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| Drought causes uncertain future |
By: Mary Jean Hall, Press Staff
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Posted: Friday, September 7, 2012 3:32 pm
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The recent drought that Weakley County residents are facing is likely to cause more problems in the future, but there could be a few long-term benefits as well.
According to the United States Department of Agriculture, Weakley County falls into the two highest drought-intensity categories: D3 Drought – Extreme and D4 Drought – Exceptional. In Tennessee, only one and a half percent of the area is experiencing D4 drought conditions, while 12.57 percent is experiencing D3 drought conditions.
While it is easy to see the immediate effects of the drought, many aren’t sure about what is in store for the future. Farmers, producers, and consumers can expect to see slightly higher costs in the future, unless something unexpected occurs.
“Yes, we will see higher prices,” said Dr. Joey Mehlhorn, UT Martin Agricultural Economics Professor. “Not necessarily now, but with the corn crop hit, the cost increase will go into ethanol and grain production, and we will probably see a rise in 2013.”
According to Mehlhorn, with the current situation, residents would likely see a five- to 10-cent increase for bread and other foods.
“There’s no reason to see a huge jump in food prices.”
The drought may not be too bad for some farmers.
“With the drought, it’s making farmers look at new ways of protecting the crops,” said Mehlhorn. “We’re likely to see more producers look at irrigation units for the fields. This would be an immediate effect since it has not been an issue in west Tennessee.”
Some local farmers have been looking into the possibility of buying irrigation units for the crops due to the past few relatively dry years, including Jay Yeargin of Greenfield. Yeargin is a corn, wheat and soybeans row-crop farmer who also runs a beef cattle operation with his father, Ronnie.
Yeargin has been looking into the economic feasibility of purchasing an irrigation unit, but has been held up on the decision due to figuring the size of the field and depth to reach adequate water in Northwest Tennessee.
Farmers and producers could see more competition from overseas as well.
“I can see it being strong,” said Yeargin. “The carry-over supply is very low and there are record sales in grain being exported to China. The demand for meat is high and lots of grain goes to that. As long as the population is growing and the demand for beef is high, I see grain prices staying high, although not necessarily now due to the drought.”
Soybeans are the largest export for the United States and it is unknown how the market will react to the drought. Corn is generally more defined in the market.
For the farmers who do invest in irrigation units, if prices become higher, it would become more feasible to pay for the unit.
According to Mehlhorn, the pressure is on the western agricultural producers where a majority of the crops are irrigated. That pressure comes from the substantial growth in large cities.
“Droughts don’t equally impact all areas of agriculture the same,” said Mehlhorn. “The drought is regional. It depends on when and where it rained.”
“Of course, no one knows the future. We can tell you why it was high or low last year, but not next year.”
Although the probability is high, no one will really know until 2013 how the market will be next year. If there is an increase in the consumer food supply, it’s likely to be within the meats, such as poultry, pork and beef, because of the higher input costs. Other areas in the food supply that are likely to see an increase are anything made with eggs, soybeans and corn.
“Something contrary to the market would have to happen for the prices not to go up. As far as fuel is concerned, consumers are likely to see less corn-based ethanol, which could cause the price to increase.
“The market for ethanol is regulating itself,” said Mehlhorn.
“If prices are too low, ethanol facilities will idle, which helps. Oil is much more in-elastic.
“In the end, the drought is not very good for the area. It wouldn’t be good for the food prices either. It’s these kinds of bad years that make or break a farmer.”
WCP 9.04.12
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