It may seem odd, but the condition of the locks and dams on the Upper Mississippi River, the mood of the U.S. Congress and China's willingness to abide by trade agreements may have as much to do with profit potential for Texas corn growers as the local weather forecast.
A comprehensive energy bill, for instance, could provide Texas growers with significant benefits, says Dee Vaughan, Dumas, Texas, farmer and president of the National Corn Growers Association.
“The energy bill is our main focus,” Vaughan said during a recent Texas Commodity Symposium, held in conjunction with the Amarillo Farm Show.
“We had hoped to get a bill passed in November, but it didn't happen. We haven't given up and have been assured by leaders in the U.S. House, the U.S. Senate and by the White House that they will bring the bill back up in January.”
Vaughan said the bill promises much for agriculture. “A comprehensive energy policy should help lower natural gas prices,” he said. “That means lower costs to run irrigation systems and to manufacture fertilizer. We also want to get ethanol included in the bill because that will help corn.”
Vaughan hopes issues surrounding MTBE liability will be ironed out to permit passage of the bill. He says the policy will benefit the nation's farmers as well as Texas growers.
“We are trying to build an ethanol plant in Moore County and are in the final stages. Other areas also are considering ethanol facilities.”
Natural gas price
Lower natural gas prices also would influence the state's corn acreage, currently estimated at about 2 million acres. “The High Plains could increase acreage if natural gas prices decline,” he said.
Vaughan said the condition of dams and locks on the Upper Mississippi may seem irrelevant to Texas grain producers. “But most of the nation's corn grows in the Midwest and moves down the Mississippi, so the price of corn is set in the Midwest. The price in Texas includes the price to ship from the Midwest, since we are grain deficit.
“So, if the price in Illinois is low because antiquated infrastructure makes movement down the Mississippi difficult, the price will be low in Texas and other areas.”
Vaughan said a report from the U.S. Army Corps of Engineers provides an opportunity to “get something done about the problem.”
He hopes Congress acts on the report to pass the Water Resource Development Act. If that happens, renovations will require 20 years.
“The Corn Growers Association has been working on this issue for at least 10 years,” he said.
“Trade also remains a big concern. We hope to get the WTO restarted and we also are interested in regional and bilateral agreements.”
Vaughan said China continues to be a trade catalyst. “They've been in and out of the market, mostly in for the last few years and selling corn at very low prices. They have cut into some traditional U.S. corn markets, South Korea, for instance.”
A poor crop year may turn China into a buyer, he said. “They made a short crop, so we may recapture some of those markets and also sell to China.”
Vaughan expressed concern that U.S. trade negotiators not give away U.S. agriculture. “In the WTO rounds other countries demand that we give up everything but are not willing to give up anything on their side. We can't sacrifice our farm safety net.”
He said trade agreements are mostly positive. “After NAFTA, Mexico became the No. 2 market for U.S. corn. Before, they were far down the list.”
Vaughan said water remains a critical issue for Texas farmers. He's concerned that moving from one basin to another will leave agriculture at a disadvantage. “We have to be conscientious about conserving water, but we also must allow producers to earn a living from their land.”
Vaughan said Texas corn growers are concerned with aflatoxin. “We have spent a lot of money over the past few years to support research into aflatoxin, looking for resistant lines and isolating genes. I hope we will soon remove aflatoxin as a barrier for corn production.
“And we're still defending the Farm Security and Rural Investment Act,” he said. “Payment limitations keep cropping up, but we strongly support keeping the law as it is.”
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