Ohio Farmers Face Lean Year, Hard Decisions After Spring Floods
Date: Wednesday, July 31, 2019
Source: The Wall Street Journal
Wet weather compounds challenges posed by low prices, tariffs
WOOD COUNTY, Ohio—American farmers are reeling after unrelenting rain delayed planting across the Midwest while trade battles continue to drag down exports and crop prices. Now, the prospect of another lean year is spreading farmers’ pain to the agricultural suppliers, traders and food makers that depend on them.
Wood County, south of Toledo in Ohio’s northwestern corner, is usually among the state’s biggest crop-producing areas. This summer, it is among the Farm Belt’s hardest hit. About 131,000 acres lay unplanted this month, nearly half the county’s total, according to estimates from the county’s Farm Service Agency. Only one in five cornfields has a crop growing.
Driving between fields where scrubby brown and green weeds run unchecked for miles, Alan Sundermeier wonders how Wood County’s farmers, cooperatives and equipment dealers will make it through the coming year. Mr. Sundermeier, county educator for Ohio State University Extension, rattles off a litany of worries that emerged after storms kept local farmers out of their fields until it was too late to plant.
Cooperatives, unable to sell seed, fertilizer and chemicals, are cutting employees’ hours. Cattlemen and dairies face feed shortages. Banks are negotiating lower payments on farm loans. And some farmers, already struggling after years of low crop prices, will have to make it until autumn of next year before they produce a crop.
“The ripple effect will be devastating for some,” Mr. Sundermeier said.
The wettest 12-month period on record in the continental U.S. is compounding challenges for farmers after five consecutive bumper crops swelled stockpiles and pushed down farm incomes. Over the past year, tariffs from top food importers such as Mexico and China slashed exports and further pressured prices.
Repeated rainstorms and flooding are also pressuring agriculture-industry giants, as farmers return crop seeds to companies like Bayer AG and Corteva Inc., ethanol giants cut production of the corn-based fuel additive, and grain companies such as Cargill Inc. and Archer Daniels Midland Co. are forced to boost offers to secure grain ahead of a lean harvest. U.S. Department of Agriculture officials have projected that crop-insurance payouts could top $1 billion this year, with around 10 million acres unplanted nationwide.
Earlier Tuesday, Bayer warned that severe weather impacting its crop-science division could strain its ability to hit full-year sales targets.
Investors expect the wet spring to weigh on agriculture-industry profits. Farmers’ inability to plant crops and spray herbicides could slice $200 million to $250 million from Corteva’s quarterly profits, according to Sanford C. Bernstein analysts, and JPMorgan analysts predicted continued costs and logistical challenges for agricultural trader and processors ADM and Bunge Ltd.
“I’ve never remembered any years like this,” said Loren Bechstein, 92, who said he had farmed in Wood County his entire life. This year, he said, his family was unable to plant a single acre. “We never got a window big enough to really get in the field,” he said.
Out of 2,000 acres Paul Herringshaw intended to plant on his corn and soybean fields near Bowling Green, Ohio, only 325 had anything growing in mid-July. “What’s happening around here is a disaster that’s unfolded in slow motion,” he said.
At a kitchen table spread with bills, farming catalogs and a quilting magazine, Mr. Herringshaw prepared to fill out insurance paperwork for his unplanted fields while more rain drenched the weedy, brown field across the road.
Some of Mr. Herringshaw’s crop-insurance forms were bound for the Farm Service Agency office in Bowling Green, where farmers’ paperwork awaited review in piles a few feet high. In a typical year, the county receives 15 to 20 such claims. The number this year likely will top 1,500, said Jody Haines, the agency’s county executive director. Mr. Haines, who farms himself and only got one-third of his corn planted, added his own forms in mid-July to the piles.
Wood County farmers said insurance coverage would help but won’t fully make up for this year’s lost crops.
For other agricultural businesses in the county of 131,000, no such safety net exists.
At Findlay Implement Co., a John Deere dealership, Bowling Green store manager Jeff Maas said farmers’ interest in new equipment had tailed off, and he had postponed hiring a new salesman and parts technician.
Rain-driven delays already are cutting into profits for companies that buy farmers’ goods and sell them supplies. Cargill said this month that spring rain and flooding slowed grain and cattle shipments, contributing to a 67% drop in quarterly profits. CHS Inc., the biggest U.S. farm cooperative, said bad weather impeded crop shipping and purchasing, helping push quarterly earnings 70% lower.
In Findlay, Ohio, Legacy Farmers Cooperative Chief Executive Mark Sunderman in late May sat down to tally lost revenue from fuel sales, crop-spraying services, and less grain likely sold to Legacy’s facilities this fall. Legacy’s overall sales are likely to drop by 50% from 2018, he said.
To cut costs, Legacy skipped hiring seasonal employees and curtailed overtime, which Mr. Sunderman estimated would reduce employees’ take-home pay by 20%. The cooperative also dropped its cleaning service. “We’ve got a chore list,” said Mr. Sunderman, who was getting ready to take his turn sweeping the hallway.
In nearby Weston, Northern Ohio Grain Coop Inc. plans to shift to a four-day workweek starting in September, lasting for one year, financial chief H.D. Roe said.
About 20 miles east, Countyline Cooperative Inc. general manager Marc Schaller has been working the phones, seeking spare corn. Usually, Countyline buys local farmers’ grain after harvest and ships it to feed mills, ethanol plants or other buyers. But with just one-tenth of the anticipated corn crop planted around Pemberville this year, Mr. Schaller has reversed his usual role, calling nearby grain companies for corn that could help cover Countyline’s projected sales to local dairies and cattle producers.
Next door, Frobose Market IGA owner Bob Frobose said shoppers worried the poor crop would drive up prices for the supermarket’s namesake bratwursts and other products. While Mr. Frobose is bracing for his livestock feed costs to jump by 25% this year, he said raising prices risked sending shoppers to chain stores in nearby towns.
“People working in a grocery store don’t think of themselves as having an agriculture job, but they do,” Mr. Frobose said.
At Drewes Farms, 16 miles southwest of Bowling Green, Mark Drewes isn’t sure whether his late-planted crop will yield enough to supply nearby dairies, his customers. “We’re going to need perfect weather to even come close to feeding these cows,” he said.
As the rain came down last spring, Mr. Drewes initially commiserated with other farmers, tipping back beers in machinery sheds. But as the weeks dragged on, he said it stopped being fun. Mr. Drewes withdrew, and started to hate coming to his farm. He began to worry about depression.
Mr. Drewes sat inside his farm office as another rainstorm pelted his pickup outside, he went through his plans. He and his son had been pricing new planters, but instead will invest in more field drainage. He has worked with state agricultural officials to help secure disaster assistance for the area, but he expects the economic fallout to last for years.
“There are no precedents for what’s happening now,” Mr. Drewes said as the rain tapered off and a brilliant rainbow appeared east of his farm. “It’s going to leave scars.”