“Farmers who have survived past cycles and droughts realize that they have to be their own support crew,” said Joe Horner, extension beef and dairy economist for the University of Missouri Extension Commercial Agriculture Program. “Good decisions, disciplined implementation and family support are the keys to survival. Government programs may help around the edges, but don’t bet your business on them.”
During these times all these items must work together. When producers do need to rely on government programs and crop insurance it is important to know how to use these resources effectively.
The government
Most state emergency programs for assisting producers in managing through the drought are administered through their county’s soil and water conservation district, housed at the local U.S. Department of Agriculture office. Horner added that, examples include the emergency well program and cost-share programs to replant drought damaged pastures.
The federal emergency programs are administered through the USDA’s Farm Service Agency. “Currently the expiration of the existing farm bill without any provisions for emergency drought aid has clouded the outlook for any programs that might ease the drought burden for producers,” Horner said. “Producers should stay in touch with their local offices to keep abreast of last minute changes that might assist them.”
The market
Another option that Horner suggested for producers is consulting with their accountants. Due to the drought, there is an option to destock herds and restock in coming years without paying income taxes on the gain.
“Since August 2007, corn has risen from $3.72 per bushel to $8.04 per bushel, a 116 percent increase,” Horner said. “All hay prices have gone from $105 per ton to $140 per ton, a 33 percent increase. Lightweight Feeder calf prices have gone from $1.09 per pound to $1.49 per pound, a 37 percent increase.”
The agricultural markets are more volatile this year than during previous years due to lower stocks of grain and hay. In in the past, reserve feed in storage was available to temper price spikes due to drought. “The market is rationing feedstuffs, using high prices to shrink the nations livestock herds,” he added.
The insurance
If you are producing crops in Missouri without insurance, contact your area crop insurance representatives and find a plan that works for you. Weather disasters in Missouri occur too often to not have insurance.
According to Ray Massey, extension crop economist for the University of Missouri Extension Commercial Agriculture Program, the base insurance price for each crop is set from the average futures price contract during a certain month. “For example, the base insurance price for corn is the average closing price for the December corn futures contract during the month of February; for soybeans, use the November soybean contract during the month of February.”
Spring-planted crops must be insured by March 15 and fall-planted crops must be insured by September 30.
If a crop suffers a loss, the farmer calls the insurance company to send an adjuster. The adjuster can make a determination of loss at that point. “If the farmer accepts the adjusters determination, it is final and the farmer can destroy or harvest the crop before its normal harvesting date,” Massey said. “If the adjuster does not want to make a determination or if the farmer does not agree with the adjuster, all or a portion of the field is left until harvest and the actual harvest is used to determine the amount of damage that the crop sustained.”
If a farmer expects an insurable loss for his crops due to drought, they should begin to preserve records of insufficient soil moisture, rainfall, and etc. “The acceptable records are specified by the Risk Management Agency. Contact your insurance company to find out what records need to be kept and what are acceptable sources of those records.”
