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Costs Mount for Farmers and Suppliers Following Unusually Heavy Spring Rains and Flooding

08/07/2019

Flooding coinciding with spring planting impacted suppliers of fertilizer and feed in addition to reducing acreage planted to both soybeans and corn. The Wednesday, July 31st edition of The Wall Street Journal quantifies the impact on suppliers and the grain industry as a result of flooding. In their second quarter report, ADM estimated damage at $65 million as a result of inability to move grain on rivers and from lost export opportunities. Corteva, the agricultural spinoff from the Dow-DuPont merger estimates losses at $300 million from unsold seed and fertilizer. Ingredion, a processor of corn will spend more than $30 million additional to budgeted cost to purchase corn to produce high-fructose syrup and starch.

Values relating to flood losses have not been provided by Bunge, Continental Grain or by Bayer, the acquirer of Monsanto.

Farmers are obviously cutting back on expenditure including tractors and implements with ripple effects through the entire agri-economy of the Midwest. It is expected that the USDA crop insurance program will have to reimburse farmers by over $1 billion with 10 million acres unplanted nationwide.