Don't go crazy over corn prices

The high price of corn has many farmers in the Southeast licking their lips, thinking about the high profits. Most likely, 2007 will see a big increase in corn acreage in the South, but whether it will mean across the board wealth for everyone who plants more corn remains to be seen.

A friend of mine, who is a researcher at a respectable land grant university, and as such, begs to remain nameless, pulled a trailer home from work, carrying a small plot tractor and some other equipment. His wife asked why he had the tractor, and just to see what she would say, he said, “I’m going to plant the backyard in corn.”

Having at one time started feeding a hog in the backyard, this wasn’t far enough out of the norm that his wife would immediately catch the joke. She came back with the expected — my kids are not going to play in a corn field in the backyard, how stupid can you be, etc, etc.

Enjoying his verbal upper hand, my friend said, “but honey, I can grow over a hundred bushels of corn on that half acre in the backyard. At $4.20 a bushel, I could make enough money to take us to the beach.”

Without cracking a smile, she said, “plant the front yard, too, I want to go to Hawaii.”

A half acre of corn, even at today’s prices wouldn’t finance much more than a day at the beach, but the euphoria over high grain prices has many fantasizing over blue skies, clear water and record profits.

Corn prices have been this high before, but they have never stayed this high for very long. Most grain dealers expect this trend to carry into 2009, maybe longer. In that period of time, farmers have an opportunity to make some money. In the Southeast, it gives many growers a chance to restore a workable rotation that will make yields of all crops better.

Unfortunately, U.S. farmers are not the only ones who see high corn prices as a chance to make money. Nearly 60 percent of all land farmed in the U.S. is owned by someone other than the farmer. High corn prices for many absentee land owners means higher land rental prices. In other cases, corn prices have caused land owners to demand that growers plant corn.

The high price of corn also means the crop is more valuable, and to get maximum benefit from the crop, growers must put in maximum inputs. Corn is not the only agriculture product that is at near record prices, so are fertilizers and any products made from oil.

And, don’t forget about the higher cost of seed. Whether there is a real shortage of corn seed is not certain. What is certain is that seed will cost a premium price in 2007.

Some farmers contend the biggest benefactors of high corn prices will be the landowner. While many landowners would like to work out reciprocal agreements with farmers to share the risks, providing lower land costs in return for a share of the profit, government programs are set up to hinder, not help, such cooperative arrangements.

Higher value means many of the traditional ‘rules of thumb’ don’t apply so well for corn and other grain crops in 2007. Soybeans, for example, may only need a yield potential of 30 bushels per acre to be valuable enough to spray with preventative fungicides. In the Midwest, many corn growers have said they will spray every acre of corn with fungicides.

Alternative energy is likely to be in the news and on the mind of the American public up until the 2008 presidential elections. Ethanol production from corn is likely to be high among the news topics for candidates.

Keeping a proper perspective on what can and can’t be accomplished with corn as an alternative source to oil for energy may not be high on the agenda of politicians. However, it should be of primary importance to farmers and to the whole agricultural industry, including those who make ethanol.

Making ethanol from corn at $2.80 a bushel is a whole different proposition from making ethanol from corn at $4.20 a bushel. If corn prices continue to rise, making ethanol may not be an option at all.

All in all high corn prices will be good for agriculture. Nationwide, corn acreage estimates range from 85 to 100 million acres for 2007. Though such giddy forecasts are not being made for soybeans and wheat, both crops are expected to benefit from the soaring cost of corn.

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