Farmland Income for 2015

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Farmland Income for 2015
Gary Schnitkey, Ag Economist - University of Illinois

Farmers across the Corn Belt are going to make a lot less money this year than they have in the past. And, as Todd Gleason reports, if something doesn’t change, things may be even worse next year.

The farms most likely to lose money are cash…
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The farms most likely to lose money are cash rented by their tenants. The fixed land cost per acre is generally too high as related to commodity prices for corn and soybeans. University of Illinois Ag Economist Gary Schnitkey ran the disappointing numbers and his price points were higher than the season’s average cash prices USDA released earlier in May. USDA is predicting a $3.50 cash price for corn.

Schnitkey :39 …and we see pretty low farmland returns for 2015.

Quote Summary - We’re using $3.75. I would note as the market year average price is lowered the ARC and Crop Insurance payments should increase. This is a mitigating factor as prices go lower. We’re using $3.75 for corn and $9.50 for soybean, vs WASDE at $9.00, and we see pretty low farmland returns for 2015.

If the cash rent paid is near average levels for the county, then Schnitkey’s figures show an expected $67 per acre loss on highly productive central Illinois farmland. Share rent leases do better, but still it’s pretty bad.

Schnitkey :08 …receiving a lower return because of the share rent.

Quote Summary - Twenty-one dollars of profit, but obviously the landowner is receiving a lower return because of the share rent.

Those two numbers, 67 and 21, are the profits and loss based off a blend of corn and soybeans being grown. Specifically Schnitkey says his crop budgets are projecting gross revenue from corn in the low to mid $800 per acre range.

Schnitkey :37 …this fall, and tough cash rent, fertilizer, and seed choice decisions.

Quote Summary - Between 2010 and 2013 those corn gross revenues averaged above $1000 per acre. It is really difficult to see a situation where we have gross revenues above $1000 per acre (this year). We are moving into a situation, unless we see dramatic price increases, where revenues and returns are tight. It will lead to cash flow issues this fall, and tough cash rent, fertilizer, and seed choice decisions.

For what it is worth, Gary Schnitkey and the rest of the University of Illinois ag econ FarmDoc team believe current commodity prices are at the bottom end of the new era plateau range and not at the top end of the old era. It doesn’t help net income on the farm, but it does offer hope for the future.