The direct financial impact to North Dakota's farmers due to prevented planted acres this year is estimated to be $1.1 billion. The total loss to the state's economy is projected to be nearly three times more – or about $2.9 billion dollars.
This estimate of the direct impact on farmers is based on the market value of the crops that would have been produced on the 6.3 million acres that the Farm Service Agency says were too wet to plant this year after accounting for multi-peril crop insurance indemnity payments on the prevented planted acres.
The $1.1 billion represents a loss in total revenue, not net farm profit. Producers with prevented planted acres will have significant cost reductions, which partially will offset revenue losses.
However, businesses that sell to or buy from producers will be greatly impacted by the reduced sales of crop inputs, such as seed, fertilizer, pesticides and less grain to merchandise.
"This is money farmers will not have available to spend on farm inputs and personal expenditures," says Dwight Aakre, North Dakota State University economist. "Therefore, the total impact of this loss to the North Dakota economy is considerably larger, at $2.9 billion dollars. This represents the total economic activity that would have been generated in the state's economy if the $1.1 billion of crop production would have occurred."
The direct loss estimate is for prevented planted acreage only. With half of the growing season still ahead, it is too early to estimate yields on crops that did get planted. Most crops in the state were planted later than normal, so yield reductions may result.
"However, at this point in time, the analysis assumed planted acres would produce an average yield," Aakre says. "The excess rain and flooding has impacted pasture and hay land as well but is not included in this analysis. These acres will be added to a final assessment once final acreage reports are known."
North Dakota averaged a little more than 1 million prevented planted acres from 2000 through 2009, so the abnormally wet planting season this year has resulted in 5.2 million more prevented planted acres than normal.
"The location of the prevented planted acres this year is considerably different than previous years," Aakre says. "Historically, the highest prevented planted acreage has been in the northeastern and southeastern crop reporting districts.
In 2011, the majority of the acres are in the northwestern quarter of the state, with 36% of the total in just six counties in the northwestern corner."
The analysis of the he prevent plant situation was completed by Aakre, Andy Swenson, Frayne Olson, Tim Petry and Dean Bangsund from the NDSU Department of Agribusiness and Applied Economics.
Source: NDSU Extension Communications