Pain From The Grain: Corn Belt Towns Languish As Prices Drop
DON GONYEA, HOST:
The Department of Agriculture expects farmers nationwide to earn a third less than they did last year. The reason - lower corn prices. Abby Wendle of Tri States Public Radio reports on the ripple effect that's having.
ABBY WENDLE, BYLINE: On a snowy afternoon on a farm in central Illinois, Dan Byers parks his pickup at the end of a dirt road.
DAN BYERS: This is part of what we - what we farm here.
WENDLE: He's looking over some of his fertile land. A few years ago, high grain prices earned farmers here about $400 per acre for their corn and soybean crops. This year, it's possible that every acre Byers farms will cost him $50.
BYERS: It just takes a certain amount of fixed money to put a crop in and adequately, you know, raise it. At today's prices, not much of anything works right now until there's kind of a rebound.
WENDLE: Record corn production with no increase in demand, as well as a leveling-off market for ethanol, have led to the lowest prices in six years. Some farmers won't break even this planting season, which could force them to tap into their savings. That's bad news for towns in the Corn Belt, whose prosperity depends largely on farmers and businesses linked to farming.
Frank Hofreiter owns the New Holland farm equipment dealership in Havana, Ill. When corn prices peaked, Hofreiter sold close to $11 million worth of shiny blue tractors in a single year. He doesn't expect to crack $3 million in 2015.
FRANK HOFREITER: Everybody's just trimming back and not doing much buying on new equipment, especially big, large equipment - anything over $20,000, $30,000.
WENDLE: John Deere, the industry leader, reports sales are down by 40 percent from this time last year. That prompted the company to lay off nearly 2000 workers in recent months, and more cuts could come.
(SOUNDBITE OF BANGING)
WENDLE: Frank Hofreiter hasn't let anyone go yet. The company's machine shop is keeping workers busy.
HOFREITER: And you'll see more when the economy is like this. Guys will spend more for repairs instead of maybe oh, guys, the tractor's got a bad engine. We'll trade it off today and stuff. Well, no, we'll see if we can patch it together and fix it back up.
WENDLE: Todd Schaeffwer owns a bar down the road from the dealership and estimates that three-quarters of his customers work in the farm sector.
TODD SCHAEFFWER: People will probably get laid off. We will have to get back behind the charbroiler, behind the bar. And rather than managing the place, we'll be managing and working it.
WENDLE: Even as grain prices plummet, grain farming isn't getting any cheaper. Land is one of the biggest expenses. Sky-high prices put it out of reach for many farmers, so they rent acreage instead. The rising price of grain pushed rents to unprecedented levels. And even though prices have fallen, many landowners are refusing to lower the rent.
Scott Irwin teaches agricultural marketing at the University of Illinois. He says high rents are forcing some renter farmers to breach their contracts.
SCOTT IRWIN: We're seeing stories of farmers who had signed multiple-year, cash-rent leases at those high rates actually just walking away from the leases this winter.
WENDLE: If corn prices stay low, rents will eventually have to follow. But in the meantime, many farmers are struggling to pay for the rented land. Dan Byers rents some of the land he farms. While his budget's tight, he says he's paying up and staying put.
BYERS: In our situation, we've got some very long-term, you know, relationships. And you don't want to screw those up.
WENDLE: He'll continue to farm even though it's not likely to be profitable. With corn production expected to remain high, the USDA is predicting that prices will continue to fall well into next year. For NPR News, I'm Abby Wendle in Macomb, Ill.
GONYEA: That story comes to us from Harvest Public Media, a reporting collaboration focusing on agriculture and food production. Transcript provided by NPR, Copyright NPR.