Some Farmers Profiting from Drought

In the midst of one of the worst droughts the country has seen in more than fifty years, some corn farmers, despite suffering from the worst of the drought conditions, may profit from the extreme weather.

The current drought, one of the worst in recent memory, is hitting farmers hard. More than two-thirds of the nation is experiencing some form of drought, with one-third experiencing severe to extreme drought. The severe weather comes at a bad time for American farmers, who had hoped to raise the largest corn crop in 80 years this summer.

While the drought has lowered predicted yields below what they’ve been in nearly 20 years (reducing some state’s corn crops to more than 80 percent poor/fair condition), some corn farmers may see increased profits this season.

The reason for the increased profitability is two-fold. With crop insurance programs absorbing the worst of the weather, many farmers will avoid catastrophic losses that could have driven them out of business. Added to this safety net, the lowered yields (along with increased demand in the form of ethanol production), will likely cause corn prices to skyrocket. Already corn has increased to more than $8 a bushel (as compared to $6.20 last year). Even considering the reduced acreage, the increased demand and lowered supply could lead to a major increase of gross revenue per acre (increasing more than $100 per acre from last year).

While these figures are all based on averages and do not take into consideration the broad regional variation in corn production and conditions, these numbers indicate a farm sector that, while taking a beating, is not likely to experience a 1980s style collapse.

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Written by: Justin Ellison / Farm Plus Staff Writer