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August 12, 2002

Crop estimates point to poor Indiana harvest, experts say

WEST LAFAYETTE, Ind. – Fall harvest might be the poorest in Indiana in years, with projected corn and soybean yields down significantly from record 2001 production, said the state's agricultural statistician and a Purdue University commodities analyst.

Statewide corn yields could be 20 percent lower and soybean yields off 16 percent from averages a year ago, said Ralph Gann, chief statistician of the Indiana Agricultural Statistics Service. Gann's estimates are based on the U.S. Department of Agriculture's August crop report.

Gann, Purdue commodities analyst Chris Hurt and Indiana Lt. Gov. Joe Kernan discussed the USDA report and what is means to Hoosier farmers during a news conference today (Monday, 8/12) at the Indiana State Fair.

"We had a very wet planting season," Gann said. "There was about 400,000 acres of corn that never got planted. There was another 300,000 acres shifted to soybeans. The acreage movement from corn to soybeans has put soybeans ahead of corn in Indiana now, but even with that we have a 7 percent decrease in corn acreage. And now, with the dry weather, we are looking at a corn yield of 124 bushels per acre. That compares with last year's record high of 156 bushels per acre. When you combined the acreage increase with the yield impact, we're looking at a 26 percent or smaller corn crop than what we had last year.

"We did pick up about 90,000 acres of soybeans above last year, and that was from some of the movement from corn to soybeans. Our yield projection is down to 41 bushels per acre, compared to 49 bushels per acre last year. That's a 16 percent decline in yield and that would give us about a 15 percent smaller sized crop."

The 2002 crop got off to a slow start and has never fully recovered, Gann said. An overabundance of rain in April and May delayed planting. Then insufficient rain in June and July left already immature corn and soybean plants stunted and stressed.

Some parts of Indiana are better off than others, Gann said. Generally, crops in west central and northwest counties are in the best condition, with average yields estimated at 140 bushels an acre for corn and 45 bushels an acre for soybeans. Crops in east central, south central and southwest Indiana are among the worst, with projected average per-acre yields of 105 bushels for corn and 35-37 bushels for soybeans.

Forage crops also are in trouble.

"We reduced our alfalfa acreage by about 10 percent," Gann said. "Yield has now been reduced on top of that. We're looking at about 300,000 tons fewer in alfalfa production than last year. That's about a 10 percent reduction – about the amount of forage we carry out in the spring following the winter feeding season."

The USDA report is likely to spark a commodities price rally, but not enough to keep farm incomes from falling, Hurt said.

Hurt predicted average cash prices of $5.60 a bushel for soybeans and $2.50 a bushel for corn, up 57 cents for corn and $1.25 for soybeans.

"What does that mean for Indiana? We're looking at yield reductions in the 15 to 17 percent range on average for corn and 10 to 12 percent on soybeans, but we have prices that are compensating for that – in the 20 to 25 percent range," Hurt said. "That doesn't mean that all the loss of yield will be compensated by higher prices. The reason for that is prices are now high enough that government payments will be considerably lower this year. And it looks like we're going to have lower returns, and those could be in the range of $30 an acre.

"There could be an impact of $300 million to $400 million on Indiana farmers this year. It's going to be a stressful year for farm income."

With grain stocks shrinking, marketing corn and soybeans shortly after harvest may be the best strategy for farmers this fall, Hurt said.

Higher grain prices mean additional production costs for livestock producers, who already are making little money, if any at all, Hurt said. Hog producers could take the biggest hit, with liveweight prices dipping to or near the devastating levels of 1998, he said. Hurt foresees prices in the mid- to high-$20s a hundredweight by late October. At those prices, producers would lose about $25 a head, he said.

Kernan said there are few positives in the USDA report.

"This is a crop report that doesn't have much good news for Indiana," said Kernan, who serves as Indiana's commissioner of agriculture. "We're normally talking about good yields, and this year it seems just the opposite. We're going to see some good pockets of cropland, and the rest of the state is going to be in trouble."

Indiana's crop production estimates mirror those of other Corn Belt states. The USDA projects a national corn crop of 8.9 billion bushels, down 7 percent from 2001. Projected yields will average 125.2 bushels per acre, compared with 138 bushels per acre in 2001.

The U.S. soybean crop is estimated at 2.6 billion bushels, down 9 percent from last year, the USDA reported. Average U.S. yield is projected at 36.5 bushels an acre.

The USDA attributes the smaller U.S. crop to weather-related planting delays and drought conditions in much of the Midwest.

Writer: Steve Leer, (765) 494-8415, sleer@purdue.edu

Sources: Ralph Gann, (765) 494-8371, rgann@nass.usda.gov

Chris Hurt, (765) 494-4273, hurtc@purdue.edu

DeeDee Sigler, communications director, Indiana Office of the Commissioner of Agriculture, (317) 470-7712, dsigler@commerce.state.in.us

Ag Communications: (765) 494-2722; Beth Forbes, bforbes@aes.purdue.edu; http://www.agriculture.purdue.edu/AgComm/public/agnews/

Related Web site:
USDA August Crop Production Report

Purdue News Service: (765) 494-2096; purduenews@purdue.edu


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