Your Reading List

Opinion: Whistling in the low-price dark?

Wheat and American dollars

As we write this column, U.S. farmers are preparing to plant in the face of what looks to be the seventh year of significantly lower prices.

The recent and historic price peak occurred in the 2012 crop marketing year when widespread drought across a significant portion of the Corn Belt resulted in an average corn price of US$6.89 per bushel.

In 2013, we saw a US$2.63-per-bushel decline in corn prices to US$4.46 per bushel. While a price decline in the year after a short-crop is to be expected, a 35.3 per cent price decline is unusual.

The 2014 corn price declined by another 76 cents and was below the cost of production for many farmers. From there the price fell to US$3.61 in 2015 and US$3.36 in 2016 and 2017. The estimated season average price for 2018 currently stands at US$3.60. Most other crops have followed a similar pattern in recent years and U.S. net farm income is down by 46.4 per cent.

Our question is not why farmers are planting despite the low prices. We understand why. Our question was asked by a friend of ours and president of the Nebraska Farmers Union, John Hanson. “Why are farmers so quiet?”

Other than some complaints following the initiation of the trade dispute with China that sent soybean prices tumbling, we have barely heard a public whimper out of farmers.

It wasn’t always this way. In the late 1920s and early 1930s, farmers were in near rebellion as they organized the Farmer’s Holiday Association. In the mid-1950s we saw the development of the National Farmers Organization in response to low milk and livestock prices. 1979 saw farmers drive their tractors across the country to Washington, D.C. for a tractorcade organized by the American Agriculture Movement.

An unusually wet spring in 1983, triggered a strong response from farmers and the government quickly increased the number of acres that farmers were allowed to put into the acreage reduction program. The farm crisis of the mid- to late 1980s with the accompanying increase in the number of farmer suicides resulted in the establishment of farmer hotlines and farm debt mediation programs.

In 1998, the second year of falling prices following the adoption of the 1996 Farm Bill — the “Farm Bill to end all Farm Bills” — Congress approved US$3.057 billion in “market loss payments” for grain, cotton and dairy farmers. This was the first of a series of emergency payments that were made for the 1998-2001 crop marketing years. During one calendar year, Congress approved US$20 billion in emergency payments in response to low farm prices. The Farm Bill was replaced a year early with the 2002 Farm Bill.

So why haven’t we seen a significant response this time? Why are farmers content with an “evolutionary” Farm Bill that will cost a lot and make little difference to the farm economy? Is it because they are so happy with a reduction in regulations that they are willing to whistle in the low-price dark?

We don’t have an answer, but we do know that if the low-price problem is not quickly addressed, we are likely to see a significant increase in the number of commercial-size farmers who will be looking for jobs in town.

About the author



Stories from our other publications