Published: July 04, 2008 01:14 pm            

Boom or Bust: Midwest flooding helps area farmers, but costs are escalating, too

Terry Vissing knows it’s a good year to be a farmer in Clark County. And he also knows it’s a very bad year to be a farmer in many other Southern Indiana counties.

“We’re not hurt in this area — we’re actually helped from flooding,” Vissing said. “Since the flood, we’re going to probably get a 20 percent increase (in profits), probably more.

“But that’s not what we want to see — we don’t want to hurt other farmers to help us.”

As he sat on his combine in a field that includes the more than 900 acres he farms in Clark County, Vissing contemplated the many bushels of wheat he had just loaded, and the freshly planted soybeans that had taken its place.

He looked at the more than $500,000 of equipment sitting around him, a fraction of what he owns, and he knew it could have as likely been him as any other farmer.

“You think about, you’ve got a job today, but what about in a year,” Vissing said. “For every farmer in the nation, there’s generally got to be someone else that does bad for prices to go up.”

And that is exactly what is occurring in corn, wheat and soybean markets now. June flooding throughout the majority of Indiana caused the federal government to name 43 Indiana counties disaster areas, and 30 contiguous counties, including Clark and Floyd, as potentially affected by the storms.

Farmers had cars in their corn fields and dairy cows trapped in barns. A late spring forced late planting, and those farmers that were able to plant early lost crops twice during the floods, said Ken Culp, the state executive director of the Farm Services Agency.

Some farmers are beginning to replant in place of the crops that were lost, while others foresee no other option but to forgo planting again this year and hope for the best in the next. Nearly 10 percent of farmable acreage in Indiana was lost due to flooding, and in the 43 affected counties the federal government is calling it a 75 percent loss that could jump as high as 90 percent.

“This could be the biggest thing in 50 years,” Culp said. “It’s pretty dim. We really won’t know the full extent until this fall.”

The price of corn jumped from $6.40 a bushel June 1 to almost $7.80 by the end of the month, specifically because of flooding in the Midwest. The drastically reduced size of the corn crop expected by farmers — and investors — has pushed the price to a record high, along with the price of soybeans, at $16 a bushel, and wheat, at $6.50 a bushel.

Purdue University agriculture professor Corinne Alexander compared the disruption in the corn supply and ensuing price increase to a recent strike by Nigerian oil workers. The strike hurt the ability of Nigerian oil producers to supply oil, but other oil producing countries benefited from the shortened supply.

“Whenever you’re in the commodity world — be it oil or corn — it’s the same thing,” Alexander said. “Anything that restricts supply — drought, strike, floods — anything that disrupts the flow is going to affect prices, and there are people who will benefit from that and people who won’t.

“You end up benefiting from others’ misfortunes in the commodity market.”

The return on that benefit for farmers not effected by flooding is offset, though, by the dramatically increased cost of farming during the last few years. The variable cost to raise a bushel of corn is up 59 percent from 2007, and the overall increase in farming is up 52 percent. The cost of fertilizer and fuel has tripled.

Terry Vissing spent $200 to put out an acre of corn in 2006; this year it cost him $500. And Vissing, and most others, place the blame squarely on the shoulders of oil.

Fertilizer, pesticides and even the plastic jug that lay discarded on the edge of Vissing’s wheat field originated with oil, he said. “Everything is energy.”

Matt Holt, also a Purdue agriculture professor, agrees.

“Oil is a major factor in many of the inputs in agriculture. In a sense we’re in a brave new world,” he said. “It could well be a situation where farmers are at a new level of prices (for their crops), but profits are squeezed as well on the input side.

“Those who are timely, good financial managers and good at managing field operations will continue to enjoy success in this brave new world, but the premium on being all those things will be very high.”

Vissing counts himself among the experienced; he was driving a tractor down Ind. 403 by the age of five. The experience he has gained through managing the peaks and valleys of farming over the last 50 years will give him an advantage in navigating the future of agriculture.

“I know I’m going to be farming in two years, but there’s a lot of young people out there and a lot of debt,” Vissing said. “It’s a scary time, because when everything goes up, we always know it comes back down.”



So you know

From the evening of June 6 to the morning of June 7, thunderstorms produced very heavy rain across portions of South-Central Indiana. Amounts of nearly 11 inches were recorded in some areas near Edinburgh. This rain lead to record river flooding in some areas during the week afterward. For maps of the flooding visit www.crh.noaa.gov/ind/?n=june0708flood

— National Weather Service

        

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