Minnesota Farmers Union

(December 25, 2009) - This past year has been a challenge as farmers have had to continue to make production and marketing decisions in the turbulence of an economic crisis that burst into view in the last half of 2008 and damaged or destroyed a number of pillars of the US economy. By the first part of 2009, what had been a domestic economic crisis created repercussions in economies around the world

While farmland has maintained its value relative to other sections of the real estate market, farmers who have diversified their holdings to include stocks have seen their net worth fall. Likewise, farm households have not been immune to issues of unemployment among parents and their children.

Added to the dynamics of the economy as a whole, farm households have been subject to their unique set of stressors.

The crop prices that seemed like they were on an ever-rising elevator in mid-2008 have remained well below their peak during the last twelve months. Still, they are well above the prices of the last ten years. At the same time, marked increases in input prices, a rain delayed spring planting, slow crop development, and wet fields at harvest have tested the management skills and patience of most operators.

(June 12, 2009) - In this series of columns we examine the impact of the rapid run-up and subsequent decline of crop prices on various groups, including crop farmers; livestock, dairy and poultry producers; importing countries; and consumers and whether or not a properly managed grain reserve program could have mitigated the problems faced by each of these groups. In this column we look at the ethanol industry as an important cause and casualty of the price bubble.

To some extent the increased use of corn in the production of ethanol can be attributed to changes in agricultural policy in 1996 and the growing scientific consensus on the role of human activity on global warming. The 1996 Farm Bill effectively eliminated the floor on crop prices and, when the universally anticipated structural increases in corn exports did not materialize, allowed grain prices to fall well below the cost of production.

The explanation for the low prices was "over production" even though the year-ending stock-to-use ratio for the years beginning with 1998 was well below historic levels. With significant fixed costs, crop farmers continued to plant their fields to minimize their losses, hoping that a random crop failure somewhere would lift prices to profitable levels.