Des Moines Register: Hit by too much rain, then drought, a derecho and the pandemic, Iowa farmers roll into a harvest unlike any before
Des Moines Register
RADCLIFFE, Iowa — On a late September day, Denny Friest deftly reversed the direction of his corn head, spewing out a large knot of tangled, downed stalks that had begun to plug his 8-year-old John Deere combine.
It was a move the 74-year-old had to repeat several times during trips across the 140-acre field, processing the bent and battered corn eight rows at a time.
With the combine limited to traveling only in the direction that the corn had toppled, the derecho-damaged field took Friest and his son, Brent, four days to harvest — more than twice as long as they normally would need. And the yields were often less than half of the 240 bushels per acre they typically see.
It wasn’t the men’s worst field of fallen corn. The Friests stopped combining a field a couple of miles away after the weight of the downed corn damaged the corn head, a costly piece of equipment designed to pull down upright corn stalks and feed them into the combine.
Across Iowa, this year’s harvest is unlike any before, farmers and agricultural experts say: The Aug. 10 derecho’s hurricane-force winds slammed through 14 million Iowa acres, wiping out crops on an estimated 550,000 acres and leaving the rest with varying degrees of damage. In addition, a drought that set in around mid-summer encompassed four-fifths of the state at its peak and still lingers. And the global COVID-19 pandemic disrupted markets that already were reeling from trade wars and a political fight over renewable fuels, an industry that consumes half of Iowa’s corn crop.
Federal assistance is helping farmers through the unprecedented challenges. Last year, Iowa farmers received $2.07 billion to offset trade losses from the U.S. Department of Agriculture, the third-largest amount in 70 years. It was about 7% of Iowa farmers’ nearly $32 billion gross income. Their net income was about $3.3 billion in 2019, USDA data show.
More aid is likely this year after the pandemic caused large disruptions to food production and Americans hunkered down, cutting travel and demand for ethanol and biodiesel made from Iowa corn and soybeans.
Then came the vagaries of nature. After ideal planting weather, Brent Friest said, the crop was hit with too much rain, followed by the drought and derecho.
A crop insurance adjuster told the father-and-son team they could disk under the hardest-hit of the family’s 1,600 acres. But Denny Friest said they will likely harvest the fields, even if it costs them more than it would net in revenue.
“I’m a farmer. I’m here to grow corn,” he said. "It bothers me to disk it under."
‘Way too many friends aren’t feeling good’
USDA officials estimated in September that 550,000 acres of derecho-hit corn will not be harvested this year. The lost acreage likely will grow in October after farmers get a better look at damage, said Iowa Agriculture Secretary Mike Naig.
The damage wasn’t just from the derecho’s winds, which reached 140 mph in places. Iowa farmers already were struggling with a deepening drought that weakened crops, and the storm also hammered many fields with hail.
In addition, Friest said, his crops received too much rain in June. "About 15-20% of the yield loss was to rain. About 15-20% of the loss was to drought. And 10-15-20% was derecho and hail damage," said Friest, who expects to get a decent crop off about a third of his acres.
"I’ve got the good, the bad and the ugly," he said.
Not everyone has suffered. About 65 miles north of Radcliffe near Clear Lake, Brent Renner was combining what could be his best soybeans ever. Renner, 44, said he was a little embarrassed to talk about a potentially bin-busting crop when hundreds of his fellow farmers are struggling to bring in one of their worst.
"I have way too many friends who aren’t feeling good right now," Renner said. "Their harvest is going to look a lot different from mine."
In fact, the growing season initially looked to be one of the best in years for Iowa. Even with reduced yields, a September forecast estimated Iowa farmers would produce 2.48 billion bushels of corn, making it the sixth-largest crop the state has ever produced. At nearly 15 billion bushels, the U.S. is forecast to produce the second-largest corn crop in 154 years of record-keeping, USDA data show.
If Iowa’s expected production holds up, the state will retain its status as the nation’s largest corn producer.
"Before the derecho, and even as the drought was building, we were looking on a national scale at some really large to possibly record-sized crops," said Chad Hart, an Iowa State University economist.
If there was any silver lining to the drought and storm, it was that questions about the Iowa and U.S. crop size helped boost prices, although they’ve begun to retreat.
Even before the natural disasters, the global pandemic had hit Iowa farmers and workers in its meatpacking industry hard. After thousands of Iowa and U.S. meatpacking plant workers became ill with COVID-19, farmers had nowhere to send pigs and other livestock for processing and had to destroy them. Many plants had to shut down operations until increased protections could be put in place.
About 3,640 Iowa packing plant workers have tested positive, and nine have died. Nationally, about 39,000 have tested positive, and 185 have died.
The USDA expects government farm payments nationally to reach a record $37.2 billion this year, mostly to offset the impact of the public health emergency.
Iowa farmers have received $968 million of the USDA’s $10.2 billion in coronavirus assistance so far this year. The bulk of the payments have gone to corn, cattle, hog, soybean and dairy producers. The department in September announced a second round of aid, amounting to as much as $14 billion in the months ahead.
About 95% of Iowa farmers have crop insurance on their corn and soybean acres, but Naig, the state agriculture secretary, said it would likely cover only the cost of production, depending on the level of coverage, leaving little to no profit to sustain their farms and families.
"This is a year of unprecedented challenges," said Naig, who is asking the USDA to also provide farmers with disaster aid.
"This is not a year you’ll thrive," he said. "You just want to bridge through it, and get to 2021."
Modest improvement in profitability ahead?
Paul Erickson, CEO of Conterra Ag Capital, said the West Des Moines lender will add a record $1 billion in loans to farmers this year, mostly throughout the Midwest.
Financially stressed farmers are driving the demand, accounting for about 20% of the new loans, said Erickson, whose company helps struggling growers restructure debt in addition to making more traditional agricultural loans.
Farm loans through Iowa-based banks climbed to $19 billion last year, federal banking data show. Nationally, U.S. farm debt grew to $183 billion. The data excludes loans through the Farm Credit system, a large provider of ag financing, and other lenders.
Altogether, U.S. farm debt is forecast to climb to $434 billion, the highest level since 1981, according to the USDA.
"The increase is being driven by rising real estate debt, which accounts for about 60 percent of total debt," said Carrie Litkowski, a senior USDA economist.
More and more, growers are restructuring debt, using farmland as collateral to survive what has been six years of scarce profits, Erickson said.
Even so, Litkowski said, "the value of farm sector assets still greatly exceeds the value, or the level, of debt." And Erickson said he believes this year could mark a turn in farm profitability, with prices inching higher than the cost of production.
"I’m not at all trying to paint a rosy picture, because that’s just not the case," Erickson said. "But we do see a modest improvement in profitability."
With some higher corn and soybean prices, Renner said strong yields could net a good year financially for some farmers. But, he added: "We’ll need a couple of good years to feel a lot better."
‘You don’t make money on crop insurance’
Even though harvesting the flattened fields is difficult, Denny Friest said his operation may need the grain, both to fill contracts for corn the family has already sold and to feed its hogs.
He hopes he has more corn to sell after filling those needs. "You don’t make any money off of crop insurance," he said.
Friest heard about a central Iowa farmer who will roll and disk flattened corn fields for about $20 an acre. It will cost Friest about $30 an acre to harvest it.
"The economics say to just walk away from it, but it’s hard to do," said Friest, who was raised to waste nothing by parents who lived through the Great Depression.
The Friests plan to reinforce the underside of the corn "snouts," the cones on the combine that lift and feed the stalks into the combine, a rolling processor that separates the corn from the stalk and husks, sending the corn into a large tank and depositing the crop residue in dusty rows behind it.
Even the option of simply disking the damaged corn isn’t without drawbacks, Friest said. Thousands of seeds from the downed corn can pop up in fields next year and compete with new plants for nutrients and water. Farmers will have to kill the so-called "volunteer corn." Anything in the field that’s not the crop is considered a weed, Friest said.
So far, Friest and his son have found no mold-caused aflatoxins in the grain, a real win because they would have a difficult time getting rid of damaged corn that contained the poison. Even if the corn is used to make ethanol, aflatoxins can get concentrated in dried distillers grain, a protein byproduct that’s fed to livestock.
The Friests also have been lucky enough to have places to store their grain. They didn’t lose any of their grain bins to the derecho, and the nearby elevator and feed mill they deliver to were undamaged. Statewide, the derecho damaged or destroyed an estimated 57 million bushels of Iowa grain storage capacity, state agriculture officials estimate, costing $300 million for removal, repairs or replacement and leaving some fields strewn with debris.
Iowans should expect to see more grain piled on the ground for lack of storage, Naig said. And farmers may need to transport grain farther to find storage.
Even with reduced yields, "I suspect we’ll have a shortage" of grain storage space, Naig said.
In 50 years of farming, Denny Friest said, he’s never seen this kind of widespread damage. His farm was on the edge of the derecho and severe drought.
"It could have been worse, but it sure could have been better," he said.