Corn and soybean crop ratings have worsened for seven weeks in a row, and are the lowest recorded since 1988, the agency said. Fifty-five percent of the nation’s pastures and rangeland areas are rated poor or very poor.
Wednesday’s disaster declaration for counties in Indiana, Illinois, Michigan, Wisconsin, Nebraska and Kansas made “all qualified farm operators ...eligible for low-interest emergency loans,” the statement said.
Agriculture Secretary Tom Vilsack said he met with President Obama last week to discuss what the agency could do to help farmers and ranchers. Crop farmers are usually insured against losses, but they often struggle to pay insurance premiums in hard times. Livestock farmers are generally uninsured and rely on loans to cover the loss of animals and the expense of hauling water and feed.
Five days after the meeting, Vilsack announced that the USDA would lower loan interest rates and allow livestock farmers to use more acres in the Conservation Reserve Program for haying and grazing. Also, the USDA planned to encourage crop insurance companies to give farmers a brief grace period for unpaid insurance premiums.
The USDA has designated 1,369 counties in 31 states as disaster areas — 1,234 because of drought. Sixty-seven percent of the nation’s livestock pastures are in areas affected by drought.
Corn feed represents 40 to 50 percent of livestock farmers’ costs. When food for the animals is not available or when the cost is too high, farmers liquidate their stock by selling it for slaughter. The remaining herds become smaller, and prices go up over time, eventually affecting consumers.
“We don’t really consume most corn directly,” said Joe Glauber, the USDA’s chief economist. “It gets in our bellies through livestock.”
Because of the drought and declining inventories of corn and soybeans, food prices could increase as much as 4 percent in 2013, the USDA said Wednesday. On Wednesday, the price of soybeans rose nearly 3 percent, and corn was up 1 percent.
More than half of corn traded worldwide is usually exported from the United States, but this year, livestock farmers, squeezed by drought, are turning to other nations for corn. The National Corn Growers Association said at least one pig-farming conglomerate on the East Coast is importing corn from Brazil.
“It’s really depressing,” said Rick Tolman, chief executive of the association. “It’s not getting better; it’s getting worse.”
Corn farmers are losing their crops to drought and watching their neighbors do the same. “It’s psychologically difficult,” Tolman said.
A corn crop is planted in April and harvested in September and October. But June is a crucial month when corn pollinates and needs rain, which did not come this year. Stalks are deformed and often have no ears or shriveled ears with tiny kernels. Having insurance only eases the pain. Growers normally pay a large deductible, and many can afford to cover only half or two-thirds of their crop.
Because corn yields are much smaller, a bushel sells for a higher price for some farmers, but not most, Tolman said. Most corn growers have already signed contracts to sell at a lower prices because yields were projected to be plentiful in May, which probably would have caused prices to drop.
Tolman looked on the bright side. “We don’t normally have this kind of drought, and hopefully we won’t have one again for a long, long time. Next year, we’ll recover,” he said.