- The Washington Times - Thursday, September 17, 2009

DES MOINES, Iowa | Darrel McAlexander, who has been farming for 43 years, has never seen his corn crop look so good.

“This is probably the best corn crop I’ve raised,” Mr. McAlexander said from his farm in the southwestern Iowa town of Sidney.

It’s the same across the country as favorable weather has helped farmers produce what could be a huge harvest, with projections calling for 13 billion bushels. That would be just shy of the 13.04 billion bushels harvested in 2007.

The giant crop is good news for farmers and livestock producers, who should benefit from lower feed costs, but it probably won’t make a big difference to the cost of groceries.

Although corn is a key ingredient in countless products, from Coke to corn flakes, most of a product’s cost is tied to labor and transportation, not ingredients, said Kent Thiesse, a farm management analyst and vice president of MinnStar Bank in Lake Crystal, Minn.

“Depending on what you’re looking at on the store shelf, less than 25 percent of the cost goes back to the base product,” Mr. Thiesse said.

Ephraim Liebtag, senior economist with the U.S. Department of Agriculture’s economics research service, agreed.

“The effect of corn changes on retail prices is pretty mild and at this point we don’t see anyone predicting a major swing in corn prices,” Mr. Liebtag said. “If there isn’t a major swing, there is no major impact and the effect will be pretty negligible for the consumer.”

A drop in corn prices is a rare bit of good news for a pork industry that has been battered by expensive feed, a drop in demand because of the recession and unfounded concerns about its product’s safety in the wake of the swine flu outbreak that has prompted other countries to limit imports.

“We have seen, over the past two years, production costs go way up - 70 percent of that is corn and soybean meal, so this would most definitely help pork producers,” said Dave Warner, spokesman for the National Pork Producers Council.

The expected harvest has helped drive down corn prices from about $4.30 a bushel in early July to $3.17. That’s a drop from a peak price of more than $6.80 a bushel in mid-2008 when prices soared because of increases in ethanol production and demands by the livestock industry.

Doug Kleckner, who grows corn on his farm near St. Ansgar in northern Iowa, said the nearly $7 corn is coming back to “haunt us.”

“It was nice for the time being, but it’s driven a lot of our input costs up and now reality has set in - prices have come down but our input costs are still relatively high,” said Mr. Kleckner, 61, who farms on land once owned by his grandfather.

The price decline, coupled with persistent high costs of fuel, fertilizer and equipment, isn’t good news for farmers, but the huge expected yield should ensure this season remains profitable.

Mr. McAlexander, 65, said the weather deserves most of the credit.

“We’ve had ideal weather,” he said. “We got it planted early, around the 12th of April, and we just had a decent growing season.”

Lance Honig, chief of the crops branch at the National Agricultural Statistics Service, said record high yields are forecast for Iowa, Nebraska, South Dakota, Ohio, Kentucky, Pennsylvania and Georgia.

Yields range from 187 bushels per acre in Iowa to 143 bushels an acre in Georgia.

Despite the good news, farmers remain edgy because cool temperatures that have largely helped the crop also have delayed it by a few weeks. That increases dangers of an early frost.

“We’re at the point where it’s the biggest factor and depending on where you’re at, guys are very anxious to see when the first frost occurs,” Mr. Honig said. “I’m sure that’s high on their list of concerns.”

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