Iowa farmer Karl Fox is drowning in corn.
Reluctant to sell his harvest at today’s rock-bottom prices, he has stuffed storage bins at his Mitchell County property full and left more corn piled on the ground, covered with a tarp.
He would rather risk potential crop damage from the elements than pay the exorbitant cost of storage elsewhere.
“That’s how poor people do it,” said Fox, who has been farming for 28 years. “You do what you have to do.”
Farmers face similar problems across the globe. World stockpiles of corn and wheat are at record highs. From Iowa to China, years of bumper crops and low prices have overwhelmed storage capacity for basic foodstuffs.
Global stocks of corn, wheat, rice and soybeans combined will hit a record 671.1 million tons going into the next harvest — the third straight year of historically high surplus, according to the U.S. Department of Agriculture.
That’s enough to cover demand from China for about a year.
In the United States, farmers facing a fourth straight year of declining incomes and rising debts are hanging on to grain in the hope of higher prices later. They may be waiting a long time: Market fundamentals appear to be weakening as the world’s top grain producers ponder what to do with so much food.
The persistent glut is a striking contrast from the panic a decade ago, when severe droughts in Russia and the United States sent prices soaring. The shrinking supply forced big importers such as China to enact policies to encourage more domestic production and increase the volume of storage to improve food security.
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China abandoned that policy last year and is now selling off hundreds of millions of tons of old stocks.
Russia, too, is looking at exporting from state-held stockpiles, with storage stuffed after a record harvest in 2016.
A surge of Chinese and Russian exports would put even more downward pressure on prices in an oversupplied global market.
That means U.S. farmers likely will be producing more grain for less money. The USDA forecasts net farm income will fall 8.7 percent this year to $62.3 billion — the lowest level since 2009.
The USDA already expects 2016-17 global harvests to be the highest since its records started in 1960-61 at 340.79 million tons of soybeans, 1.049 billion tons of corn and 751.07 million tons of wheat.
“Nobody is going to cut back,” Fox said. “I have a note at the bank to pay off. I can’t do less.”