Farmers seeing steep discounts in prices for their soybeans at grain elevators have little recourse, state agriculture officials said Wednesday.
Heavy and consistent rainfall, especially in eastern Arkansas from September and into November, have kept farmers out of the fields for days at a time, putting them several weeks behind schedule in completing their harvests. The delays have caused beans still in the field to mold or sprout, become discolored or hold too much moisture.
After soybeans are harvested, and if intended for immediate sale, they are trucked to a grain elevator or other buyer where the beans are graded for quality. Damaged beans sell for a lower price. Dockage fees vary among grain buyers and can be levied whether the purchase is by contract or on the cash market.
The dockage fees are taken off a commodity's "basis," which is the difference between the price per bushel set by the Chicago Board of Trade and the price that a grain elevator or other buyer is willing to pay. Several factors go into the basis, including transportation costs, logistics, supply and demand, and inventory of stored crops. Sometimes the basis works out for the positive.
"There's nothing we can do about it as a Plant Board or Agriculture Department," V.O. "Butch" Calhoun, state Plant Board director, said Wednesday during a meeting of the Arkansas Agriculture Board.
Aside from soybeans being rejected at the grain elevator, the worst case he's heard about, Calhoun said, was a farmer who was docked $3 a bushel despite having a pre-harvest contract for more than $9 a bushel.
Calhoun owns farmland that he rents out. "We've gotten hit on every load," he said. "Most of my soybeans were already booked and still got hit 80 cents a bushel."
The dockage fees come at a time of already-low prices for soybeans, brought on in part by a trade dispute between the Trump administration and China, until this year the biggest buyer by far of U.S. soybeans. China added a 25 percent tariff on U.S. soybeans this year, causing prices to drop more than $2 a bushel, from about $10.50 in early March to $8.30 in mid-September. Market prices Wednesday for November beans were $8.67 a bushel.
"Outside of this room, I don't think anyone really understands the damage," said John Lewis, a senior forecaster with the National Weather Service in North Little Rock and recurring visitor to the Agriculture Board's quarterly meetings.
Lewis said cool, wet weather in October was an "agriculture nightmare" in a year that began with a cool planting season in April, unusually high temperatures in May, a drought through some of the summer and heavy rainfall in a warm September.
Sam Angel of Lake Village, a farmer and member of the Agriculture Board, said of farmers' complaints, "They are not denying damage, but they are getting harmed by inconsistencies in grading at the elevators."
Angel said he has seen a wide range of discounts, or penalties, being applied to truckloads of beans from the same field, harvested with the same equipment. "Different prices have been offered from one truckload to the one right behind it with the same crop," he said.
The Agriculture Board is an advisory panel, created in 2005 by the same law that established the Arkansas Agriculture Department.
While Calhoun said little can be done now about the matter, but officials could work with farmers, grain operators and others in coming up with guidelines to assure better consistency in grading at elevators.
In 2009, Mississippi released its "Field Guide to Soybean Damage," a 10-page photo-packed booklet to help farmers and grain elevators better identify damage more consistently. It was developed after complaints of inconsistent grading the year before.
Mark J. Cochran, a board member and vice president for agriculture of the University of Arkansas System's Division of Agriculture, said his scientists and researchers haven't compiled a financial estimate for crop damages this year. "There are no numbers yet, so it's not news now, but it's going to be when the numbers are out," he said.
"The dynamics are such that doing a point-in-time study" wouldn't be relevant until harvest is complete, he said. The poor weather also has hurt hay production and livestock in Arkansas, Cochran said.
According to the U.S. Department of Agriculture's crop progress report for Arkansas, 72 percent of the state's 3.6 million acres of soybeans had been harvested as of Monday. That's well behind the 93 percent rate a year ago and the five-year average of 89 percent. The harvest of Arkansas' 30,000 acres of peanuts also is behind schedule, with 72 percent harvested as of Monday, compared with 93 percent a year ago.
"Rain last week halted harvest for the most part," Mike Andrews, an extension service agent in Randolph County, told the USDA for its weekly report. "A few fields of peanuts and soybeans were harvested. We will need several days of dry conditions before harvest can start back up, but rain is in the forecast."
Business on 11/08/2018
Print Headline: Grading fees ding soybean growers