July 24, 2014
2014 Farm Bill Decisions: Base Acre Reallocation Option
This article discusses the one-time option the owner of an Farm Service Agency (FSA) farm has to reallocate, but not increase, its base acres. The article concludes that this decision is important because of the emerging low prices, because Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) pay on base acres, and because the change in base acres can be substantive.Posted by Carl Zulauf, Nick Paulson, Jonathan Coppess, and Gary Schnitkey
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July 23, 2014
The 2014 U.S. Average Soybean Yield: Headed for a New Record?
As we highlighted in an article two weeks ago, there has been much discussion this summer about the prospects for what can only be described as spectacularly high U.S. corn yields. We examined summer weather conditions in the six years from 1960 through 2013 that had the largest positive U.S. average corn yield deviation from trend. The objective was to determine if summer weather conditions are on track to produce another such high yield in 2014. Our conclusion was "... that very high U.S. corn yields have been associated with summer precipitation that was near to slightly above average and summer temperatures that were well-below average in Illinois, Indiana, and Iowa." With regard to 2014 we found that "...June weather conditions in Illinois, Indiana, and Iowa were not entirely consistent with those experienced in the previous six highest yielding years relative to trend. This was particularly true for Iowa, which received over twice its long-term average precipitation in June."Posted by Scott Irwin and Darrel Good
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July 22, 2014
Renegotiating Cash Rents Down for 2015
Actual cropland returns in 2013 and projected returns in 2014 and 2015 are considerably below returns from 2010 through 2012. In many cases, projected 2015 returns will be lower than current cash rents, likely require renegotiating for lower cash rents. This article evaluates these situations by 1) identifying farms requiring adjustments in cash rents, 2) identifying how far cash rents must be lowered, and 3) providing comments for both land owners and farmers.Posted by Gary Schnitkey
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July 21, 2014
Corn Price Premiums Continue to Fade
Corn was the primary focus of the agricultural commodity complex beginning in the 2006-07 marketing year and continuing through the 2012-13 marketing year. Corn prices during that period were supported by a rapidly growing domestic ethanol industry that required more acres of corn and by relatively poor U.S. corn yields in 2010, 2011, and especially in 2012 that kept corn supplies very tight.Posted by Darrel Good
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July 18, 2014
Bigger Is Better?
The notion that larger farms have a different and lower cost structure is prevalent. The idea that larger farms can negotiate lower prices would seem logical. The idea that larger farms have more acres to spread fixed costs over seems logical on the surface as well. Both of those ideas would indicate that as farms increase in size that costs are lower. With that in mind, let's review some 2013 data from three groups of farms and make our own conclusions. We will look at selected per acre costs on increasing average farm size (in acres) for farms in northern Illinois, central Illinois, and southern Illinois.Posted by Brandy M. Krapf, Dwight D. Raab and Bradley L. Zwilling
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July 17, 2014
Mapping the Size of Dairy Safety Net Programs: Comparing MILC and the Margin Protection Program
In today's article we will review the historical performance of the Milk Income Loss Contract (MILC) program using data provided by USDA Farm Service Agency (FSA). Then, we will demonstrate how the Margin Protection Program (MPP), by increasing production coverage to be more accommodating to all U.S. dairy producers, offers a larger safety net program and is capable of providing considerably more production coverage than the existing, and soon to be expired, MILC program.Posted by John Newton and Todd Kuethe
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July 16, 2014
Highlights of the 2012 Census of Agriculture: Distribution of Farm Size
There are two conventional ways of measuring farm size: (1) number of acres operated and (2) volume of sales. Between the 2007 and 2012 Censuses of Agriculture, the size of the average Illinois farm increased by 3.2% to 359 acres, and the average market value of agricultural products sold per farm increased by 32% to $228,895. However, given the size and diversity of the Illinois farm population, the average farm size may mask some important changes occurring across the distribution.Posted by Todd Kuethe
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July 15, 2014
Range in Revenues and Returns Possible for Corn in 2014
The U.S. Department of Agriculture released a revised World Agricultural Supply and Demand Estimates (WASDE) report on July 11, 2014. In this report, the 2014 Market Year Average (MYA) price for corn is projected to fall between $3.65 per bushel and $4.35 per bushel. Revenues and farmer returns are estimated for prices in this range given an average and high yield. Crop insurance and commodity title payments are included in estimates. Given this price range, there is about a $100 per acre range in which per acre returns can fall. Farmer returns likely are negative for cash rented farmland, given that costs are near average. Farmer returns for share rented farmland likely will be low.Posted by Gary Schnitkey
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July 14, 2014
How Burdensome Are Corn Supplies?
Corn prices have been declining for almost two years following the peak price generated by the very small U.S. crop in 2012. The recent sharp decline in prices has been associated with increasing prospects for a very large U.S. corn harvest again in 2014 following the record harvest of 2013. A second consecutive large crop would lead to a further build-up in stocks of corn by the end of the 2014-15 marketing year.Posted by Darrel Good
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July 11, 2014
2014 Farm Bill Decisions: Payment Yield Update Option
The 2014 farm bill provides the owner of a Farm Service Agency (FSA) farm with a one-time option to update the farm's payment yield for covered crops. This article will discuss this decision. It concludes by recommending that all producers consider updating yields if updated yields are higher than current yields; however, updated yields may be surprisingly low.Posted by Carl Zulauf, Nick Paulson, Jonathan Coppess, Gary Schnitkey and Todd Kuethe
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