For the second straight year, Louisiana farmers struggled in 2016 as depressed commodity prices continued, compounded by wetter than usual weather conditions and flooding, according to the LSU AgCenter.
“We had infrastructure of these enterprises that were built on $6 corn and $14 soybeans,” says LSU AgCenter Economist Kurt Guidry. “That just doesn’t work with $9 soybeans and $3 corn.”
After several years of relatively high prices, many producers made significant investment in their operations, but the downturn in prices is now causing financial hardships for some. While the weather did not cause the statewide average yield of many crops to drop significantly, the numbers don’t reflect the true picture. Many acres went unharvested because they were in such poor condition, and those acres are not included in yield averages. Some harvested crops had major price reductions because of quality issues.
“A 90-bushel grain sorghum yield looks good on paper,” Guidry says, “but if you can’t sell it because of quality issues, it doesn’t do you any good to harvest 90 bushels.”
And producers shouldn’t expect any relief in terms of commodity prices in the coming year, he adds, making it all the more important for producers to have good yields next year. Guidry believes sugar is the only commodity with a stable price among the major row crops grown in the state.
“We’re going to have to deal with corn in the $3 to $4 range and soybeans in the $9 to $10 range,” he says. “That’s just going to make that recovery much more difficult.”
Declining land values are also a concern in the coming year, Guidry says, noting many farmers have much of their equity in the land they own and farm. While values are not falling as fast as they are in the Midwest, Guidry says it’s something Louisiana farmers should take seriously.
“What we’re seeing is an erosion of equity because of these reductions in land values that impacts farmers’ ability to withstand these hard times,” he says.
The LSU AgCenter has the full story.