ST LOUIS, Missouri — (DMN/CBS News) – More than half of U.S. counties that stretch from Nevada to the Midwest to the Southeast were added Wednesday to the U.S. government’s list of natural disaster areas as the nation’s agriculture chief unveiled new help for frustrated, cash-strapped farmers and ranchers grappling with extreme dryness and heat. The U.S. Department of Agriculture’s addition of the 218 counties in drought-stricken states means that more than half of all U.S. counties – 1,584 in 32 states – have been designated primary disaster areas this growing season, the vast majority of them mired in a drought that’s considered the worst in decades.
Counties in Arkansas, Georgia, Iowa, Illinois, Indiana, Kansas, Mississippi, Nebraska, Oklahoma, South Dakota, Tennessee and Wyoming were included in Wednesday’s announcement. The USDA uses the weekly U.S. Drought Monitor to help decide which counties to deem disaster areas, which makes farmers and ranchers eligible for federal aid, including low-interest emergency loans. To help ease the burden on America’s farms, Agriculture Secretary Tom Vilsack on Thursday opened up 3.8 million acres of conservation land for ranchers to use for haying and grazing. Under that conservation program, farmers have been paid to take land out of production to ward against erosion and create wildlife habitat. “The assistance announced today will help U.S. livestock producers dealing with climbing feed prices, critical shortages of hay and deteriorating pasturelands,” Vilsack said.
Vilsack also said crop insurers have agreed to provide farmers facing cash-flow issues a penalty-free, 30-day grace period on premiums in 2012. As of this week, nearly half of the U.S. corn crop was rated poor to very poor, according to the USDA’s National Agricultural Statistics Service. About 37 percent of the U.S. soybeans were lumped into that category, while nearly three-quarters of U.S. cattle acreage is in drought-affected areas, the survey showed. The potential financial fallout in the nation’s midsection appears to be intensifying. The latest weekly Mid-America Business Conditions Index, released Wednesday, showed that the ongoing drought and global economic turmoil is hurting business in nine Midwest and Plains states, boosting worries about the prospect of another recession, according to the report.
Creighton University economist Ernie Goss, who oversees the index, said the drought will hurt farm income while the strengthening dollar hinders exports, meaning two of the most important positive factors in the region’s economy are being undermined. While drought conditions are hammering agriculture in a swath of the U.S., but an analyst says it could be good for business at Lindsay Corp., which makes irrigation systems. Janney Capital Markets analyst Ryan M. Connors said Tuesday that severe drought like that affecting the Midwest could lead some farmers who have been undecided to buy a center-pivot irrigation system.
Maybe not an immediate boost though — Connors said company management believes that a spike in sales for next year is unlikely. He said the farmers who could benefit most from an irrigation system might not be financially able to buy one, and that access to water supplies could be limited in a severe drought. Moderate drought would be good for the Omaha, Neb.-based company, he said, but the effect of a severe drought would be less certain. Lindsay shares are up nearly 30 percent since mid-June. On Tuesday, they rose 34 cents to close at $70.90 and have ranged from $46.03 to $74.40 in the past 52 weeks. Janney rates the stock “Neutral.” Connors said mechanized irrigation will grow over the long run, but the recent stock-price rally “has been driven by over-exuberance regarding the near-term impact of the drought” on sales of irrigation systems. The analyst said he would be cautious in buying the shares at current prices.