Drought worries increase for Minnesota farmers

Dry weather that has persisted in Minnesota through the fall and winter is raising concerns among farmers about this year's growing season.

Most of the state didn't get significant precipitation before the soil froze, meaning dirt that was already moisture-depleted didn't get the recharge it desperately needs. Drought Monitor, a drought-tracking website, shows that since last fall's harvest, a big chunk of Minnesota has moved from "moderate" drought to "severe."

"It's unusually dry in our area," said Kensington, Minn., farmer Curt Stark, whose land has moved into the "severe" classification. "It's something everybody is kind of nervous about."

Last year, Minnesota corn farmers grew their largest crop ever while a drought in other key corn states shriveled crops and pushed prices above $7 per bushel for the last half of the year.

Currently, all of Minnesota is in at least a moderate drought, according to Drought Monitor, a service of the University of Nebraska, the U.S. Department of Agriculture and the National Oceanic and Atmospheric Administration. The percentage of Minnesota in "extreme" drought — most notably the southwest — has stayed near 25 percent since November, according to Drought Monitor.

Many counties have dried up considerably since then. Earlier this month, 84 percent of Minnesota was classified as in "severe" drought — the ground between "moderate" and "extreme" — compared with around 45 percent in late October.

"Fall and spring are the important recharge periods," said Greg Spoden, the state's climatologist. "So we will be very dependent on abundant spring rains."

"You're going to see production go up, but prices go down, and that will lead to less revenue on corn and soybeans," said Chris Hurt, professor of agricultural economics at Purdue University in Indiana."There is a lot of optimism right now, and I don't know that the optimism is justified given how low prices could go."

Like many Minnesota farmers, Stark received just enough rain in 2012 to score high yields at a time when grain prices were also high.

Stark, who even bought a new cultivator, got another reminder of the golden 2012 this month when his co-op, CHS Inc., unveiled a record annual dividend, $600 million. Thousands of CHS farmer-members like him will get cash payouts.

Last year, "was possibly the best ever since I started farming," said Stark, who's been a tiller since 1993, working a medium-sized farm about 20 miles southwest of Alexandria.

Theresia Gillie, who with her husband, Keith, has been farming since 1986, said 2012 "was one of the best years we ever had." The Gillies, who farm near Hallock in Minnesota's northwestern corner, used some proceeds of the bountiful year to pay down debt.

But across the state, the lack of autumn rainfall came on the heels of a dry summer. Crops in Minnesota prospered anyway by drawing moisture from soil that been stocked by copious spring rains — coupled with a timely summer shower or two.

Winter snowfall in much of the state has been relatively anemic, too. However, snow that accumulates after the ground freezes isn't often a major source of soil moisture replenishment, said Spoden, the climatologist.

"The vast majority of [snow] runs off into the surface water system — lakes, rivers, drainage systems."

Bloomberg News contributed to this report.