Drought Packs Punch On Protein Sector; Feed Prices Destined To Climb

Even with recent rains, ag leaders tell USDA Under Secretary for Farm and Foreign Agricultural Services that Michigan has yield loss.

Published on: Jul 19, 2012

Adding to the frustration for growers is the loss of five disaster programs that expired Sept.30, 2011, increasing the urgency for a new farm bill.

Scuse says, "We need a farm bill and we need one sooner rather than later. We need a livestock indemnity and disaster programs so we can get assistance out in the country. The banking community also needs some certainty."

However, while it's not going to help the livestock industry, Anderson noted a difference from the 1988 disaster --  wider acceptance of crop insurance and the safety net it provides. "For those that didn't have coverage, it's an educational lesson in managing your risk profile."

Another difference is farmers today have stronger balance sheets than they did at that time. "And we have cheap money, and that's the only redeeming part of this scenario, but debt is debt," Anderson says. Interest rates are also lower, he noted, allowing farmers to lower the cost of funds for the expenses they can control.

With exceptions of some pockets that received showers, almost all crops south of I-96 are in trouble, according to Eric Cook from Spartan Insurance, headquartered in Ithaca. "Here in Gratiot County we're in the sweet spot of the state with some great, timely rains that the rest of the state did not receive, but that could change quickly."

To help producers and to get assistance to them, Scuse says USDA has already taken a few steps to streamline the process, including trimming the average 89 days to declare a disaster area by lifting the requirement for a request from the Governor.

"Another problem, and we actually found this last year, is the emergency loan interest rates were higher than those offered through Farm Service Agency. They are now 1% below current loans with a cap of 3.75%," he says.

Scuse also noted that in the past, there was a 25% reduction on rental rates on CRP land being used for hay or graze. The reduction has now been reduced to 10%.