John Block Reports from Washington

Hello everybody out there in farm country. This radio commentary is brought to you by the Renewable Fuels Association, Wal-Mart Stores, Monsanto, and John Deere. They are all friends, supporters, and allies of a healthy farm economy and prosperous rural America. Thank you.

And now for today’s commentary—

Get the combine out. Get it ready to go. Harvest is just around the corner. We have work to do and we’re going to do it, but that doesn’t mean we are as confident as we might have been in 2007 or 2008.

Growers east of the Mississippi are worried about frost. The crop was planted late due to a very wet spring. An early frost would be devastating to corn and soybean yields.

Not surprising, we worry about market prices. Corn and wheat are down more than 40% from last year.

The livestock industry is really feeling the pressure. I talked to a dairy farmer from Minnesota last week complaining that his milk prices are almost cut in half from last year. We raise hogs and like most pork producers have lost money on every pig for 2 years. Those hogs don’t smell very good right now. The U.S. Department of Agriculture projects net farm income for 2009 to drop by 33 billion dollars. That is a 38% drop from 2008. Let’s not forget, however, 2008 was a record year.

Last year, all we heard was complaints about corn to ethanol driving up food prices. Now, with food prices moderating, maybe the critics can find something else to complain about.

As we take on the harvest and look to the future under current economic conditions, I expect the ag industry will tighten our belt. Shop for less expensive fertilizer; maybe half the cost of last year. Seeds and chemicals for next year’s crop probably will not come down much. The nation is fighting to shake off a costly recession.

Unless your business is hogs or dairy, I don’t think the ag industry has been pulled into a recession yet. We all know the price swings in farming year to year are severe. It’s like riding a bucking bronco. You are up and then you are down. And I fully expect if we hang in there we will go up again.

We have critical days ahead of us as we keep one eye on the weather channel and the other on the combine. Let’s bring in the harvest.

Until next week, I am John Block from Washington, D.C.