A year that started with such promise for poultry producers now has some ominous dark clouds hanging over it, and they aren’t the kind of clouds that bring rain. With the largest number of acres planted in corn since World War II, an early start to planting throughout much of the Corn Belt, and some anticipation that we wouldn’t have yet another year with below trend line yields, analysts were predicting easing corn prices for this year and into next. But, those predictions always came with the caveat that a drought could change everything.

Unfortunately, it looks like we have a drought across much of the Midwest, and the corn crop will likely not be large enough to lower prices. Dr. Thomas Elam, consulting economist, FarmEcon LLC, told the audience at the National Turkey Federation’s Leadership Conference in early July that the corn crop in Indiana, his home state, has been particularly hard-hit by the lack of rain and high temperatures. He said that the drought could be the worst the U.S. has experienced in terms of the negative impact on corn yields in a couple of decades.

“If you go back to 1988 and look at what happened then and in 1983, those are the kind of reductions that we are going to see in (crop) yield,” Elam said. “I am guessing that yields will be well under last year, and last year wasn’t super. I wouldn’t be surprised to see yield at or slightly below 140 bushels per acre.” He explained that much of the crop damage is irreversible. “Corn stalks that are brown in July don’t give you much corn,” Elam said.

Waiver

A broad coalition of energy companies, food companies, and poultry and livestock producers continues to ask the U.S. Environmental Protection Agency to grant a waiver of the Renewable Fuel Standard because of the tight corn supply. The ability to grant a waiver was included in the legislation, which set the Renewable Fuel Standard, but Environmental Protection Agency has yet to grant a waiver.

Representative Robert Goodlatte from Virginia is championing a proposal to put the Renewable Fuel Standard on a sliding scale based on the corn stocks-to-use ratio. The best option for the nation would be for crop support programs to be separated from energy policy, and for renewable fuels and green energy mandates to be eliminated. Goodlatte’s plan offers a compromise between the current unworkable situation and just letting free markets sort out the winners and losers. I prefer the free market approach, but this may not be politically doable at this time; if it isn’t, I support the Goodlatte proposal.