Flooding in the Midwest leads to increased grain prices for Idaho farmers

Posted at 10:16 PM, Aug 27, 2019
and last updated 2019-08-28 00:16:27-04

KUNA, Idaho — Idaho dairies have been facing serious complications from the nation's capitol as well as it's midsection. Two weeks ago we told you about the damage from President Trump's trade war with China. Now, we spoke with farmers who say the Midwestern flooding from earlier this year could create a double whammy for the industry.

The majority of grain used to feed farm animals here in Idaho comes out of the Midwest. So when a wet spring caused record-breaking flooding across the Midwest region, that created a lot of unknowns as far as crops go; increasing corn prices due to a forecasted low supply. But now, dairy farmers say things might be looking up.

“The Midwest is more suited for growing that crop," said Rick Naerebout, CEO of the Idaho Dairymen’s Association.

Flat land and prime soil conditions help give this area of the Midwest better growing conditions for corn. That's the reason why it's called the Corn Belt, and why most of the corn that Idaho farmers use to feed animals comes from the Midwest.

“They can grow it there and transport it here more affordably than what we can grow it here ourselves,” said Naerebout.

So when record-breaking floods plagued the United States Midwest in the spring of 2019, concerns about the supply of this year's corn yield went up.

“That was kind of a shocker, you know, we’re already dealing with tough, uh, tough economics here, um, finances are pretty tight, and then all of a sudden we have a flood in the Midwest,” said Ted Vander Schaaf, an Idaho dairy farmer.

It’s a game of educated guesses. How much yield there will actually be can’t fully be determined until harvest season rolls around.

“To have a lot of unknowns when it comes to what to expect for feed cost over the next year, uh, really adds, adds a level of stress to dairy producers,” said Naerebout.

Ted Vander Schaaf said his corn prices went up by about 20 percent, “My corn prices coming into the farm here, you know, jumped by $50 a ton,” said Vander Schaaf.

And at a time when dairy tariffs are high and rising, money is tight as it is.

“We’re trying to do our own planting at that time, we’ve got, you know, money flying out the door, uh, going to the farm and stuff, and so to throw an extra 20% on the corn bill, you know, there wasn’t a lot of funds for that," said Vander Schaaf.

But for dairy farmers who rely on this crop yield out of the Midwest, a new report by the United States Department of Agriculture suggests there might be a light at the end of this financial tunnel.

“That’s the report that gave us a bit of a surprise showing that there was less impact from that flooding and delayed planting than what the market had initially expected,” said Naerebout.

However, that USDA report is based on surveys and is subject to error, so while corn prices are down for now, Naerebout said actual yield can’t be predicted until harvest. He also said that USDA report is usually fairly accurate, but it's raising confusion with farmers because its data revealed very different data than farmers were predicting.

Naerebout also said it’s not just corn coming out of the Midwest, but corn is the biggest crop commodity which farmers use as an indicator for what overall commodity prices are going to be.