In the past two months, our editorial travels have taken us through the heart of the Corn Belt. Our personal observations match USDA's recent assessment which indicates our nation's corn crop is in critical condition. Not only has dearth of rainful withered plants, but blistering temperatures have expanded the prospects of widespread crop failures.
While the drought's impact will ravage many of us, crop farmers who elected to buy coverage will be somewhat protected by federally supported crop insurance. The same cannot be said for those who feed livestock, even if we raise some of our crops. Not only will many of us have to scramble to secure feed, but we will have to deal with skyrocketing prices once we find it. This will further erode what are already the historically slimmest income over feed cost margins.
Just how bad is it? USDA sharply reduced corn yield estimates by 20 bushels per acre last month. This is the largest mid-season reduction since the drought of 1988. Corn futures have responded swiftly by rushing towards record prices in mid-July with a 29 percent market swing during a three-week window. This is all taking place despite the largest corn acreage in the past 75 years. If the drought ensues, other crops such as soybeans will be affected, as well. Even if we receive a desperately needed rain, prices will remain robust as everyone seeks alternative feeds.
USDA has already declared over 1,000 counties, over one-third of the nation, as natural disaster areas due to drought. This is the biggest declaration ever made by the department. Those numbers will surely rise as dry weather continues allowing more producers to become eligible for low-interest loans to help us survive the drought.
There are some ways to stretch feed supplies. Strong cull cow prices can work to our benefit as cows consume about the same forage regardless of their milk production level. Cull those whose production is slipping and still aren't bred. Those with high somatic cell counts and other health-related issues are also logical candidates.
For those with cropland, the articles on pages 500, 503 and 515 will present some ideas about making the best of the already bad situation.
As each of us consult with our advisors, we must remember not to skimp on rations for our milking herds. In the business of milking cows, quality feed, and plenty of it, still provides the best return for our investment.
This article appears in the August 10, 2012 issue of Hoard's Dairyman on page 504.