Heavy rainfall at harvest time this year cost Arkansas soybean farmers at least $77 million, according to agriculture experts with the University of Arkansas.
In late September, with the remnants of Tropical Storm Gordon coming up from the Gulf, parts of east-central and southeast Arkansas received more than 4 inches of rain. Above-normal rainfall continued into October and November, when farmers were trying to harvest their crops, especially soybeans.
The wet conditions delayed harvest and, coupled with warm temperatures, caused "sprouting, mold, stalk rot and lodging, pod splitting and grain shatter," according to a report released by the University of Arkansas System's Division of Agriculture.
Citing estimates from the U.S. Department of Agriculture, the report said the untimely rainfall primarily damaged the quality of soybeans and didn't have a "significant" effect on per-acre yields.
Once harvested, some of the damaged beans saw heavy discounts at delivery to buyers, if they weren't rejected outright.
The UA report put physical damage to soybeans at $56.2 million.
Another $21 million to repair fields will be spent by farmers who sent their combines and grain hoppers into muddy fields to salvage their soybeans, according to the report by Jeremy Ross, a soybean agronomist, and two UA agriculture economists, H. Scott Stiles and K. Bradley Watkins.
Farmers likely won't receive insurance money, because those plans largely cover damage caused by hail or wind, not quality of soybeans, Ross said Monday.
That additional work will be required on 2.6 million acres, or 80 percent of Arkansas' 3.3 million acres of soybeans, before the 2019 crop can be planted, according to the report. The additional tillage will cost about $8 an acre, the report said.
"Virtually every field has rut damage, and each will require one or two additional trips to repair the damage," Ross said. "It all adds up, labor, fuel, and a lot of equipment was put under a lot of stress in that late harvest."
Discounts for quality ranged from 5 cents per bushel to $1.47 per bushel for sales between Sept. 1 and Nov. 28. Those per-bushel discounts amounted to $5.9 million on 73 percent of the state's projected 162.5 million bushels of beans, $23.7 million on 16 percent of the crop, and $26.5 million on the remaining 11 percent. Some beans were sold for less than $7 a bushel, compared with $10 a bushel a little more than a year ago.
"Damage discounts for soybeans are reported to be significantly higher in 2018 relative to 2017," the report said. "It should be noted that there is no single discount table used across the Arkansas soybean markets and many transactions are conducted subject to change to reflect current market conditions."
Arkansas generally has about the nation's 10th largest soybean crop each year, worth about $1.7 billion. By acreage, soybeans are the state's largest crop.
The $77 million tally doesn't include losses sustained through tariffs placed on U.S. soybeans by China during an ongoing trade dispute.
The lack of sales also forced many farmers nationwide to store their crops, resulting in an excess supply, further reducing commodity prices, the report said.
"Many growers indicate they are storing a higher percentage of the 2018 soybean crop for deferred sale," the UA report said. "The motivations to place soybeans in storage vary" but include an assumption that beans could be rejected because of damage or in hopes that commodity prices will improve in the coming weeks or months.
Export sales of soybeans have dropped 32 percent compared with last year, mostly because of the 97 percent cut in sales to China, according to the report. Sales to China dropped from 711.5 million bushels in 2017 to 21.5 million in 2018, the report said. Until this year, China annually bought about $13 billion worth of U.S. soybeans, or 60 percent of the crop.
An increase in sales of soybeans this year to Mexico, Japan, Thailand and Spain hasn't made up the difference.
"In previous years when demand for soybeans was much greater, off-grade beans could be mixed with undamaged soybeans, with the resulting blend sold on the international market as #2 beans," bringing only slight discounts, Ross, Stiles and Bradley wrote. "The current excess of supply of soybeans has greatly curtailed this activity."
In early October, American Farm Bureau President Zippy Duvall told farmers in Woodruff County that they and their colleagues across the nation faced a "perfect storm" this year of low prices, poor weather and a trade war that brought commodity prices even lower.
The USDA also has projected net farm income in the U.S. to fall by almost $10 billion, to $65.7 billion, a 13-percent drop from 2017.
The Trump administration has set aside up to $12 billion to help farmers hurt by the tariffs, though agriculture experts have said that amount likely won't offset the total damages. Those payments are made to farmers only after their crops are harvested. Crops and commodities under the tariff-relief package include soybeans, cotton, corn, certain fruits and vegetables, and beef and hog production.
The full harvest of Arkansas soybeans is still two or three weeks away, Ross said.
"The elephant in the room is tariffs," Ross said. "If we hadn't had those, we wouldn't have had near the problem of getting rid of the beans. There would have been discounts, but the real problem was capacity. Elevators along the [Mississippi] river and in the Gulf got backed up, with no place to sell."
Business on 12/11/2018
Print Headline: State soybean losses at $77 million