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With historic drought, farm profits soar

The Harlan County Reservoir lies parched in drought on August 25, 2012 near Alma, Nebraska. Most of Nebraska remains in extreme or exceptional drought, despite recent lower temperatures and thunderstorms.

We've told you a lot about the effects of the drought on US farms. Onto that, add now the latest farm income forecast from the U.S. Department of Agriculture. The USDA says that despite -- or maybe because of -- the drought, U.S. farmers will set a new record for profits.

To see what's going on here, we've got Gordon Groover. He's an associate professor of agricultural and applied economics at Virginia Tech. Half of the U.S. corn crop is rated poor, and so prices will go up. So it makes sense that some farmers would benefit from that. Groover says the effect will vary from farmer to farmer.

"Those individuals who can put water on crops during the year will benefit greatly, but those who are dry-land corn and soybeans will be adversely impacted."

Listen to the audio above for more details.

About the author

Jeff Horwich is the interim host of Marketplace Morning Report and a sometime-Marketplace reporter.
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