HANCOCK COUNTY – Local corn and soybean farmers are preparing to ride out a slump in crop prices that experts say will likely lead to significantly lower profits in 2016.
During the last decade, many corn and soybean farmers worldwide had successful seasons, with several measuring record harvests. Their products flooded the market, leading many farmers to lower the price of corn and soybeans to remain competitive against other sellers, said Chris Hurt, an agricultural economist at Purdue University
While production of corn and soybeans worldwide has been on the rise, local farmers saw lackluster harvests in 2015, when summer rains flooded fields and damaged crops. Those farmers were then forced to offload crops at the lowered rate, which decreased revenue, Hurt said.
When crop prices fell, many companies that purchase large quantities of corn and soybeans stockpiled as much as they could afford. In turn, many buyers have huge inventories of corn and soybeans and will likely purchase less in 2016, he said.
Corn and soybean fields make up 94 percent of the approximately 160,000 acres of crop farmland in Hancock County, according to Census data.
Between 2012 and 2015, the price of a bushel of corn dropped from $6.89 to $3.65; meanwhile, soybeans fell from $14.40 a bushel to $8.90, according to figures from the U.S. Department of Agriculture.
Hurt projects it will take until 2018 for corn and soybean prices to rebound.
Until then, farmers might be forced to sell crops for less than what it cost to produce them, he said.
Hurt and other researchers from Purdue project in 2016, it will cost farmers about $4.17 to produce a bushel of corn – more than 50 cents below the average selling price last year.
In 2015, Indiana cornfields averaged 156 bushels of corn per acre, according to USDA estimates, which means farmers could lose about $80 per acre.
Hurt said he expects most farming operations will survive the downturn, as many were able to save money during recent years of record harvests.
“It’ll be discouraging for many, but this is cyclical,” Hurt said. “We know it will come to a close.”
Roy Ballard, agriculture resources educator with the local Purdue Extension office, said while fuel and herbicide costs aren’t something most farmers can reduce spending on, there are other areas to cut costs.
Most farmers don’t own all of their land; many rent from property owners through lease agreements.
Many landlords are willing to negotiate rental fees once they realize the state of the industry, Ballard said.
Chris Cherry, a Hancock County farmer who oversees more than 3,000 acres of corn and soybeans, said he heeded experts’ projections that prices would eventually drop and chose to spend conservatively in recent years.
That meant buying used harvesting machinery instead of new equipment, he said.
“We’re tightening our belts, but everyone’s prepared to weather the storm,” he said.