Tough times in the heartland as some farmers hit by losses weigh exiting the business


Times are tough in the nation's heartland as farmers struggle with low crop prices for another year.

Farmers are seeing incomes decline, forcing them to cut expenses. Some are even looking for second jobs or to exit ag.

The government is forecasting 2017 will be the fifth-consecutive year of lower corn sales.

And some growers worry next year may bring another year of limited profitability to losses.


Jeff Daniels, CNBC

Dec 27, 2017


Like a lot of corn farmers in America's heartland, Don and Barb Batie in Nebraska are struggling to make ends meet and worry next year may bring another year of limited profitability or even losses.


"The farm crisis in the 1980s was much worse than what we currently have," said Don Batie, a fourth-generation farmer. "But we're headed in the same direction."


The U.S. Department of Agriculture is forecasting that cash receipts for corn and soybean farmers will be down in 2017. Yet it's a different story for some livestock farmers, especially those who raise hogs. Also, cattle feedlots were under pressure but have recovered in the past year.


"If you look at the general economy and the ag economy, they generally kind of historically have run countercyclical to one another," said Curt Hudnutt, Rabobank's St. Louis-based North America's head of rural banking. "While the U.S. economy felt the recession in 2008, we were having record years in agriculture."


Hudnutt said some corn farmers in the Midwest have been experiencing "below break-evens. This is really year three now. We really expect more of the same in 2018. It's not simply a matter of grain prices as it is input costs [such as seed, chemical and fertilizer supplies] are not coming down as quickly as grain prices have fallen."


Overall, crop cash receipts the income from crop sales during the 2017 are forecast to be $189.9 billion, down 2 percent from last year. That would represent the fifth-consecutive year of lower corn receipts, and the total dollar value of the crop is expected to be the lowest number recorded since 2009, according to USDA economist Carrie Litkowski.


Corn represents about 13 percent of total ag commodity receipts in the U.S., ranked second only behind cattle. It is also the main U.S. grain feed, and almost 40 percent of the crop gets used for ethanol.


"A lot of operations are having trouble adjusting to the fact that we had such a tremendous commodity runup from about 2007 to 2013 where there was tremendous margins in the production of corn and soybeans," said Mark Kenney, a farmer in central Iowa. He said some farmers' cost structures shifted along with that runup, and now they're still catching up with lower crop prices.


Analysts say there was a limited time during the year when farmers could have sold corn at profitable levels...


... some in agribusiness still worry about another year of low crop prices and the added uncertainty surrounding the North American Free Trade Agreement between the U.S., Canada and Mexico...