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Rivers and corn are both on the rise in Iowa"Spot price for Sunday deliveries is $7." That was the message I received last weekend from Cargill's corn processing facility in Eddyville, Iowa. The price of corn, and begging to get it on Sunday, reflected how the Father's Day Flood of 2008 has affected the lives of thousands along these swollen Midwestern rivers and the farm fields beyond. I thought I'd moved to the land of milk and honey when I came here four years ago and, in many ways, I have. But the undeniable force of nature is as real here as it is on an Oklahoma farm. The incidence of extreme weather is less in this fertile land between two rivers, but the results are no less catastrophic. We moved into a wet weather pattern at Thanksgiving of last year and it is still with us. The land can only take so much water before it becomes saturated and sheds additional moisture into the streams that empty into the rivers and become floods. The major cities of the state, Des Moines and Cedar Rapids, were built on rivers that served them well but they are now a liability as flood prevention costs millions of dollars and may not protect high value real estate in extremely wet years. The Des Moines River and Raccoon River in Des Moines ran "bank full" last weekend but the city escaped with limited problems. Cedar Rapids did not. The Cedar River rose 11 feet higher than the previous record, breaking levees, flooding miles of homes and businesses. The downtown reminded me of Grand Forks, N.D.,in 1997. In the fields, far from the cities, the problem of too much rain is equally evident. I spent three days last week in a caravan of antique tractors driving through a region of Southeast Iowa. The observations at 11 miles per hour were graphic, as fields of corn and soybeans were short and yellow with some spots eroded and about 10 percent of the land still unplanted. In mid June, this far north, not having a field planted is almost a sin. The result has been a sharp uptrend in prices but great uncertainty as to the size of the crops this fall. Projections from agronomists and interested observers call for a reduction in yield of 20 to 30 percent. Iowa corn yields averaged 178 bushels per acre last year with over 2 billion bushels of total production coming from this state. If that is shaved back by less acres and lower yields, the reduction will be quite significant and the current run up in prices is accurate. The total area affected extends from Minnesota and Wisconsin all the way to Indiana. Roughly defined, that is the majority of the Corn Belt. Farmers have hope and crop insurance. They are weighing their options and talking to their agents. The "prevented planting" option is on the table for corn and becoming much more probable for soybeans. If a man can still be a man without growing a crop, then that will be the outcome. The major U.S. newspapers are having a field day with the news of a smaller corn crop. As ethanol has brought agriculture into the international spotlight, the prospect of a small crop becomes "food scare" journalism for the major dailies. There are other changes that a smaller, more valuable crop is already making but those don't make as fascinating a story for consumers. The pork industry is in fast retreat as are other livestock producers who can't break even with sharply higher inputs. Most of the smaller cattle feedlots are empty and the dairies are evaluating their next move. The ethanol price is linked to the price of gasoline and soybean oil is linked to the price of crude oil. The former remains slightly profitable and the latter has biodiesel refineries using animal fat or shutting down. What is to come? Meteorologists, who didn't predict this weather, are now split on what will happen next. Some are saying the extreme weather will continue with a complete shut off of rain as summer begins and others are calling for an early fall. Hot and dry would be ideal...for a month, and then we'd have to worry about pollination on corn and blooming on soybeans. Meanwhile, the world buys our grain. Prospering economies from the Middle East to the Far East are taking advantage of the cheap dollar and buying millions of tons to raise their standard of living. Underdeveloped regions like the Ukraine are now becoming very attractive for investment in agriculture and importing countries are encouraging expansion of crop production. Next year will see more hectares and greater productivity rising to meet the world demand. I'm getting old enough that I'm a little tired of learning new lessons from Mother Nature and the marketplace, but still they come. This amazing era started in the fall of 2005 but when it ends is anyone's guess. The key to survival in agriculture is in keeping our balance and handling each setback and opportunity--realizing, with some grace and some angst, what we can control and what we can't. 6/23/08 Date: 6/19/08
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