Low corn prices impact entire Minnesota economy

A story in Sunday’s Star Tribune by Tom Meersman did an excellent job showing what falling corn prices mean for Minnesota’s overall economy.

“A big part of Minnesota’s overall economy is from the outstate that flows through the metro eventually,” said Michael Swanson, agricultural economist for Wells Fargo. “So we better take care of it if we want to have long-term health for a big part of the state.”

Obviously, corn farmers are negatively impacted by low prices, but it’s not all doom and gloom. Prices were good from 2011-13, making it more manageable to weather this year’s price decline.

But if input costs — land rent, fertilizer, seed, etc. — don’t also come down, there could be issues.

“I don’t see this to be a devastating time because we’ve come out of some good years,” said Albert Lea corn farmer Tim Wiersma. “But if [low prices] persist and the costs don’t retract, we could see some exiting of farmers out of the industry,” he said.

Equipment dealers will feel the pinch, too. Farmers won’t be purchasing as many combines and tractors if corn prices are low and costs remain high.

Manufacturers have already noticed the change. Two weeks ago, Deere & Co. announced that it will put more than 600 employees at four locations on indefinite layoff because of weaker demand for its agricultural equipment. Last week the Moline, Ill., company announced another 460 layoffs at its tractor manufacturing plant in Waterloo, Iowa. Deere said it will also introduce “seasonal and inventory adjustment shutdowns and temporary layoffs” at other factories.

You can read the entire Star Tribune story here.