COLUMBIA — While Missouri corn and soybean growers can expect low crop yields from the summer drought, the crops' high prices will likely offset the yield losses this coming market year.
Scott Brown, an agricultural economist and MU research assistant professor, said Missouri's 2012 net farm income could reach $2.8 billion — a drop from the $3.33 billion amassed in 2011, but still higher than the previous eight-year average of $2.45 billion. Brown defined net farm income as the total amount of farm receipts, government payouts and value of inventory changes, with the cost of production subtracted.
Brown and his MU colleague Daniel Madison are coauthors of the Missouri Farm Income Outlook 2012 report, which analyzes data from the U.S. Department of Agriculture's September Crop Production Report. The report predicted that while this year's corn and soybean crop yields will be the smallest since 1999 and 1995, respectively, there will be little change in crop cash receipts.
Corn and soybeans are key staples of Missouri agriculture; in 2011, the two crops comprised nearly 45 percent of total state cash farm receipts. This year, Missouri corn prices are expected to rise from $6.50 to $8 per bushel, while soybean prices will increase from $12.45 to $16 per bushel.
Additionally, the drought's hot, dry weather is estimated to decrease corn yields to 75 bushels per acre, a 45 percent decrease from the 2004-2011 average. Soybean yields have been reduced to 38 bushels per acre, a 29 percent decrease from the eight-year average.
Boone County was one of the hardest hit areas; from May 2012 to July 2012 — a crucial growing period for corn and soybeans — it received less than 30 percent of the average rainfall over a two-decade period.
"We'll look back at the 2012 drought as one of the worst we've seen since the 1950s," Brown said.
If climate conditions improve by next year, Brown predicts the state's net farm income will reach slightly over $4 billion in 2013.
Gary Riedel, who runs a farm south of Centralia , grows soybeans, corn and wheat and has been farming full time since 1969. He said this year's corn crop is about a third of what it should be; the soybean crop, about half.
"I think it's been hit pretty hard here," Riedel said, adding that the southeast, central and northeast regions of Missouri had been, from his perspective, the most heavily affected by the drought.
Riedel said the expected recovery time for farmers depends on whether they had purchased crop insurance. He predicted insured farmers could recover within a year or two, while uninsured farmers would likely need additional time.
"It's hard to say," he said. "It depends on what the next year's like."
Members of the corn and soy industries retain a cautiously optimistic outlook.
Gary Marshall, CEO of the Missouri Corn Growers Association, said the changes in the corn market were typical for a drought situation.
"A rationing effect is taking place," he said.
Marshall said demand was spread across different segments of the industry: exports, feed usages and ethanol products. He said while farmers might face lower income and fewer crops than they might have hoped for, ultimately, the outcome was better than expected.
Brown predicted the economic impact on manufacturers that use corn and soy products would be reasonably small, with the possible exception of the biofuel industry, where the rising costs of corn could dampen ethanol growth. He explained that manufacturing and fuel costs make up the majority of overall costs, while the purchase of crops represents a small percentage of total spending.
However, Brown added that livestock farmers, who can have up to 50 or 60 percent of their total expenses tied up in feed costs, are likely to struggle. He said feed prices are increasing across the board, and that includes the costs of corn and soybean meal.
"The effects depend on who you are," Brown said.