Mother Nature smiled on Georgia grain farmers this year. Not just by sending us favorable weather, but by making growing conditions unfavorable in the Midwest.
"1996 was a good year for all the grains in Georgia -- corn, wheat and soybeans," said George Shumaker, an economist with the University of Georgia Extension Service.
This is the first year farmers are operating under the "Freedom to Farm" bill that allows them to switch to crops that can be more profitable for them. Shumaker said that's allowed them to plant different crops as world market prices have dropped or risen.
A lot of the effect farmers felt was due to a cold, wet spring in the Midwest. That kept those farmers from harvesting their wheat on time and planting corn.
Through 1996, world wheat stocks dropped to a very low level. It became imperative to either grow a very large crop or use less wheat. Because those stocks were so low, prices rose.
Shumaker said the rising wheat prices earlier this year didn't really affect Georgians, though. Local prices dropped near the harvest period. The main grain exporting facility in Savannah closed last year, further depressing prices.
But the prices of retail bread and wheat products remained the same because the wheat value in the product is already quite low.
Worldwide wheat production jumped through the rest of 1996. "In fact, right now there is really an excess of wheat in the market," Shumaker said. That's pushing prices back down.
Georgia farmers grew a very large corn crop. Farmers really had to manage the way they sold their corn, to reduce their risk of getting caught by falling prices, he said.
The near-record crop caused prices to fall sharply during harvest. They dropped from $5.50 per bushel during early spring to about $2.50 per bushel during harvest in September and October.
But that's good news for livestock farmers and retail meat buyers. Lower corn and other feed grain costs help lower the cost of raising beef cattle, hogs and chickens. Lower production costs gradually translate into slight retail price drops.
Other feed grains include soybeans. Georgia farmers are just getting back into growing soybeans. "For many years, other crops such as peanuts, cotton, corn or wheat, were more profitable," Shumaker said. "So farmers grew those instead of soybeans."
New management programs are helping Georgia farmers grow soybeans at profitable levels. They're contributing to the record U.S. soybean exports this year, too.
"Any nation that needs soybeans at this time of year has to come to us to get them," he said.
"Here at the end of 1996, I would expect to see some increase in soybean acres (for 1997)," Shumaker said, "and a slight decline in the corn market."
Current price ratios between soybeans and corn suggest that soybeans are likely to return a greater profit than corn for grain farmers, he said.