Thursday, June 6, 2019

Food for Thought

For those of you who are new, I work in an agricultural industry in the upper Midwest. We grow a lot of corn and soybeans around here and I have daily contact with the farmers that grow what we all eat.

Things don't look good this year.
  • We had a harsh winter, with cold temperatures and snow unlike any winter in the last 30 years.
  • Winter set in early last fall, cutting off the normal fertilizer season in late November. This means that the ground needed to be fertilized this spring for a crop to grow to its best potential.
  • Winter changed to spring overnight, leading to massive flooding along most of the minor and major rivers. Rain and snow melt can't flow through snow on the ground, leading to water backing up in tributaries and drainage systems.
  • A wet fall and bitterly cold winter drove the frost deep into the soil. It takes a lot of sunshine to thaw out dirt that is frozen four feet below the surface. You can't do anything with frozen soil.
  • Spring stayed cool this year, delaying the start of field work. There are minimum soil temperatures for things like applying certain fertilizers or pesticides and planting seeds.
  • We've seen roughly 50% more rain than normal in the five states around me from March to April. After the wet fall last year saturated the ground, the rain is not soaking in and is either standing in the fields or running off into already full rivers.
  • The combination of frequent rain and saturated soil has curtailed the time available to do anything in the fields that aren't still under water. The heavy-duty tow trucks have been kept busy with tractors getting stuck in fields.
  • The Army Corps of Engineers is still mismanaging the rivers and dams. Several sources are predicting a repeat of their fiasco of 2011 that wiped out a few million acres of farm production.
  • I have several customers who have thousands of acres of farmland that are still flooded. Some of them are not going to be able to plant anything this year, which means no harvest and no income. How long could you go without any income but the same rent/mortgage payments?

All of the above have combined to produce a bad year for crop production. The USDA keeps track of planting progress across the country and publishes a weekly report here. For clarification, they refer to their numbers as an estimate, but they are not guessing at the percentages. Roughly 3,600 people or companies who have frequent contact with farmers and/or can do in-person field inspections send in a weekly report from their area and those numbers are combined to produce the USDA report. My company is one of those reporters, every location sends a weekly estimate to corporate and they forward them to the USDA.

To summarize the rather lengthy report:
  • Corn is normally 80% planted by now. This year it's less than 50%. What is planted isn't sprouting well,
  • Soybeans are normally about 50% planted, this year we're under 20%. Again, what is in the ground isn't growing well.
  • Rice is normally 90% planted, this year it's under 75%.
  • Spring wheat, cotton, peanuts, oats, barley, and sorghum are about normal for percentage planted, but were planted late.

Corn takes 90-120 days from planting to harvest, so we're running out of time to get it planted if we expect to harvest it before winter sets in again. Beans grow a bit faster and can be planted later, but economic conditions (mainly tariffs) have depressed the price to where farmers can't make a profit from growing them. We don't grow much of the other crops in my area, but I have talked to people from areas that do and they're in the same situation. Everything is late and not growing very well due to lack of sunlight and too much water.

So, what does this all mean to someone who lives in a city and gets their food from a grocery store? You're going to be paying a lot more for your food in the near future. Stock up on the essentials while they're still fairly cheap because prices are already starting to climb on the futures markets (We update our price board at least once a day). If we have another wet fall as predicted, we could lose some of the limited crop that will be grown this year, further reducing supplies. 

We're about one bad year away from having serious problems feeding everyone that relies on the US farmers. That could lead to interesting times in some areas and starvation in others. Add in the swine flu in China that just wiped out more hogs that the entire US produces in a year, over a million calves lost to flooding in Nebraska alone, and crop failures in Australia, Italy, France, Mexico, Argentina, and the Philippines, and you might see why I think food prices are going to rise rapidly and the potential for unrest around the world is going to rise with them.

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