May 22, 2011
May 22, 2011
AFBF’s Johnna Miller and AFBF chief economist Bob Young on the impact of weather on agriculture.
By American Farm Bureau Federation
Johnna Miller: From wet weather and floods to drought and wildfires, Mother Nature has put farmers behind schedule with spring planting.
Bob Young: If the weather is exactly perfect from here on out we can probably recover and things will be fine but who knows at this stage of the game?
Johnna Miller: American Farm Bureau Chief Economist Bob Young says floods that have been getting a lot of media attention are only a small part of the problem.
Bob Young: We’ve probably had a larger production affect associated with bad weather ,dealing with droughts in Texas and Oklahoma and Kansas, Colorado, New Mexico, with the late plantings that we’re having because of cold, wet weather up in Ohio, Indiana, Illinois. Farmers are very good at getting a crop in the ground when conditions are such that they can do that but it’s just been too cold and too wet. Ohio, for example, less than 20 percent planted and by this time of the year typically they’d be more up in the neighborhood of 75 to 80 percent planted. So that that’s going to have a bigger effect at the end of the day really than what we’re talking about with respect to the floods.
Johnna Miller: But Bob Young says it’s not just the crop folks who are stressed, particularly in the drought ridden parts of the Southwest.
Bob Young: Some of these folks in the cattle industry in Texas, for example, it’s not going to surprise me that they decide to you know quit raising cattle. Cattle folks in particular because of forage problems. Those cattle eat grass and if the grass isn’t there because it’s all dried up they’ve either got to go out and buy additional grass someplace and ship it in or move the animals to feed. So regardless the producers there are facing some real challenges. We classify droughts as D1, D2 and up to D4. These are D4 droughts in Texas. These are the worst droughts that we’ve had and we’re talking about 200-plus days without rain in some of these parts of the country.
Johnna Miller: We have three extra actualities with AFBF Chief Economist Bob Young. In the first extra actuality he talks about the compounding difficulties of the drought for cattle ranchers. The cut runs 24 seconds, in 3-2-1.
Bob Young: There are all kind of compounding factors. You don’t have the feed. You’ve got to bring the feed in. You’re going to spend a lot on fuel to bring that feed in. You’re going to have to haul water and water is a pretty heavy commodity to have to ship around. Clearly some producers are going to decide to sell off parts of their herd. It just doesn’t pay to try to keep them there. This is going to have some ripple effects down the road two, three, four, five years from now that we will see some folks get out of raising cattle and probably not come back.
Johnna Miller: In the second extra actuality Bob Young discusses the uncertainty in the commodities markets. The cut runs 26 seconds, in 3-2-1.
Bob Young: There’s a lot of uncertainty in the market right now. We’ve seen some very sharp movements in crop prices over the course of this week in part because again there is just that uncertainty. We’re having a problem putting the crop in the ground. The crop that is in the ground has gone in a little bit late. It’s wet. It’s cold. You know all those kinds of things and so because you’ve got that weather uncertainty, together with some very tight supplies coming out of last year, all that adding together is just making prices move and move pretty sharply.
Johnna Miller: In the third extra actuality Bob Young explains the difficulties flood victims will face even after the water is gone. The cut runs 34 seconds, in 3-2-1.
Bob Young: Any time you get a flood situation like that where a levee breaks you tend to get very massive movement of water, a lot of debris a lot of sand and it can take you two and three years to get the field reconditioned to get back into production again. So those folks in almost every case so far where they had crop insurance purchased beforehand, our understanding is that USDA is going to pay the crop insurance claims and they’ll have that to fall back on, but you know insurance. You have insurance policies and you know as well as I do that they’re nice to have and you’re really glad they’re there, but they almost never make you whole. so these folks are going to be in some real financial hardship as they work their way through this.
Stay up to date with the latest political news and commentary from Natural Resource Report through weekly email updates:
Prefer another subscription option? Subscribe to our RSS Feed, become a fan on Facebook, or follow us on Twitter.