2.1 million farms cover our country’s rural landscapes, and 99 percent of them are family-owned and operated. And now, a growing number of them host wind turbines. Increasingly, the extra income from wind projects helps keep these farms in the family and the family on the farm, even in uncertain times.
Weather, supply, demand, and policy can all affect crop prices. A change in just one of these aspects can increase volatility or influence long-term trends.
Over the past 20 years, agricultural commodity prices have hit both highs and lows. But since 2012, rates have steadily declined due to strong supply and weak demand. Beyond this, more short-term fluctuations due to weather or policy changes add extra layers of uncertainty to a farming family’s income.
This June alone, the total value of the U.S. corn, soybean and wheat crops dropped 10 percent, or roughly $13 billion. Soybean prices have fallen around 18 percent, heading to their lowest point in nearly a decade. A University of Illinois analysisfound that to make a profit on soybeans, farmers must make around $10.05 a bushel for the 2018 harvest. Currently, farmers are getting $8.40. That’s a troubling gap.
Though crop prices have dropped over time, production costs have not, creating tightening profit margins. Volatile commodity prices affect a farmer’s bottom line, putting them at risk for significant debt or even bankruptcy.
After the U.S. announced tariffs on $34 billion of Chinese products this month, China responded with taxes of their own, primarily on agricultural products like pork and soybeans. These are the kinds of goods made by family farmers in America’s heartland.
In 2017, Texas farmers sent $42 billion worth of goods to China. Castro County, in the center of the Texas Panhandle, is a top agricultural producer in the state. Its economy centers on dairies, corn and cotton. Analysis from Moody’s Analytics shows that U.S. tariffs on China could negatively affect nearly 25 percent of Castro County’s GDP.
Fortunately, many farmers in Castro County have a stable cash-crop that is policy and drought resistant. Castro County is ranked sixth in the nation for most megawatts of installed wind capacity and hosts 282 turbines.
Landowners who host one or more of these turbines on their property receive yearly lease payments from wind companies, offering a new source of stable revenue. This passive income source can help keep farms afloat in times like these.
Wind turbines can not only help landowners stay afloat, but also can increase certainty about the future. A 2014 study found that farmers with turbines on their land have invested twice as much in their operations over the past five years as farmers without them. Farmers with turbines are also more likely to believe that their land will stay in their family once they retire.
Dr. Sarah Mills of the University of Michigan’s Gerald R. Ford School of Public Policy also took a look at this question in a paper entitled, “Farming the wind: The impacts of wind energy on farming.”
John Dudley, a Texas farmer said, “It will not change how we operate, it will not change anything about our lives. But it will be an additional income stream that I suspect will be very handy. It will allow the family to have the ranch for a long time.”
Wind power adds a significant economic boost to agricultural America, becoming even more important during uncertain times like these.