Scott Irwin says agriculture’s fortunes are now tethered more to ethanol than food, making crop growers vulnerable to sharp price swings at filling stations rather than the typically slower cost shifts at grocery stores.
“We’re just experiencing the full brunt of this new source of volatility,” said Irwin, a professor of agricultural and consumer economics. “When food prices were the main trigger, recessionary impacts were much less direct and much more gradual. Now, there’s this new connection through energy costs that immediately gets translated to agriculture.”
Energy demand has sagged amid a global economic meltdown, netting sharply lower prices for crude oil, gasoline and ethanol, a corn-based fuel additive, he said. That, in turn, reduced the amount ethanol producers can pay for corn and still break even, pulling down the market for both corn and other grains that have ridden its coattails since the ethanol boom took hold in 2006.
“The same thing that drove prices up is driving them back down,” said Irwin, who co-wrote a report with economist Darrel Good that is among five by agricultural and consumer economics faculty members on how the financial crisis affects farmers.
Corn prices climbed to nearly $8 a bushel in futures markets this summer amid strong global demand that pushed gasoline to almost $4 a gallon. But pump prices have since tumbled to nearly $2 a gallon as a credit crisis and looming recession put the brakes on driving.
Irwin says corn prices have mirrored that slide, falling to about $4 a bushel. He predicts prices will likely hover there until the economy rebounds from a recession that could be the nation’s deepest since World War II.
“Over the next couple of years, with normal weather around the world, I think we’ll see corn prices ranging between $3.50 and $4 a bushel, closer to the low end with good weather and the high end with bad,” he said. “But with a weather disaster, prices could easily spike to $5 or $6 again.”
Despite the dramatic slide, Irwin says corn prices remain well ahead of the $2.42 a bushel average from 1973 to 2006, when ethanol demand paved the way for two of the most profitable years ever for grain farmers.
“Even if we settle in at $3.50 a bushel for corn, that’s still nearly 50 percent higher than it was for 30 years,” he said.
Irwin says 2008 income will vary widely depending on whether growers locked in prices before markets began turning downward in July. Farmers who sold their crop before the slide could again see record earnings, while those who didn’t might manage small profits or just break even.
But he predicted better-than-expected profits for livestock farmers, thanks to lower feed costs as ethanol scaled down grain prices.
“One of the really interesting things that has happened in the last month-and-a-half is how the relative fortunes of crop and livestock producers have reversed at head-snapping speed,” Irwin said.
Irwin’s report is part of a five-part package developed by U. of I. economists to guide farmers through the recent financial meltdown. Other topics include an analysis of short-term credit, crop insurance, and land rental and lease negotiations.
Jan Dennis | EurekAlert!
Kakao in Monokultur verträgt Trockenheit besser als Kakao in Mischsystemen
18.09.2017 | Georg-August-Universität Göttingen
Ultrasound sensors make forage harvesters more reliable
28.08.2017 | Fraunhofer-Institut für Zerstörungsfreie Prüfverfahren IZFP
Plants and algae use the enzyme Rubisco to fix carbon dioxide, removing it from the atmosphere and converting it into biomass. Algae have figured out a way to increase the efficiency of carbon fixation. They gather most of their Rubisco into a ball-shaped microcompartment called the pyrenoid, which they flood with a high local concentration of carbon dioxide. A team of scientists at Princeton University, the Carnegie Institution for Science, Stanford University and the Max Plank Institute of Biochemistry have unravelled the mysteries of how the pyrenoid is assembled. These insights can help to engineer crops that remove more carbon dioxide from the atmosphere while producing more food.
A warming planet
Our brains house extremely complex neuronal circuits, whose detailed structures are still largely unknown. This is especially true for the so-called cerebral cortex of mammals, where among other things vision, thoughts or spatial orientation are being computed. Here the rules by which nerve cells are connected to each other are only partly understood. A team of scientists around Moritz Helmstaedter at the Frankfiurt Max Planck Institute for Brain Research and Helene Schmidt (Humboldt University in Berlin) have now discovered a surprisingly precise nerve cell connectivity pattern in the part of the cerebral cortex that is responsible for orienting the individual animal or human in space.
The researchers report online in Nature (Schmidt et al., 2017. Axonal synapse sorting in medial entorhinal cortex, DOI: 10.1038/nature24005) that synapses in...
Whispering gallery mode (WGM) resonators are used to make tiny micro-lasers, sensors, switches, routers and other devices. These tiny structures rely on a...
Using ultrafast flashes of laser and x-ray radiation, scientists at the Max Planck Institute of Quantum Optics (Garching, Germany) took snapshots of the briefest electron motion inside a solid material to date. The electron motion lasted only 750 billionths of the billionth of a second before it fainted, setting a new record of human capability to capture ultrafast processes inside solids!
When x-rays shine onto solid materials or large molecules, an electron is pushed away from its original place near the nucleus of the atom, leaving a hole...
For the first time, physicists have successfully imaged spiral magnetic ordering in a multiferroic material. These materials are considered highly promising candidates for future data storage media. The researchers were able to prove their findings using unique quantum sensors that were developed at Basel University and that can analyze electromagnetic fields on the nanometer scale. The results – obtained by scientists from the University of Basel’s Department of Physics, the Swiss Nanoscience Institute, the University of Montpellier and several laboratories from University Paris-Saclay – were recently published in the journal Nature.
Multiferroics are materials that simultaneously react to electric and magnetic fields. These two properties are rarely found together, and their combined...
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