Surging Gas Prices Threaten One Of The Best Years American Farmers Have Ever Had

Sunday, February 26, 2012
By Paul Martin

Tom Polansek

Brian Roach scrawled a simple outlook for corn prices in a spiral notebook, with a line diving from the upper left hand corner to the lower right.

Sitting in a hotel ballroom at the U.S. Department of Agriculture’s annual Agricultural Outlook Forum last week, the commodity broker predicted increasing supplies and weakening demand would slow a boom in the farm economy that has fattened growers’ wallets and pushed up food prices.

“Nothing is telling me to think any different right now,” said Roach, president of the Florida-based commodity business Roach Ag Marketing.

For the first time in years at the conference that traditionally kicks off the year for America’s agri-business sector, forecasters said the seemingly endless upward trajectory on everything from crop prices to farmer income was coming to an end.

The price of corn, the big daddy of the major U.S. crops, could fall 20 percent this year and because of expanding production globally, the corn stockpile would double.

It is a significant shift after corn prices reached a record high near $8 a bushel last summer on concerns about strong demand draining inventories. The surge in prices is expected to encourage an expansion in planting of crops this year.

Farmers are becoming “very pragmatic about the investments they’re making in machinery, equipment and input costs” after spending freely following last autumn’s profitable harvest, said Thomas Dorr, president of the U.S. Grains Council. Many built new storage bins and upgraded their tractors and combines.
Moving forward, “the mood is one of caution,” Dorr said.

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