— Drought conditions to the north of Mankato improved in the past week, while south-central and southwestern Minnesota remain in the “abnormally dry” to “moderate drought” range.
The U.S. Drought Monitor this week showed that rains in and to the west of the Twin Cities and up through northeastern and much of southeastern Minnesota have removed drought risk.
Nicollet County and most of Blue Earth County remains abnormally dry, while Brown County and areas to the west and south remain in a moderate drought. Le Sueur and Waseca counties have normal moisture levels.
While crop farmers in the region are being spared the devastating drought that’s gripped most of the Midwest and Corn Belt, hot and dry weather are lessening yield potentials.
And the national drought is laying the groundwork for record-high crop prices that will affect grocery store prices and are pushing livestock producers toward a cliff.
Hog and beef producers are reeling as the drought drives up feed prices.
“It’s not good. People are wondering if they’ll even have enough feed,” said Jim Compart of Compart’s Boar Store near Nicollet.
He is part of the third generation of Comparts operating what is one of the largest family-owned swine genetics business in the Midwest. They also have a Compart Duroc premium pork label.
They raise about 10,000 hogs.
About 75 percent of a hog’s diet is corn. Feed costs to raise a pig have increased $25 per pig since June, Compart said. But the worst is yet to come.
“There will be a $40 to $50 loss per pig by December.”
Besides the normal cost increase in corn that comes from a drought, the pork industry says matters are being made much worse by government mandates and subsidies for the ethanol industry.
About 40 percent of all corn in the U.S. is being used to make ethanol and the amount of ethanol used is effectively mandated by the government. With high corn prices in recent years, ethanol producers have had poor financial results.
“This is a crisis situation. If ethanol producers aren’t making money anyway, don’t have them burn up our food,” Compart said.
“Pork producers aren’t subsidized by the government. So it stings when you’re competing against the ethanol industry, which is subsidized.”
Livestock groups have been calling on the Environmental Protection Agency to provide waivers that would reduce the amount of ethanol required. The requirements are aimed at reducing emissions from vehicles and reducing the dependence on foreign oil.
Since early June, soy meal prices have increased 39 percent and corn 36 percent.
The run-up in feed prices is causing many livestock producers to sell off large parts of their herds. That’s led processing plants to be booked full.
“They’re physically not able to process the hog and beef herd,” Compart said.
The glut of livestock being sold and butchered has temporarily slashed prices producers get, which will temporarily keep prices low in grocery stores.
“A year from now there will be record prices for beef and pork. If you kill off the sow herd, there’ll be a shortage. So the consumers will pay,” Compart said.
He expects to see some producers go under.
“Some producers that have the equity will be able to withstand it, others won’t.”
Far from a good crop
“From the road things look good. But you get in the field, and the corn ears are smaller,” said Wayne Knewtson, who operates Knewtson Soy Products south of Mankato.
“We’re going to need rain to finish the crop. But it will be far from a great or even good crop.”
While some pockets in the Mankato region have received adequate, timely rains, most areas are short of moisture — and it comes at a critical time.
Corn plants already have pollinated and set their ears and kernels. Besides smaller ears, the kernels are also small, a condition that could improve if rains come very soon. But farmers report that many of the kernels are already starting to “dent” — meaning a depression forms on the top of kernel. When the dent sets, there is limited chance for the kernels to grow larger, even if rains fell in a couple of weeks.
Knewtson, whose company sells soybeans to international customers, including in Japan and China, said soybeans in the region also suffered from the hot and dry July.
“They say beans are an August crop,” meaning yields are made depending on the August weather and precipitation, Knewtson said.
“If we get substantial rains soon, it will help. But we’ve gone weeks with hot dry weather when they were flowering and flowering brings pods. The plants just went dormant during flowering; they just didn’t put out any new growth,” Knewtson said.
“So there was about three weeks in the growing season where the plants didn’t do anything.”
As for soybean markets, Knewtson is fairly optimistic about next year because prices will be high and area farmers should have at least some crop to sell.
He said that with crop prices rising, overall demand has slowed. “But the foreign market is still strong, the Asian market has a demand for soy products.”