Maryland farmers again facing a bleak season of wilted prices

`Too much grain' being produced in U.S. and rest of the world

Agriculture

July 13, 2000|By Ted Shelsby | Ted Shelsby,SUN STAFF

Bumper crops in the United States and other parts of the world are holding down grain prices for the third consecutive year, raising fears that Maryland could see a serious shakeout of its farms, agriculture officials said yesterday.

"We've got too much grain," said Kevin McNew, an agricultural economist with the University of Maryland, College Park, said after predicting big year-end inventories of corn, soybeans and wheat.

As a result, he sees corn in Maryland selling for slightly more than $2 a bushel, about the same as last year, which was a 20-year low.

"I hate to say it," McNew continued, "but soybeans could be $4 to $4.25 a bushel at harvest time. Wheat will be in the low $2 range."

That is not enough for farmers to pay their bills, according to McNew. "For a farmer to break even, he needs to get $6 a bushel for his soybeans, $2.60 for corn and $3.20 for wheat. Anything less than that and he's losing money," he said.

He said most state grain farmers have not posted a year-end profit since 1996.

The U.S. Department of Agriculture lowered its Midwest price estimates for corn, soybeans and wheat yesterday. The price of corn is expected to be off 10 cents compared with last year and soybean prices are predicted to be 25 cents lower than in 1999.

The price of wheat is expected to be the same as last year.

Farmers won't be the only ones feeling a financial pinch from low grain prices. Taxpayers will share in the burden since the federal government makes subsidy payments to farmers as a result of low commodity prices.

Grain farmers are in line for about $8 billion in government subsidies for last year's crop and another $9 billion for this year's harvest, according to the USDA.

"Things aren't turning around on the supply side, that's for sure," said Larry Salathe, an economist with the USDA. "We've got very good weather, and, unless we get some demand surge, we'll see some low prices for quite a few months."

Federal payments accounted for about 40 percent of Maryland farmer income last year.

McNew said the government subsidies help, but they are not enough to make a farm profitable.

Phil Councell Jr., a grain farmer who plants 750 acres near Easton and is president of the Maryland Grain Producers Association, said this year's crops are doing much better than last year, when corn and soybeans suffered from a serious drought.

He said the federal government needs to stimulate grain exports for prices to return to profitable levels.

Councell also expressed concern about the state's poultry industry. He said that if the poultry producers ever leave the Eastern Shore, corn and soybean prices would drop 40 cents to 50 cents a bushel.

"That's our market," he said of the chicken producers. "If they go, we go."

The Associated Press contributed to this article.

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