Timely Topics
By Tom Stanley Extension agent
On Tuesday, Aug. 12, the USDA released updated national corn yield and acreage estimates forecasting a record high yield of 188 bushels per acre nationally. Combined with acreage estimates, this increased the previously forecasted yield by 6%, enough to drive corn prices to historic lows. New crop corn in Harrisonburg can currently be contracted at $4.72 per bushel and, when adjusted for inflation, you have to go back to the mid 1980s to find similarly low relative prices.
Anyone with a knowledge of agricultural history or a memory that stretches back to the 1980s will recall that the 1980s were a period of catastrophic financial and social turmoil in the Corn Belt states. The 1980s certainly proved the adage that “more farmers go bankrupt from abundance than from crop failure” and fears are mounting farmers in the Corn Belt may have a similar experience in the coming 12 to 18 months. An essential difference is land values have buoyed farmer balance sheets in the Midwest and data from the Federal Reserve indicates Corn Belt farmers are going into this period of low prices with generally healthier balance sheets than they had in the 1980s. But just like Rockbridge, Midwest farmers own a lower percentage of their farmed acres and are more dependent on rented land than they were in the 1980s.
What does this mean for Rockbridge County agriculture? As has been covered in this column previously, agricultural interests in Rockbridge often run counter to those of the Midwest. Rockbridge agriculture is centered on livestock and poultry production and low prices for corn and soybeans are helpful to these industries. The current low corn prices coincidentally are occurring during a period of very high cattle prices. Locally, hay inventories have rebounded from 2023 and 2024 when drought impacted hay production. So, the agriculture situation is pretty good for most Rockbridge farmers except for the few that depend heavily on the sale of corn or soybeans.
Where to from here? One does not have to go back too far to find a cautionary tale for Rockbridge farmers from the agriculture markets. Corn and soybean prices surged as the world economy emerged from the pandemic and Russia launched its war on Ukraine. Midwest land rental rates surged with the corn price as farmers sought to plant more acres and nonfarming investors bought up Midwest cropland. Rockbridge stockmen may be experiencing a similar temptation today to secure additional pasture or hay land to support cattle production. But the management of breeding livestock and the resources to support them are far less elastic than grain production. By this I mean the young heifer bred to produce a new calf in 2026 is a financial commitment that cannot be ‘switched off’ like a decision to forego planting an additional 20 acres of corn. As covered in a July series of this column, the current times of profitability for Rockbridge farmers is an opportunity to make investments that lower long-run costs and have the “longview” in mind.
For more information on decisions impacting cost of production for a farm contact the Rockbridge Extension office at (540) 463-4734 or by e-mail, [email protected]
