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Missouri Corn Growers: Input implicationsMCGA President Mike Geske shares his thoughts on the implications higher input costs are having on the current and future corn market Missouri Though Missouri's corn growers have worked hard to successfully create new markets for corn, it seems that many people outside of the industry are wishing the days of two dollar corn would return. These hopefuls often blame ethanol for increased corn prices. However with or without ethanol, the future doesn't appear to favor prices returning to previous levels. Input dynamics have shifted dramatically over the last 12 to 24 months, altering the market with them. As you well know, corn farmer's price of production has skyrocketed over the last two years. Diesel fuel has risen dramatically. Fertilizer has more than doubled in the last 18 months. Seed and chemical prices are on the rise as well as machinery costs. Land costs are increasing. In such a changing environment, we have faced a paradigm shift. Cheap corn used to be $2. I believe $3.50 is the new "cheap" corn. Where farmers used to look at corn topping the $3 mark as a great year, surviving at $3.50 corn is quickly approaching the impossible. Just last week I was forced to replace a thin, very small piece of sheet metal that closes the clean grain elevator on my combine. It cost $150. If corn was at $3.50, it would have taken nearly 43 bushels of corn to pay for that small piece of combine. To replace a plastic snout on a corn header takes 80 bushels. To fill a pickup, and a small one at that, would take at least 20 bushels. Corn at $3.50 is a very cheap product, especially considering the average food product has less than a penny's worth of corn in it. It was only a couple years ago that some people were buying furnaces that burned corn to heat their shops or homes. The economics of that would probably be as favorable with $3.50 corn and oil at $150 per barrel as it was then. Furthermore, returning to $3.50 corn, let alone those dreaming of $2 corn would automatically ensure a shortage of the crop. Farmers cannot profitably produce corn for that price. Many of the same people that are wishing for cheaper corn are the same people that bitterly complained whenever corn farmers were depending on government subsidies to stay in business. They just didn't realize that they, as corn consumers, were being subsidized as well. For those corn customers looking for the old days of $2 corn, painful realities are setting in as we move into a new market realm. Corn growers continue to work hard to expand markets and stay profitable. Industries relying on the so-called "cheap corn" to be profitable will have to undergo an economic readjustment of their own in order to compete in today's marketplace. Or pray for a return to $10 to $30 per barrel oil. 10/20/08 Date: 10/16/08 Advertisement
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