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Reduced Yields Will Affect Commodity Groups

TAGS: Soybeans
Reduced Yields Will Affect Commodity Groups
Some groups will bring in fewer checkoff dollars this year.

There is yet another unintended consequence of the drought. Reduced yields will mean less income for commodity groups. It may cause them to rethink and adjust budgets, sources say. The effect won't be the same on each group.

The group in Indiana that stands to see the biggest drop in annual income is the Indiana Corn Marketing Council. Based on legislation passed within the last decade, the Council receives a half-cent per bushel for every bushel of corn sold. Their income comes in quarterly from the first point of sale, primarily grain elevators.

LESS CORN: Ears like this won't turn out the 160 bushel per acre trend yield that generates revenue for the Indiana Corn Marketing Council. Funds could be reduced this year.

With the Indiana corn yield projected at 100 bushels per acre and the trend above 160 bushels per acre, that could mean a big drop in what's realized vs. what's actually received this year. Farmers will have crop insurance in many cases to help recover dollars, but crop insurance won't help the Corn Marketing Council.

Word is that the Council is already meeting and looking at ways to trim budgets if the actual shortfall materializes. Inside sources are confident that the Council can maintain the major research projects it funds, with some tweaking of other efforts.

The situation is somewhat different for the Indiana Soybean Alliance. Their funds come from a national check-off that's based on percent of price, not a set amount per bushel. With soybean prices rising, the amount collected per bushel will increase.

The other mitigating factor for soybeans is that it appears yields won't be hit as hard as for corn, especially in Indiana. Late rains may strengthen yields for later season soybeans that were still podding when rains came.

The two groups in Indiana work together on some projects. It's likely both boards will be involved in deciding which efforts they can continue, and if there are any efforts that must be curtailed until revenues improve.

It's not a matter of farmers not contributing to the corn checkoff. Contributions continue to be strong and the request for refund rate low, sources say. It's just a matter of reduced bushels meaning less income this year. Stay tuned for more in-depth coverage on this issue once it's clearer exactly how corn yields will fare in Indiana.

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