Drought threatens to drain Rock County's economy
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Corn along Highway 14 is curling and even drying up entirely, due to the lack of rain and high temperatures in the past months.
JANESVILLE — Commuters driving past fields of spiky and dying corn might wonder if the drought will mean higher food prices next year.
What they probably don't ponder is what a partial or total crop failure would do to the local economy.
In the dark days of the Great Recession, deepened locally by the closure of Janesville's GM plant, Rock County agriculture stayed strong.
"Agriculture was the shining star of our local economy when housing and manufacturing were down," said Rene Johnson, vice president of ag lending at Union Bank and Trust, Evansville.
Grain prices were high, and harvests were big.
Farmers, food processors, farm machinery dealers, large animal vets, vegetable growers, grain exporters and many others helped keep the local economic engine turning.
According to the UW Extension, Rock County agriculture:
-- Accounts for $1.45 billion in business sales.
-- Contributes almost $445 million to county's income.
-- Pays almost $37 million in taxes.
-- Provides 6,266 jobs.
-- Accounts for almost 8 percent of the county's income.
The DeLong Company in Clinton, for example, is one of the leading exporters of food grade soybeans to the Pacific Rim.
But the area's reliance on agriculture cuts the other way, too. If the drought reduces the corn harvest to near zero, the local economy will take a big hit.
Hunkering down
How would a bad year of farming impact farmers and local businesses?
"A good economist always says, 'It depends,'" said Steven Deller professor of agriculture and applied economics at the UW-Madison.
For farmers, it depends on their financial position and what they did during the good years. If they saved money or paid down debt, that's a good thing.
The Rebout family, who farm west of Janesville, used those good years to build equity in their business by building new calf and heifer barns. That's a positive step, too, Deller said.
If the year continues to go badly, both businesses related to agriculture and not related to agriculture will feel it.
It's something economists call the "wealth effect," Deller said.
Before the housing market collapsed, people's primary assets were their homes. They used their homes to take out lines of credit, deducting the interest from their income taxes.
But after the collapse of the housing and stock markets, everybody stopped spending, even people who still had jobs, had paid off their homes or were otherwise in a good economic situation.
"That's the wealth effect," Deller said. "People suddenly feel much poorer than they actually might be."
Farmers faced with a poor harvest likely will respond as business owners, as consumers and as family members, he said.
"As a business person, they're going to hunker down," Deller said. "They're not going to build buildings, they're not going to buy equipment."
As farm families, they'll be careful about spending money. Maybe they'll put off buying a used car for a daughter, or hold off on buying a refrigerator or even decide to skip the movies in favor of an evening at home.
Those decisions will trickle through the local economy.
How bad is it?
To recover, crops would need "perfect growing conditions for the rest of the year," Deller said.
Here's the situation:
-- Average rainfall for Rock County in May and June is 7.8 inches. This year, Janesville had 2.5 inches in those two months. Except for localized trace amounts, there's been no rain in July.
-- A series of days with triple-digit temperatures made a bad situation worse.
-- Cows don't like the heat; it makes them uncomfortable and disinclined to eat. As a result, milk production is down significantly.
-- The corn is curled and spiky across the county. In some places, it's dead. In others, it's starting to tassel. Extreme conditions mean pollination will be poor, and corn cobs will produce very few, very small, or no kernels at all.
-- The corn could be cut for silage, but growing conditions mean it will be high in nitrates. Such silage must be mixed with a large number of purchased additives to make it safe for animals.
-- When temperatures return to normal, milk production won't return to previous levels. In addition, dairy and livestock who lost field crops will have to buy feed—and that's going to be expensive.
"For dairy farmers, it's a double whammy," said Johnson. "A lot of land around here goes to cash grains. If that is lost, what are they going to feed their cows? It's going to be one more heavy load on their back."
Help might come from federal government.
"I understand that Gov. Scott Walker is collecting information for disaster relief from the federal government," Deller said. "We're not quite there yet."
Hope for hail
Doug Rebout joked that a hailstorm might be just what his farms need. That's only because his hail insurance provides better coverage that his crop insurance.
Rebout and his family have 2,600 acres of corn, milk 130 cows, and have about 570 other animals including heifers, calves and steers that they finish.
Their fields look bad. The corn has narrowed into green spikes.
Unfortunately, he's already been paid for about half of a corn crop that's unlikely to materialize.
"What we do is we figure we should have about so many bushels and we usually contract about 50 percent of the crop," Rebout said. "We contracted for this fall's crop about a year and a half ago."
That money pays for inputs such as seed, fuel, fertilizer and other chemicals, machinery costs and some labor.
"We have insurance to cover our input costs," Rebout said.
Unless things get better immediately, the farm will lose money this year—even with the insurance.
"It's part of farming, it's part of the business," Rebout said. "We've had some good years. Now we're just going to have to hunker down."
CROP INSURANCE CAN HELP COVER SOME LOSSES
Even farmers with crop insurance won't have complete protection from drought losses.
Farmers can insure 50 to 85 percent of their yields, said Jessica Sarbacker, crop insurance manager for Union Bank and Trust, Evansville. So, even if they carry the maximum amount of insurance, it wouldn't kick in until losses hit 15 percent of last year's yield.
The most common crop insurance policy usually is 70 or 75 percent coverage, Sarbacker said.
Much depends, too, on commodity prices and the type of insurance farmers carry.
For example, revenue insurance is based on the average of corn contract prices during February. Let's say that number is $5.48 a bushel. That's the minimum price farmers are guaranteed for their losses. However, if the average of the futures price in October is $7 a bushel, farmers will receive that.
Yield protection insurance guarantees farmers only the average contract price set in February.
In 2011, about 4.9 million acres of Wisconsin's farm acres were covered by crop insurance.
That works out to about 69 percent of cornfields and 74 percent of soybeans acreage.
Farm lenders always encourage—and sometimes require—crop insurance. Premiums vary from year to year, but this year a 70 percent crop insurance policy would cost about $15 per acre.
On Tuesday, Union Bank and Trust is holding an informational meeting for their customers to educate them about the best way to file claims, when to contact adjusters and marketing during a drought.
"We've been so lucky for so long," Sarbacker said with a sigh. "We just need to do a little education on the issue."
Jul 16, 2012 at 6:33 p.m.
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The story is well written. It is there for all to read. The comment section sometimes goes down the toilet in short order. Sometimes one comment sets the tone for the whole string of comments. I think that is just the way it is, good or bad.
Jul 16, 2012 at 5:43 p.m.
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Bob, Idzerda's story is certainly well written. And your post just as certainly is powerful augmentation to the importance of her story.
As for what happens on the "comments arena" of sites like this: As much as I don't like the wanton paranoia and neurotic disgruntlement of many posters, I've come to realize that those comments are wanted or needed to make sites like this viable for whatever their ultimate purposes are -otherwise there'd be more removals and bannings. Particularly, the more comments there are on a story, the longer it's on the list to attract serious commentators. It's not as though more people will post serious comments if all the screwheads just went away.
As for hostility and anonymity, it's not always a bad thing for hostile exchanges to take place as long as the pitfalls of in-person confrontations are not there. Those pitfalls are absent when hostile exchanges happen on sites like this. It's as though sites like this are a safe place for intense communication. It's the nature of beast. Though, again, some of these people are insufferable. And I dread to think about what local educational institutions are responsible (or blameworthy) for the paucity of critical, articulate thinking on the part of the ignoramuses who comment here.
Anonymity: Non-paid bloggers on this site want to be well-known or famous for merely having opinions -even if some of those opinions are dumb enough to center around urinal etiquette. But, most of the people who comment realize fame for just having some opinions is a computation that severely lacks proportion.
When commenting here, the trick is to join in without assuming the mentality of this site's lowest common denominator. That's not easy. Bloggers as well as reporters and many posters have found it almost impossible to not talk off the point of the story and to not avoid getting just a little angry.
Jul 16, 2012 at 5:16 p.m.
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partarican1-you make a few good points, but the issue isn't about what they planted so much as the weather we are experiencing right now. This drought is rough for everyone, especially those who rely on water for their bread and butter. Of course it would help if we didn't plant everything in corn and soybeans, but that isn't the case right now.
Jul 16, 2012 at 4:05 p.m.
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Well Catherine Idzerda, there must be a few readers out there somewhere that pause to "thoughtfully" ponder your journalistic efforts. But, I suspect they do not wish to participate in a free-for-all of creepy diversionary comment postings. It’s a shame that since the Web began, that the “comments” arena has always been taken over by the anonymous posting rabble wearing cute pseudonyms like badges of honor. And, espousing their rhetorical flatus as if they are on MSNBC, CNN, Current, and FOX News.
People’s lives are being destroyed and we gleefully type posting tripe via anonymity. If you don’t use your real name, what credibility do you really have in anything in life?
Anyway Ms. Idzerda, it is true; the damage to our farms by this once-in-a-hundred-year’s drought is obvious to us all. Unlike however, the usually hidden perils of farming the drive-by commuter never sees – exponentially high insurance costs, high fuel costs; high equipment costs; being your own boss with no back up; sick animals; high veterinarian costs; exorbitant property taxes; on-going building maintenance; high seed costs; long hours; and, just plain back-breaking labor.
And, I might beg the differ with the one observation in the article by an academic suggesting that better weather now might save the day – perennial optimism by professors rarely pays the bills.
We might entertain considering then, that this current drought variable during this economic mess is “the straw that may break the last straw.” And a pretty big and ugly straw it is. Call it the plane crash syndrome. Planes are built to accommodate several setbacks at once – mechanical breakdown, human error, and weather challenges to name but a few. But, sooner or later that one last unexpected glitch may go wrong too…, and down comes the state-of-the-art aircraft with all souls on board.
For some of us, since 2005ish, the economy has never gotten better – only worse. And, the same said “some-of-us bunch” ain’t get’n any younger. Experience with bad times past and current, suggests to we “the-economy-ain’t-never-get'n-better-in-what’s-left-of-our-lifetimes” crowd, that in the very, very, near future, we are all going to have the results of this drought, the enduring crappy economy, and the buffoonery of our perennially impotent elected leaders from both parties…, shoved down our collective throats.
Bob Keith – really sick of the anonymous posting rabble hijacking some semblance of intelligent discussion in America; or, what’s left of it.
Jul 16, 2012 at 3:14 p.m.
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Of course this is Walker's fault! He wants us to be more like Texas...so here we are!
Jul 16, 2012 at 3:09 p.m.
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The only way for Sigma to dig out of the hole he's dug for himself on this site is to claim that he's a put-on.
Jul 16, 2012 at 10:46 a.m.
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Oh, you are putting it in the van.
Jul 16, 2012 at 10:20 a.m.
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primer-the only gas station I use (locally owned and operated) has fuel with up to 10% ethanol....would rather use this blend than 100% gas...my van runs better on it for some reason....
Jul 16, 2012 at 10:17 a.m.
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partarican1 - well said
Jul 16, 2012 at 10:13 a.m.
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I would be careful about consuming ethanol
when driving that van if I were you.
Jul 16, 2012 at 9:59 a.m.
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it's very unfortunate that the weather took a turn for the worse this year, related to farming....but, it's times like this when I have to wonder why we plant crops that are not adapted to this climate and ecosystem? switchgrass and hemp are suited for this climate and ecosystem, and as I look around at the native plants that thrive in this area I notice they are all green and tall and full of life, but these GMO crops fail without human intervention...of course I eat corn in some fashion...I eat meat therefore I ingest corn...I drive my van, so I consume ethanol...I would gladly use 100% ethanol fuel in exchange for giving up using fossil fuel, and I gladly support my local farmer who grazes their cattle instead of feeding them corn (which makes them sick and fat)...Monsanto has all these people convinced their products will save the world, but what they do is destroy the local ecosystems and the local economy...we need to switch back to community supported agriculture, where people grow food crops to support the local community and surplus is banked locally.....we need to STOP GOVERNMENT SUBSIDIES for all commodity crops and fossil fuels...
Jul 16, 2012 at 9:23 a.m.
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Ever hear of sarcasm?
Jul 16, 2012 at 7:39 a.m.
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Wow, this is what happens when you allow computers in the psych ward...
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"foreign born"?? Time for your meds now mooshoo
Jul 16, 2012 at 7:39 a.m.
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Shopiere- I was not referring to your post.
Jul 16, 2012 at 7:05 a.m.
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I would hope that sarcasm is recognizable when it is laid on thick.
Jul 16, 2012 at 6:35 a.m.
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Wow! After looking at the level of paranoia and their ability to connect almost everything to politics. I have now reached a new level of high regard for some of the esteemed posters on this site.
Jul 15, 2012 at 11:02 p.m.
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That's right, MooShoo. And tell them about the Gazette somehow getting hold of one of those Halliburton weather control machines and they created the drought. Then they loan it to the police and the city who messes with it and makes it cloudy getting people's hopes up that it will rain, only to make it clear up again dashing all hopes. It is a conspiracy of monumental proportions.
Jul 15, 2012 at 10:07 p.m.
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rick, feel free to wander off to where ever you like. As the saying goes, don't go away mad...............
Jul 15, 2012 at 9:30 p.m.
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Rick_Raff - this whole site and the whole gazette is sugar coated and one sided. Everything written is dictated by the police, the city, and then jazzed up by the gazette to get your attention. Its sad how far from reality it is and then those of us that point out truth get the comments deleted....lol.
Jul 15, 2012 at 9:23 p.m.
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Help is available. Don't be ashamed to ask for it.
Jul 15, 2012 at 7:41 p.m.
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Rick - "There is nothing left for a rainy day..." Isn't the lack of a "rainy day" the real problem here?
Jul 15, 2012 at 5:50 p.m.
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It was inevitable that the drought would be politicized by morons.
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