Global crop surpluses threaten farmers' incomes

Agro-business companies such as Monsanto use genetic modification to create faster-growing crops and crops that can withstand diseases, resist pests, and grow in historically cold or otherwise inhospitable climates.
By Kathy Fey | Sep 29, 2017
World grain supplies have been running a massive surplus for four years straight, according to USDA data, and agriculture experts worry that the glut will drive down prices will hit the world's farmers hard. Driven in part by high-tech farming innovations and crop breeding, farm production is soaring and end-of-season grain supplies are on track to total 638 million tons in 2016-2017, a historic record, the USDA reported.
"It's somewhat the seed companies' faultthey keep breeding better and better seeds every year," said Jonas Oxgaard, an analyst with investment-management firm Bernstein.
Agro-business companies such as Monsanto use genetic modification to create faster-growing crops and crops that can withstand diseases, resist pests, and grow in historically cold or otherwise inhospitable climates. Monsanto spokespersons said that corn planters in relatively chilly western Canada could multiply to 10 million acres by 2025, which would raise the world corn supply by 1.1 billion bushels, or 3% of current production.
As farms' crop output rises, however, the revenues the farmers earn for their crops falls. U.S. net farm incomes will total $63.4 billion this year, about half of their 2013 total, according to the USDA.
Even the agro-business giants feel the pinch. Monsanto's 2016 profits were its lowest in six years. It agreed to merge last year with Bayer AG to soften the blow.
And the Saskatchewan-based Potash Corp., the world's largest fertilizer company, shed more than 400 jobs last year and saw its U.S.-listed shares plummet by almost half since 2015. The company ended up merging with rival Agrium Inc. Oxgaard expects many more industry consolidations to take place as individual growers and suppliers struggle to not fall behind.

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