It will be weeks before we know the total impact the storms that flooded southern Wisconsin in June will have on everything from corn and soybean prices to feed supply and availability. But one thing is already clear – the impact of the floods will vary widely from farmer to farmer and neighbor to neighbor.
I figure you will find yourself in one of at least seven separate scenarios based on whether you experienced crop damage or not, have dairy or livestock to feed with the crops you grow, whether you grow all of your forages and purchase your corn, or buy all or nearly all of your feed.
Depending on which scenario you fall into will determine whether this is going to be the best year you've ever had farming in your life, the most disastrous year (and perhaps sadly your last year) farming or somewhere in between.
Scenario 1 – If you are a grain farmer and your crops weren't damaged by the heavy rains or flooding the southern half of the state received between June 5 and June 14, then count yourself as one of the lucky ones. Provided you didn't sell all of your crop back in January when corn prices were hovering around $4 a bushel, then 2008 will likely go down as one of the best years of your life. If you locked in corn prices in the $6 to $8 range and soybean prices in the $14 to $15 per bushel range and you have above average to outstanding yields, then run don't walk to a store to buy a new video camera to record that big, beautiful smile that's flashing across your face. After all, how likely is it that you'll ever see a year as good as this again?
Scenario 2 – If you are a grain farmer and your crops were somewhat damaged by the floods, but your yields are good enough to cover your input costs or you had adequate crop insurance that will allow you to eek out a little profit or at least break even, then you fall into this category. 2008 won't be a banner year for you, but look on the bright side, at least it wasn't a disaster either.
Scenario 3 – If you are a grain farmer and your crops were wiped out or you locked in your corn for $4 a bushel and now you have to buy corn and soybeans you don't have at much higher prices to fulfill your contracts, and/or you didn't have adequate crop insurance, then this year could wipe you out and end your farming career. Call your banker and see what you can work out. The government may come through with some grants and/or low-interest loans, but there will no doubt be much paperwork involved and many delays before you see any money. Hopefully you have enough equity built up in your farm to carry you through this horrific year.
Scenario 4 – If you are a dairy or livestock producer and grow your own crops and didn't experience much if any crop damage, then you too are probably having a good year but not quite as good a year as your scenario 1 neighbor. You still likely had to purchase some expensive protein to feed your cattle or hogs which cut into your profits a bit. But overall you can count yourself lucky, too.
Scenario 5 – If you are a dairy or livestock producer and grow your forages and buy your corn, then 2008 will probably be a decent year for you, but not outstanding. The days of being able to buy corn for less than it costs to grow are behind us, at least at the moment. Skyrocketing corn and soybean meal prices likely are cutting into your profits and are making 2008 a less than outstanding year.
Scenario 6 – If you are a dairy or livestock producer who purchases nearly all or most of your feed then this was likely not an easy year for you either unless you were able to work out some good feed buys. While it may not be your best year, it could've been worse. Check out what happened to your scenario 7 neighbor.
Scenario 7 – If you milk cows or raise livestock and grow your own crops and your crops were destroyed or severely damaged by flooding, 2008 is a horrific year for you, too. Especially if you don't have adequate crop insurance. Not only did you have to pay and arm and a leg for fertilizer, seed, fuel, land rent and chemicals this spring, but you didn't get a crop and now you have to go out and buy $8 corn and $400 soybean meal to feed your animals. The government may come though with some assistance -- at least this is an election year -- but don't count on the helping hand they extend to be all that generous or speedy. Call your banker and see what you can work out. The earlier you get the dialogue going, the more options you will have. Hopefully you have enough equity built up in your farm to weather this devastating year.
In this together
I'm not trying to make light of any of the challenges Wisconsin farmers are facing in 2008 and neither should you. This was a year when all farmers really needed to have a good growing season and we needed our neighbors to have good crops too, but that didn't happen. In the end, skyrocketing feed prices, limited feed supplies, and escalating crop input costs will cost us all.
While it's too early to tell for certain, I suspect 2008 will go down as a less than stellar year for the majority of farmers in the Badger state. Fortunately, 2007 was a good year for most farmers and maybe next year will be, too.