The primary impact is on crop yields and reduced forage and pasture, which have resulted in higher prices due to shortages of production. They say the higher prices will offset portions of losses, and they calculated prices that were 20% above breakeven prices due to the drought, which they indicated would result in higher, gross revenue consequences. Additionally, they said with 90% of Iowa corn acres and 91% of soybean acres covered by crop insurance the policies covered nearly $14 billion in total liability and will boost farm income.
High grain and hay prices impact the livestock industry negatively, say the economists. With corn and beans being primary components of feed, livestock producer margins will decline as prices rise. But without adequate forage, many other livestock will suffer from herd liquidation where forage is unavailable. The economists say, “One can conclude that animal production in Iowa will decline, though the magnitude of that decline is still unknown, as will be the overall impacts of those reductions to the state’s gross domestic product.”
They also say yield reductions will be felt by orchards and horticultural crop production, but irrigated production may not suffer significantly provided water supplies are sufficient. The non-irrigated crops will realize yield reductions and affect the quality and quantity of those crops.