Prices of wheat and corn — among other agricultural products — are as low this year as they’ve been since 2014. But despite falling prices and an oversupply of the commodities, farmers continue producing grains at record-breaking rates, reports the Wall Street Journal.
Because of high start-up and investment costs, along with the seasonal nature of most agricultural production, farming is less responsive to changing market conditions than other sectors. Farmers are often paying down the cost of equipment, land, and inputs for many years, making it difficult to consider reducing their production levels. Plus, the federal subsidy program creates incentives for farmers to produce or not produce that can be disconnected from actual market conditions.
“Global markets are just flooded,” one grain farmer told the Journal. “It’s one of those situations where you choose what you’re going to lose [the] least money on. We still have to plant those acres. We have to eat. If everything works perfectly … we still can make a small profit sometimes.”