Why Farmers Plan To Plant So Much Corn This Year

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NEAL CONAN, HOST:

This is TALK OF THE NATION. I'm Neal Conan.

U.S. farmers say they intend to plan 97.3 million acres of corn this season, the largest corn planting since 1936 when farmers were trying to make up for crops lost in the Dust Bowl. And maybe it's not a coincidence that many parts of the country suffered a severe drought last year. We want to hear from farmers right now. What are you planting and why? Give us a call, 800-989-8255. Email us: talk@npr.org. You can also join the conversation at our website. That's npr.org, click on TALK OF THE NATION.

Chad Hart is an economics professor who specializes in agriculture at Iowa State University. He joins us from Iowa Public Radio in Ames. And it's good to have you on the program today.

CHAD HART: It's a pleasure to be with you, Neal.

CONAN: So why are so much corn being planted?

HART: Well, a combination of factors that you mentioned. The drought last year definitely put corn supplies at the lowest level they've been in quite some time. But also, we've seen big demand build up for corn over the last five years, and that's led to some significantly higher prices, which farmers are chasing after by putting in acreage this year.

CONAN: Demand for corn. We know that, for example, corn is a fed to a lot of cattle in feeding, but we also know, as also a result of the drought, smaller herds than there used to be.

HART: There are some smaller herds, especially as we look at beef cattle, but we are beginning to see the poultry industry grow, the pork industry grow. Also, corn goes into a lot of other industrial and food uses which have been growing over time.

CONAN: And other crops are not as profitable?

HART: Some of them are, some aren't. In this case, corn gained a lot of area last year. It's gaining a little this year. We are seeing some expansion in other crops as well. Probably the biggest expansion this year will be sorghum.

CONAN: Sorghum, what's that used for?

HART: Sorghum is also used as a feedstock. So in this case, a lot of the growth that we're seeing in crops this year is targeted towards livestock feed. We're seeing some growth in hay acreage, some in wheat acreage, some in sorghum, barley and corn.

CONAN: And as you look at this - again, there was the drought last year, so corn, once it's been harvested is - you can build up supplies that last from year to year? It's not all used in a year?

HART: That's correct. It's usually - we do carry some over from year to year. In fact, that's something that the corn market watches very closely, is how much corn are we able to carry between crop years?

CONAN: And as much corn exported?

HART: Actually, about 15 to 20 percent of our corn does turn out to be exported. The U.S. is the largest corn exporter in the world.

CONAN: And is there any danger? I mean, you think one crop with so much acreage?

HART: Well, not really. I mean, if you look back over the history of cropping here in the U.S., corn has typically been a dominant crop. As you mentioned in the intro, we planted over 100 million acres back in the 1930s, so we've had large acreage in corn before. And when you look across the breadth of agriculture, we still produce a myriad of crops and livestock products through our agriculture.

CONAN: So it's not - we shouldn't be alarmed that we're going to monoculture here.

HART: Not necessarily. I mean, when you look, we're still planting over 55 million acres of wheat, over 70-some million acres of soybeans, around 10 million acres of cotton, with rice, sugar beets, you name it. And we produce a lot of agricultural products here in the U.S.

CONAN: All right. And let's see if we get some farmers on the line to tell us what they're planting this year and why. 800-989-8255. Email us: talk@npr.org. And we'll start with Keith. Keith with us from Iowa Falls.

KEITH: Hello. A long-time listener, first time I've gotten through.

CONAN: Congratulations. Nice to talk to you.

KEITH: Yeah. I raised corn and soybeans primarily. I got a little bit of pasture. But I'm planting the same amount of both this year. I primarily am in a 50-50 rotation. In this part of the state, that's fairly common. Corn has been gaining in acreage in recent years. But for me - I own the ground that I farm - it seems to work out well.

CONAN: And when you say 50-50 rotation, half your farm one year is corn, and then the next year that half is soybeans and vice versa?

KEITH: Correct.

CONAN: And why is that?

KEITH: Well, by doing that, I get a little higher corn yields. I don't have to use as much nitrogen fertilizer when I grow my corn after soybeans. Also, probably don't have quite the pest problem. Soil insecticide isn't needed, for example, when I rotate with soybeans. I do make more money raising corn than soybeans, but the rotation effect is quite beneficial in my case.

CONAN: And how much do prices vary?

KEITH: Well, they vary a huge amount. Cash corn, that is the price of corn here in Iowa, has dropped in the past few days about 90 cents a bushel, and that's a lot of money. You raise about, you know, on a good year, maybe 200 bushels an acre. So if it fell a dollar, you'd be losing $200 in gross income right there. Prices vary a lot. I mean, in my 20-year farming career, I've sold corn for $1.89 and $7.89.

CONAN: That is a huge variance. So what are you hoping to get this year?

KEITH: Per yield or price?

CONAN: For both.

KEITH: Well, yield is probably, you know, 185-bushel corn is probably what I'll budget and 52 bushels an acre soybeans. And if I get $5.50 a bushel for corn and maybe $12 a bushel for soybeans, you know, those are probably reasonable budgeting figures right now.

CONAN: Well, good luck and we hope it rains.

KEITH: Yeah, we do.

(LAUGHTER)

CONAN: Thanks very much, Keith.

KEITH: You bet. Bye.

CONAN: So long. And, Chad Hart, as you listen to those calculations, that sound about right to you?

HART: Those did sound about right. When you're talking to Keith there - he's in the central part of the state like I am. And, yeah, as he mentioned, 50-50 corn-soybean rotation tends to be typical. It's 185 bushels. That would be a good number for here in central Iowa as far as corn production is concerned. And when you look at the price targets Keith was talking about there, that's about where the future markets for corn and soybeans are settling out today as we look at new crop corn and soybeans.

CONAN: I have to ask you also, ethanol, how much of a factor is that?

HART: Ethanol has been a fairly large factor, especially over the last five years. We've seen that demand for corn through ethanol grow dramatically over the past decade. And at the same time, that's sort of why we're seeing this maybe wealth of corn acreage now. The corn production area has grown dramatically over the last five years to help meet that ethanol demand.

CONAN: And email from Wes(ph): McKinley Farms in Plant City, Florida. Love your show. We're planting Silver Queen sweet corn, sweet potatoes, okra, summer squash, watermelon. Thank you and God bless America. So that sounds a little bit more like a truck farm operation. Bob joins us now from Washington, Iowa.

BOB: Yeah, hi.

CONAN: Hi. Go ahead.

BOB: I was going to say, you know, I just wanted to comment on - Keith is your guest, is that right?

CONAN: Yes, that's right.

BOB: So he made the comment that ethanol was a fairly large part. And as a livestock producer, I think that's understating it. I mean, corn - ethanol, what is it Keith said, is taking 40-some percent now.

CONAN: And forgive me. It's Chad.

BOB: Oh, Chad. I'm sorry. So it's taking roughly 40 percent of the crop, and when you get the drag distillers grain out, it's a third of the crop roughly that's going to ethanol. And for those of us that are both livestock and corn producers, like for me, I just go straight corn now because I've got to have it for my hogs, and it's such a hassle getting it. I mean, it's held much tighter. The price is so much higher. And you asked about the impact of it. I used to sell hogs for $100 and break even or make a little money. Now I have to have 180, you know, $190 to break even. So it's just - that's what's driving this corn is really the ethanol eating up a third of the crop.

CONAN: Chad Hart?

HART: Well, I would agree. As ethanol has grown, it has driven the market to higher prices as we've experienced over the past few years. And it's something that, if you will, an agricultural market tends to go through about every two to three decades. We find a new source of demand that tends to bring prices up, and it takes a while for production - in this case, acreage - to ramp up, to catch up. And that's definitely what the corn market has been wrestling with here over the last five years.

CONAN: And you mentioned distillers, Bob. That's people making spirits?

BOB: No. Yeah. They are making spirits, but that's not what we're feeding our livestock. Distillers grain is a byproduct of ethanol production, so you can't just look at the total corn that goes to ethanol. You have to subtract part of that because it actually comes back to cattle and hog feeding. But it's still - it's just such - it's such a clear - I mean, I agree with his comments about every few years, we see this. But ethanol, I don't think there's ever been historically anything like this. And the burden has largely fallen on livestock and users of corn in this time period. And now it's going to fall on the consumers with higher meat prices because a lot of people have gone out of business, and a lot of us have lost equity in the last five years.

CONAN: Well, Bob, we wish you good luck and a good summer.

BOB: Thanks. Appreciate your show too.

CONAN: Thank you very much. Let's go next to - this is Bill, and Bill on the line with us from Hesperia in Michigan.

BILL: Yeah. Are you there?

CONAN: Yeah. You're on the air. Go ahead.

BILL: Well, yeah, I have mostly grass - we call it grass, although it's legume. It's alfalfa and clover. And I raise beef. I raise a little bit of vegetables. And I'm not planting any corn this year because the price of hay went up about four times last year, makes much more sense for me to keep my ground inside. I'm just on the edge of where corn is really profitable in northern to mid Michigan. What I have seen, though, is I have seen what I would consider to be a great plough up. I mean, there is a lot of ground that has been in sod that has been fallow, unfarmed, that's now in production. And I - there just is no fallow ground around me anymore.

And a bale of hay had an 800-pound bail I bought for $25 in June. I just stopped at the gas station. There was a guy with a bale that size on the back of his truck, and he told me he paid $80 for it and he drove 30 miles to get it.

CONAN: Hmm. Is that what Bill is describing there in Michigan, central, northern Michigan, Chad Hart, is that peculiar to that area or is he describing areas - other areas of the country as well?

HART: Well, no. I would say we've seen that in other areas as well when you look at cropland and pasturelands throughout the U.S. With crop prices, corn is not the only one that's experiencing high prices right now. So we have seen a lot of land come back into crop production over the last couple of years. So a lot of, as he mentioned, fallow land has been tilled back in, brought back in the crop production. And we're seeing it more in what I'll call the fringes of our crop-producing area.

So we typically think of the Corn Belt, that's where you grow your corn and soybeans, where we're seeing this expansion in all places like Michigan, up in Minnesota and North Dakota along with Southeast, anywhere from Texas all the way up through to Virginia. That's where we're seeing a lot of the growth in corn area this year.

CONAN: All right. Bill, good luck with the hay - with the alfalfa this summer.

BILL: OK. Thank you.

CONAN: Appreciate it. We're talking about crops, what are you planting and why? You're listening to TALK OF THE NATION from NPR News.

And let's go to Abby(ph), and Abby's with us from Carrizo Springs, Texas.

ABBY: Hi. How are you doing?

CONAN: Good. Thanks.

ABBY: We're planting olive trees. We have 40,000 trees down in the Carrizo Springs area, which in the oil and gas region of Texas (technical difficulty) other oil boom. And we've just broken ground of a new orchard in Victoria, Texas, (technical difficulty) south of Houston. And when we're done with that orchard, it'll be another two to 300,000 trees.

CONAN: Now, as I understand, it's going to be some years before those trees are in production.

ABBY: Well, down in Carrizo Springs area, why we're there is because we found the oldest olive trees in the state of Texas, and we got our first harvest in two and half years.

CONAN: That's very good. Is this for olive oil?

ABBY: Yes, sir. You're looking at the emergence of a brand-new agribusiness not only in the state Texas, but there's other states in Georgia, Florida is trying to grow olives and, of course, as well as California. But 98 percent of olive oil consumed here in the United States is imported.

CONAN: And is this gourmet, boutique-type olive oil or run-of-the-mill?

ABBY: Well, at the moment in Texas, everything's being at a level that are (unintelligible) level. But the company I work for, Texas Olive Ranch, has big sites to a commercial grower as well as other growers out in California. But, no, we are definitely in commercial growing because the demand. Right now, the U.S. is the second largest consumer of olive oil in the world. But our consumption per capita is very low. So it's an important agriculture to grow.

CONAN: Chad Hart, I don't know if you know much about olives, but I think Abby is right. There's a boom in American olives.

HART: Well, I think that's the deal. As you look at olives, for example, as Abby mentioned, the idea we see some farmers there that see a market niche that they feel they can address and they can make some profits. And when you look at agriculture, you need to think of it just like a small business. Often times, the decisions, especially on the production side and what crops are going to grow are driven by the profits they think they can achieve in that market.

CONAN: And, Abby, how does rain look for you this year?

ABBY: Well, we always need rain in the farming world. So right now, I'm driving through a rainstorm in central Texas so we can only hope that can help our aquifers. But the olive - growing olive trees, that bear our fruit tree, they do need water to fruit. But there is studies going on with Texas Tech University on trying to see what's the optimal growing of olive trees, but also managing water.

CONAN: All right. Well, good luck, Abby.

ABBY: Thank you.

CONAN: Appreciate the call. And, Chad Hart, we just have a few seconds left. But spring, it's a little like every baseball team. They're all going to make the World Series, but there's been some parts of the country that have really been stricken by drought in the past several years, last year in particular, and may happen again.

HART: It may happen again. As we look right now, it's the western part of the U.S. where we're concentrating. They're still under the drought. It never really went away and anywhere from Abby down there in Texas all the way up into North Dakota, we're still seeing drought conditions.

CONAN: Well, Chad Hart, thank you very much for your time today. We wish rain for everybody.

HART: Thank you very much, Neal.

CONAN: Chad Hart, an economics professor who specializes in agriculture at Iowa State University joined us from Iowa Public Radio in Ames. Tomorrow, we'll talk about what's next for the inmates at Guantanamo Bay, Cuba. Join us for that. It's the TALK OF THE NATION from NPR News. I'm Neal Conan in Washington.

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Source: http://www.npr.org/2013/04/03/176145181/why-farmers-plan-to-plant-so-much-corn-this-year?ft=1&f=1007

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