Weather, prices complicate farm year
from Staff Reports - NEWS
January 6, 2017 - ListenUpYall.com
(Franklin Sun) — Unfavorable weather and lower commodity prices made 2016 a difficult year for those involved in agriculture in Louisiana, according to a report from the LSU AgCenter.
The final numbers for Franklin Parish are currently being compiled, with a report on the local agriculture picture expected to be released at the end of the month, according to Carol Pinnell-Alison, extension agent with the AgCenter.
For the second year in a row, depressed commodity prices made conditions hard for farmers. After several years of relatively high prices, many producers made significant investment in their operations, but the downturn in prices is causing financial hardships for some.
“We had infrastructure of these enterprises that were built on $6 corn and $14 soybeans. That just doesn’t work with $9 soybeans and $3 corn,” said LSU AgCenter economist Kurt Guidry.
According to Guidry, producers should not expect any relief in terms of commodity prices. He believes sugar is the only commodity with a stable price among the major row crops grown in the state.
“We’re going to have to deal with corn in the $3-$4 range and soybeans in the $9-$10 range. That’s just going to make that recovery much more difficult,” Guidry said.
Pinnell-Alison also noted that while the prices went down, prices related to production costs did not decline.
“Production costs are the same. They have not come down,” she said.
Another compounding problem was unusually wet weather across the state, including two major floods. North Louisiana received torrential rains in the spring, just after a significant amount of corn was planted. Many acres of corn had to be replanted, adding to production costs.
In south Louisiana, a late-summer flood delayed harvest or ruined many acres of rice, soybeans, cotton and grain sorghum. It also delayed sugarcane planting, which may affect next year’s crop.
While the weather did not cause the statewide average yield of many crops to drop significantly, the numbers don’t reflect the true picture. Many acres went unharvested because they were in such poor condition, and those acres are not included in yield averages. Some harvested crops had major price reductions because of quality issues.
“A 90-bushel grain sorghum yield looks good on paper, but if you can’t sell it because of quality issues, it doesn’t do you any good to harvest 90 bushels,” Guidry said.
Another concern of Guidry’s is declining land values. Many farmers have much of their equity in the land they own and farm. While values are not falling as fast as they are in the Midwest, it is something Louisiana farmers should take seriously.
“What we’re seeing is an erosion of equity because of these reductions in land values that impacts farmers’ ability to withstand these hard times,” Guidry said.
Pinnell-Alison explained that the value of the crop land is tied to the value of crops, and that rent prices are set accordingly.
“A few years ago, corn and soybeans in particular were historically high. With that (higher prices) it meant that the price of land goes up,” she said.
She also noted that when other markets brought lower returns, outside investors opted to put money into land, which is a factor.
“With agriculture being on a high, a lot of folks had money to invest. They found that since commodity prices were higher, they could make bigger returns on their money,” she said.
“A lot of producers can’t afford to pay the prices they were paying before,” Pinnell-Alison said.
She also noted that number of local producers rent land.
“A lot of our producers don’t own the land, they rent it,” she said.
According to Guidry, it is important for producers to have good yields next year because prices are not expected to rebound. Favorable weather would also be beneficial, he said.
Cattle prices have stabilized for the past month, Guidry said, and he believes the bottom of that market may have been reached, with a slight increase possible sometime in 2017.