Million Dollar Rain

Posted in Farming on Tuesday, July 07, 2015

Million Dollar Rain

The “million dollar rain” did not come this year.  As a result, Eastern Washington car dealers will not sell as many full sized pickups this fall.  A lot of other planned farm expenses will be forgone as well.

I don’t know how long farmers have been saying it, but it is still true, “rain makes grain.”  For as long as I can remember, dryland community wisdom has claimed that a good rain in June, adds a million dollars to the local economy.  Some agricultural economist has probably made a stab at quantifying the economic impact of the presence or absence of June rainfall, but a few million for a well-timed rain is entirely possible.

Spring crops, i.e. spring wheat and barley, legumes, and canola, with their shallow, two to three foot root systems really depend on rainfall in June to reach their full yield potential.  Winter wheat is helped as well, but with its deeper root system (up to six feet), it is a little better off in a dry June.  Still, nothing has been helped by the last few weeks of hot, dry weather. 

When plants are moisture stressed (thirsty plants!), they produce fewer seeds of lower quality.  Some kernels will die and their moisture and nutrients reabsorbed and used by the plant elsewhere.  The surviving kernels will be smaller, lighter, more brittle, and maybe shrunken and shriveled.  When wheat is graded for quality, the graders note the number of shrunken and broken kernels.  

I could spend a lot of time looking at my crops, and evaluating how bad harvest is going to be, but that information isn’t terribly useful at this point in the season.  The same combine that harvests a good crop will harvest a bad one.  Mostly, dryland farmers will simply wait until harvest actually starts to determine how bad the reality is.  In the meantime, though, we adjust our thinking. 

It is obviously not going to be a big crop yield this year, and for some, this may be one of those years when crop insurance settlements make up way too much of our income.  There isn’t going to be any extra income.  It’s time to think about ways to tighten our belts.  Some equipment purchases or planned expenses may be delayed - put off for another, better year.  We buy only absolutely necessary things for the farm.  We cut back on personal expenses.

It also makes us reluctant to forward contract, or sell wheat before it is actually harvested.  If you can sell wheat in March for delivery in August at a price that guarantees a reasonable profit, why wouldn’t you?  Well, for one reason, what if it doesn’t rain in June and we don’t have much of a crop? This time of year, depending on the price trend and world supplies, I often sell a little of my expected crop.  Having already sold some earlier before this dry June became a reality, I’m not selling any more until I know what I actually have.

It is easy to assume that since the crops are suffering, yields will be down, and the price should go up because of scarce supply, but that rarely happens.  Like it or not, we sell into a world market, and if the world thinks there will be plenty of wheat, the price doesn’t go up no matter how little of it I have to sell. Buyers can fill their needs in Australia, Canada, the Black Sea, or South America

Many farmers have operating loans, money borrowed for this year’s crop expenses and/or living expenses.  Sales of this year’s harvest must be applied to pay off those loans.  If there isn’t enough of this year’s crop to pay off the loan, you hope you can borrow enough to grow the next crop and survive till next harvest, next harvest when crops will be better, and prices, higher.  Next year will always be better. Next year will be near perfect.  In the meantime, let’s get this imperfect crop year over with so we can concentrate on the next one.  It will be better.