Bumper grain crop set to weigh heavily as farmers count costs of seed, fertilizer – and effects of possible trade war
www.theguardian.com
Many US midwestern grain farmers will lose money this year after reaping a bumper crop, and the outlook for their future income is bleak.
US farmers harvested some of the largest corn and soybean crops in history this year. Big harvests traditionally weigh on crop prices because of plentiful supply. And those price pressures comes at a time when costs remain persistently high to grow corn and soybeans, the US’s most valuable crops.
That double whammy is hurting farmers. Income will vary per farmer and per state, yet even for producers in top agricultural states such as
Illinois, losses could be staggering.
Agricultural economists from the University of Illinois and Ohio State University
estimate that the average Illinois farm could make a loss of $30,000 for 2024. Their projections place farm incomes at the lowest level since the 1980s’ farm crisis led to bankruptcies.
The decks are stacked against farmers for 2025 as well. Costs for seed, fertilizer and other inputs rose during 2022, fueled by the Russia-Ukraine war, which also lifted crop prices to record highs.
While crop prices are down nearly 50% from those highs, in part due to a global supply glut, input prices remain elevated. Sterling Smith, an independent commodities researcher, says the national average break-even price for corn is $5.67 a bushel, and $12.72 a bushel for soybeans. Those levels are far above current Chicago Board of Trade most-active futures prices of $4.43 for corn and $9.76 for soybeans.
“We’re looking at this crop, that, when it gets planted, of being a money-loser next year,” Smith says.
And things could look worse for farmers if
Donald Trump places tariffs on imports. Trump
pledged to impose across-the-board tariffs of 20% on all US imports, with a 60% tariff on Chinese goods. Recently, he advocated for 25% tariffs on goods from Canada and Mexico.
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Until the first
trade war between China and the US in 2018, China was the No 1 destination for US agricultural goods. That came to a halt during the trade war, although China and the US eventually signed an agreement in 2019 to import a set amount of agricultural goods for two years.
During the skirmish,
China began diversifying its suppliers, including buying from Brazil. Brazil was already a global grower and exporter of soybeans, but Chinese investment ramped up expansion, Smith says.
“China is not going to put their food supply at risk,” Smith says.
Brazil increased their soybean production by the equivalent of an area the size of the state of Kansas, and some estimates suggest it has as much as 70m acres (28m hectares) of unused pastureland it can plant to crops, the equivalent of two states the size of
Iowa.
Brazil can also grow the equivalent of two crops in one year, planting soybeans in September and after that harvest, quickly plant a corn crop, he says, increasing Brazilian corn production. If Brazil continues with its aggressive expansion and the US continues its traditional output, a global situation of habitual oversupply will result, especially for soybeans, Smith says.
