Bad weather and trade war put farmers in quandary

Michael Hirtzer and Shruti Date Singh
Bloomberg News
Davenport, Iowa Mayor Frank Klipsch, left talks to U.S. Sen. Chuck Grassley, R-Iowa, about businesses affected by flooding during a tour of the downtown Friday, May 17, 2019, as rain falls in Davenport, Iowa.

Clay Govier reckons he’ll be kept out of his fields through the Memorial Day weekend as a torrent of rain drenches farms across the U.S. Midwest and Great Plains.

While that may give Govier an unwanted break from fieldwork, the U.S. farmer will be kept busy by a dilemma: He has to consider whether it would prove more profitable to grow corn or switch to soybeans once the downpour abates. Or plant nothing at all and make an insurance claim for his troubles. Adding to the confusion is a lack of clarity over a government aid package for those hurt by the trade war with China.

“That is a bit of a conundrum right now,” Govier said in a telephone interview.

It’s a decision that American farmers will have to make in coming days, after storms battering their fields reduced the planting pace for corn to the slowest on record for this time of year. While the wet weather has pushed up prices of the grain in Chicago to the highest level in a year, that doesn’t mean there will necessarily be a rush of sowing as the sky clears.

The farmers risk missing deadlines specified in crop-insurance policies that pay them in the event of a drop in prices or crop failure. Delayed planting can also cut yields as key grain development phases are pushed into peak summer heat. There’s an old adage that states farmers lose a bushel of corn a day when planting after mid-May.

Another option for farmers is to instead make claims for so-called prevented planting, which pay out those who are unable to sow seeds due to extreme weather.

That is if farmers don’t switch to soybeans, which typically have a shorter growing season that helps minimize the risk the crop won’t be harvested before winter hits. Though soy plantings have also been stalled by the rain, a decision to swap some corn acreage to the oilseed may hinge on the Trump administration’s plan to help farmers hurt by the trade war with China that’s roiled prices.

Government officials were considering payments of $2 per bushel to soybean farmers and 4 cents per bushel to corn farmers, according to two people familiar with the payment levels, who asked not to be identified because the aid plan hasn’t been made public. That could make a switch to the oilseed a good decision for farmers such as Govier.

The outlines of the plan still could change since President Donald Trump can make adjustments any time before it’s officially announced.

The White House will hold meetings on the farm aid on Thursday, according to Press Secretary Sarah Sanders. “We want to make sure that the farmers are being protected as we go through the process of negotiating new trade deals,” Sanders told reporters on Wednesday.