Friday, May 5, 2017

Areas of Above & Below Trend Yields in the Corn-Belt

Areas of Above & Below Trend Yields in the Corn-Belt
Gary Schnitkey, Agricultural Economist - University of Illinois
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Farmers in Illinois and other parts of the eastern corn belt have had above average yields over the last several years. Gary Schnitkey wondered if this was due to the weather or some other reason. He explored the topic and came to three conclusions.

First, yield expectations in the current year likely are more heavily influenced by more recent experience. In those areas where yields have been high, it may be tempting to building financial budgets and expectations on relatively high yields. Doing so could result in higher projections of incomes than are warranted. Farmers in Illinois and other recent high yielding areas should be cautious about building in high yield expectations.

Second, the comparison of above average yields in Illinois and near average yields in Iowa is instructive in understanding whether high yields are caused by technological change. The high yields in Illinois in recent years likely are not a result of technological changes. If technological change was causing the yield differences, Iowa would have had above trend yields as well as Illinois. Rather, high Illinois’ yields likely are the result of good growing conditions. Over time, areas with good growing conditions will move around the greater Corn Belt, as has happened in the past.

Third, the above yield maps likely are indicative of relative financial performance since 2012. Overall, incomes have been lower since 2012. However, farmers in Illinois and other higher yielding areas likely have fared better than farmers in Iowa and other regions with near average yields. Again, weather variations can change from year-to-year, so areas with higher and lower yields will change over time.