, 2014
Amy Bugg will oversee the execution of all promotional strategies for the corporate brand and the complete product portfolio. Read More
StewardshipFarmers, Retailers Attend 4R Certification 4U Workshop
December 15, 2014
More than 160 farmers and ag retailer attended the “4R Certification 4U” workshop December 12 to learn more about the 4Rs of nutrient stewardship, water quality research in the area and cost-sharing opportunities. Read More
Matt Hopkins10 Best New Agriculture Apps For 2015
December 15, 2014
These new agriculture apps are certain to help ag professionals do their jobs more efficiently in 2015 and beyond. Read More
ManagementARA Learnings, Retail Buying Intentions: Welcome To Cro…
December 12, 2014
This informal video program puts news and events effecting retailers into context, and features Editors Paul Schrimpf and Eric Sfiligoj. Read More
Seed/BiotechMonsanto Herbicide-Tolerant Technology Closer To Commer…
December 12, 2014
The final EIS moves Monsanto one step closer to the introduction of Bollgard II XtendFlex cotton and Roundup Ready 2 Xtend soybeans, paving the way to provide access to dicamba-tolerant soybeans and cotton. Read More
Seed/BiotechUSDA Issues Final Environmental Impact Statement On Her…
December 12, 2014
The USDA Animal and Plant Health Inspection Service (APHIS) is issuing a final environmental impact statement on varieties of cotton and soybeans that have been genetically engineered for resistance to several herbicides, including the one known as dicamba. Read More
CropLife 100CHS: Driving Momentum To Help Farmer-Owners Grow
December 11, 2014
CHS Inc., the nation’s leading farmer-owned cooperative and a global energy, grains and foods company, must capture new opportunities to Read More
LegislationARA Applauds CFATS Passage Prior To Holiday Adjournment
December 11, 2014
The streamlined bill provides a four-year authorization of the CFATS program and guidance to DHS on key issues of chemical facility security Read More
Seed/BiotechBayer CropScience’s ILeVO Approved By EPA
December 11, 2014
EPA has approved ILeVO, the only seed treatment that protects the root system against infections caused by the Sudden Death Syndrome fungus and has activity against dangerous nematodes. Read More
Biologicals in Emerging Markets Map.
Crop InputsBiocontrols Could Quadruple By 2025; Will Regulators Pl…
December 11, 2014
The European experience with GMOs offers caution — and a promise — for biologicals. Read More
Crop InputsBASF Donates $75,000 To Feeding America
December 10, 2014
The donation will support Feeding America’s National Produce Program, an initiative that helps with planning, transportation and logistics to ensure fresh produce deliveries to the 200 member food banks around the country. Read More
InsecticidesHow To Avoid Aphid Infestation In Winter Wheat
December 10, 2014
The best strategy for managing aphid infestations in winter wheat — and the potential yellow dwarf diseases that they transmit — is prevention, according to a South Dakota State University Plant Pathology field specialist. Read More
LegislationDufault Installed As New ARA Chair
December 10, 2014
Dave Dufault, Vice President and General Manager of J.R. Simplot Company's Retail Business, was installed as the 2015 Chairman of the Board for ARA on December 4. Read More