2014 brought with it an abundance of grain for Colorado farmers and it doesn’t look likely to change in 2015. While farmers wait for a rebound, the new year could bring substantive policy change.
Great Plains farmers are unlikely to see relief in 2015 from sluggish commodity crop prices, according to Brian Kuehl, director of federal affairs with K-Coe Isom, one of the country’s largest agricultural consulting firms. Kuehl spoke at an economic forecast event in Greeley.
An American rebound from drought, and bumper crops in other parts of the world, have caused a grain glut that has pushed down prices for corn, wheat and soybeans. Farmers are coming off a couple seasons of some of the highest corn prices in years.
“Certainly low commodity prices is the overwhelming story and that’s going to put downward pressure on everything from input prices to land rents,” Kuehl says. “Farmers are going to try to make ends meet if they can. And a lot of them will have trouble making ends meet. We’ll probably see some farmers not able to make it through low commodity prices.”
That means the trend of consolidation of existing farms is likely to continue, Kuehl says. For decades farms have grown larger and more high-tech as farmers attempt to maximize their profits. They do that by buying up more land and expanding their operations.
As always weather could play the biggest role in determining how farmers fare in 2015. Too much or too little precipitation can make or break a farmer’s growing season. Even beyond 2015, Kuehl says climate change will create even more volatility in the farm economy.
“Weather is one of the big wild cards. It was in large measure drought that drove up commodity prices,” Kuehl says. “Many large producers take it as a given that climate change is real and it’s affecting agriculture.”
Agricultural groups have been forming their agendas for the current Congressional session, and Kuehl says some big policy changes could be in the works. In his State of the Union, President Obama made tax reform a priority, pledging to close tax loopholes on the wealthy and lessen the burden on the middle class. Republicans have rejected the idea. Agriculture traditionally has found a special place in the tax code because of the industry’s high volatility and risk, Kuehl says.
“As Congress looks at ways to flatten the tax code, and ‘make it more fair,’ it’s really important that we don’t inadvertently hurt U.S. agriculture,” Kuehl says.