Inflation is squeezing Americans, and the economic outlook is uncertain. Unsettled times are nothing new for farmers, though. They can look back just a few years to the start of the COVID-19 pandemic to recall some challenging times.
Going into 2020, farmers faced an uphill battle due to a number of circumstances. International trade wars, low commodity prices, and erratic weather patterns caused farmers across the globe to struggle just to get by. And some weren’t able to. In 2019, nearly 600 family farms went bankrupt in the US, almost 100 more than in 2018. Then the COVID-19 pandemic arrived, dramatically shrinking GDP in virtually every part of the world by at least double digits, and sending farmers into an agriculture crisis. “2018 and ’19 were bad, but then we got hit by the virus, and finances got even worse,” says Robb Ewoldt, who farms 1,000 acres in Davenport, Iowa.
Ewoldt ruefully recalls that less than ten years ago, he was sitting pretty, selling soybeans for more than $14 per bushel. But, he says, “we can’t expect to make that kind of income now.” He adds that even if corn were selling for about $4.25 a bushel and soybeans for upwards of $10 a bushel, “we could make it work. We could survive on that.”
But when the virus hit, Ewoldt faced low crop prices. He lost about $1 a bushel for soybeans and 65 cents per bushel for corn. With more than 100 bushels of corn produced per acre and about 60 bushels of soybeans, “that’s a serious loss,” he says.
During uncertain economic periods, farmers have few large pressure valves to open to reduce the financial impact. Part of the reason is that most successful farms practice highly efficient agriculture, and even under the best of circumstances, profit margins can be tight and volatile. Nonetheless, there are a series of potentially beneficial steps that farmers should consider to navigate difficult terrain.
Profit volatility is an inevitable facet of farming. It can’t be entirely eliminated. But by following some practical policies, farmers can reduce its impact and survive even during downturns.