‘New normal’ crop prices short lived

Remember just a few years back, when wheat was selling above $9 a bushel, corn was nearing double digits and cotton drove through the mystical dollar-a-pound benchmark faster than a semi-truck on I-40?

Some observers, including some politicians who were working—or putting off working, as it turned out—on the 2012 farm bill, which didn’t materialize until 2014, argued that those high prices would set the new normal.

They assumed that grain prices would remain at those dizzying heights for as far as you can see across the Texas High Plains on a clear, still day—and that, as they say, is a fer piece.

But I heard a lot of farmers and more than a few knowledgeable Extension market experts caution against such pie in the sky notions.

“Nothing threatens high prices like high prices,” some wise observers noted at the time.

But folks in Washington, including those politicians who kept delaying any real efforts at crafting a farm bill, remained unconvinced. It was an easy assumption for folks who don’t understand farmers. Grain and cotton producers tend to plant more of what they can make the most money from, assuming they have the soil and climate to do so.

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Acreage popped. Had it not been for some disastrous weather—historical droughts for four straight years across much of the Southwest and a catastrophic dry spell in the Corn Belt—that clamped down on production, supplies would have stacked up much faster than has been the case.

We still produced a lot of grain and a lot of cotton, a slew of peanuts and plenty of rice. Some analysts predict the U.S. corn crop this year will break records. Cotton acreage is up and production, though still uncertain in some places still under severe drought stress, will be better than for the last few years. And China is sitting on boatloads of cotton that could hit the market at any time.

So the chickens are coming home to roost. Prices have plummeted. Cotton now close to 60 cents a pound, wheat below $6, and corn near $3.50 hardly lives up to what some believed would be “the new normal.” It’s more like back to reality.

Crop production and commodity prices are fickle. Agriculture comes with few guarantees other than hard work, unpredictable weather and markets controlled by someone else.

That’s why they need a reasonable safety net, and that’s what congress should consider every time they take up a bill that affects ag programs, and that’s why agencies that administer programs that provide assistance when prices fall and drought destroys crops should make certain that help is available in a timely manner.

Farmers should at least be able to depend on that.




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