A healthy crop, coupled with high prices, should mean a strong year for Minnesota's agricultural economy.
In much of the Midwest this year, farmers have harvested the equivalent of burnt toast. In Minnesota, more than 90 percent of the state is suffering from at least moderate drought, and some areas are scorched.
Yet as the state's earliest harvest in decades closes this month, many Minnesota farmers are smiling. The worst U.S. drought since at least 1988 decimated corn and soybean fields in other states, but both crops are at least respectable here, even in the thirstiest parts of the state.
"We have been blessed this year," said Tom Neher, vice president for grain at Mankato-based AgStar Financial Services, a farm lender. The state's corn crop is the best in the U.S. Corn Belt.
Meanwhile, spring wheat and sugar beet farmers have had banner years, even though their main turf -- northwestern Minnesota -- has been particularly parched. To top it off, prices for corn, soybeans and wheat have been rich, pushed up by supply fears created by the national drought.
Minnesota lucked out because copious spring rains saturated much of the state's soil enough to provide a reserve for the hot, dry summer. But that reserve has been sucked dry, and the state dearly needs precipitation to replenish the soil.
"My biggest concern is, what kind of moisture do we get between now and next April?" Neher said.
For now, the relatively strong harvest here and in North Dakota is a boon to both states' economies, said Joe Mahon, an economist with the Federal Reserve Bank of Minneapolis.
High grain prices have hurt livestock and biofuel producers by raising their input costs. But Minnesota crop farmers' income should generally be robust, reverberating through the agricultural economy, from machinery dealers to fertilizer wholesalers.
The Upper Midwest's strong crop farming sector is a reason the region's overall economy has been doing better than the national economy, Mahon said.
An early spring planting, coupled with the dry summer and fall, has farmers finishing up at least two weeks early. Corn matured faster than normal, and the crispy fields are free of mud. "This is a flash harvest," Neher said.
Fifty-three percent of the state's corn crop was harvested as of Sept. 30, well ahead of the five-year average of 5 percent, according to the U.S. Department of Agriculture.
As for soybeans, 76 percent of the state's crop had been hauled in by Sept. 30, compared with a five-year average of 24 percent. Minnesota is among the nation's top four states for both corn and soybean production.
Minnesota's corn yield is expected to be on par with 2011's yield, and production is forecast to be 7 percent higher, as farmers planted more of the grain this year. Nationally, corn production and yields are expected to sink 13 percent and 17 percent, respectively, according to the USDA.
The situation is similar in soybeans, with yields and production falling nationally around 15 percent, but only marginally in Minnesota. The weak crops nationally have pushed up prices, much to the advantage of farmers with a good harvest.
Corn, which fell to nearly $5 a bushel this spring on the Chicago Board of Trade, soared to more than $8 a bushel in August, and is now at about $7.50. Soybeans, trading around $13 a bushel this spring, hit a record of nearly $18 in early September, then falling back to just over $15.
"The loss in other parts of the corn belt have been to the gain of producers in Minnesota and North Dakota," Mahon said. "It's been a windfall."
Tom Haag, a farmer near Eden Valley in central Minnesota, wasn't even ruing the recent decline in prices, given the plight of livestock producers. "We're happy with where [prices] are right now."
Ample spring rains and showers at a critical time in mid-July set up his crop for the rest of the season. He expects a corn yield of 180 bushels per acre, above the norm of about 140 bushels in his area, and higher than the 156 bushels estimated for Minnesota on average this year. "It's about as good as it gets," said Haag, who is also this year's president of the Minnesota Corn Growers Association.
The drought hit parts of the state's southwest hard: Some fields were wiped out. Liz Stahl, a crop educator for University of Minnesota Extension in the southwest, said farms with lighter, sandier soils got hit the worst.
Still, some farmers in the southwest had crops as good as those in Haag's neck of the woods. "If you got timely rain, that could make all the difference in the world," Stahl said. "I think people have been pleasantly surprised at how things have turned out."
Gene Stoel, a corn and soybean farmer near Lake Wilson, is one of them. "I'm amazed we're getting as much as we have," said Stoel.
He's expecting corn yields of about 140 bushels per acre. That's 15 to 20 percent below his historic norm, but good enough that he won't need to make a crop insurance claim. "Without those heavy May rains, we would have been in big trouble," he said.
Northwestern Minnesota, a hub for spring wheat and sugar beets, was also particularly dry this year. Yet the beet harvest, now in full swing, is expected to be 40 percent bigger than in 2011, and the USDA has forecast record yields. Minnesota is the nation's leading sugar beet producer.
The state is the second largest U.S. spring wheat grower, and production of that crop was up 8 percent this year -- even though farmers planted significantly less of it, opting for more lucrative corn. The higher wheat output stemmed from a big jump in yields.
"Everyone was pessimistic, but the harvest was way better than anyone expected," said Dave Torgerson, executive director of the Minnesota Association of Wheat Growers. As with other crops, an early planting coupled with soil-soaking spring rain did the trick. "The plants really tapped out the moisture in the fields," Torgerson said.
Soil across Minnesota is tapped out; rain is needed now for the 2013 crop. "The top three feet of soil is essentially dust," said Greg Spoden, Minnesota's state climatologist. "We desperately need a fall recharge."
September and October are critical months, as dry dirt acts as a sponge for good strong rains. Once the ground freezes, it doesn't absorb water as well, though a snowy winter would help when spring's thaw arrives.
Precipitation gauges barely registered statewide in September, and October has so far been mostly arid. "Mother Nature has not offered us anything," Spoden said.
Mike Hughlett • 612-673-7003