University of Illinois: Department of Agricultural and Consumer Economics, University of Illinois Urbana-Champaign
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August 29, 2014

Are USDA Corn Yield Forecasts Getting Better or Worse over Time?

A widespread view in the trade is that the final yield estimate for the U.S. average corn yield in 2014 will be well above the USDA August forecast of 167.4 bushels per acre, perhaps as large as 175 bushels. Much of the expected yield increase is based on the concept that "big crops get bigger," with support also coming from relatively high crop condition ratings late in the season. A recent farmdoc daily article, however, revealed that not all big crops have gotten bigger in the past and that weather conditions this summer may not have been consistent with a large increase in the USDA yield forecast from August to January. An implication of the expectation that the USDA yield forecast will increase substantially in future Crop Production reports is that the August forecast this year will have an unusually large forecast error. The purpose of this article is to examine trends in the accuracy of USDA corn yield forecasts in recent years in order to provide an additional perspective on the debate about the U.S. corn yield in 2014.

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Posted by Scott Irwin, Darrel Good, and Dwight Sanders   Permalink  

Farmers and Foreign Accounts

The IRS has taken steady, effective steps over the past several months in the area of offshore asset reporting, with serious civil and criminal penalties at stake for taxpayers who are not reporting assets located outside the United States. These severe penalties not only apply to taxpayers willfully attempting to dodge the rules but even for those unknowing taxpayers, including farmers, who run afoul of the rules without knowing what to do to comply. Farmers with assets outside the United States must be aware of these rules, especially because of the substantial civil and criminal penalties for failure to comply with the relevant rules each year.

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Posted by Marc Lovell   Permalink  

August 28, 2014

Resolution of U.S. Crop Year Price Uncertainly and Its Implications for the 2014 Farm Program Decision

The 2014 farm bill gives Farm Service Agency (FSA) farm owners a 1-time decision to elect their Title 1 crop program for the 2014 through 2018 crop years. FSA has not yet released the sign up dates, but sign up likely will not end until sometime in 2015. By this time, farmers will have good information on 2014 crop yields. The related question, "How much uncertainty about 2014 U.S. crop year prices will have been resolved by the time sign up ends?" is examined in this article. U.S. crop year prices are used to determine payments by the Agriculture Risk Coverage - county (ARC-CO), ARC - Individual (ARC-IC), and Price Loss Coverage (PLC) programs.

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Posted by Carl Zulauf   Permalink  

Introducing the USDA Sponsored Margin Protection Program for Dairy Decision Tool

Today the U.S. Department of Agriculture, Farm Service Agency announced the new Margin Protection Program (MPP) for Dairy Producers. The program is effective September 1, 2014 and dairy farmers may enroll beginning September 2, 2014.

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Posted by The National Program on Dairy Markets and Policy   Permalink  

August 27, 2014

What Can We Learn About Corn and Soybean Yields From Crop Tours?

It almost goes without saying that corn and soybean prices are heavily influenced by the size of the U.S. crop and that expectations about crop size are especially important for prices during the growing season. Market participants rely on a variety of information in order to form yield and production expectations. That information includes general growing season weather conditions, weekly USDA reports of crop conditions, and USDA survey-based forecasts beginning in August. Every year, there is no shortage of discussion of about evolving prospects for corn and soybean yields and 2014 has certainly not been an exception.

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Posted by Scott Irwin, Darrel Good, and Gary Schnitkey   Permalink  

August 26, 2014

Will High Yields Rescue 2014 Crop Returns?

Expected corn yields are high for many areas of the corn-belt. In central Illinois, for example, corn yields may average 220 bushels per acre on many farms. However, a 220 bushel yield will not result in positive returns for corn, given current expected 2014 crop prices and given that farmland is rented near the average cash rent. To have positive returns, yields must be exceptionally high. In this year, those farmers forward contracting a substantial portion of 2014 production likely will have higher returns than farmers who did not contract. Due to difference in yields and marketing decisions, there will be a wide range in revenues across farms.

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Posted by Gary Schnitkey   Permalink  

Your Farm Business and the Affordable Care Act

Beginning in 2015, a farm that is an "applicable large employer" (ALE) generally must either provide health coverage to full time employees and their dependents, or pay a penalty for not offering coverage. Generally, a penalty is triggered if an employee of the farm business is offered coverage by the farm business that does not meet the minimum guidelines or if an employee obtains coverage through a Marketplace exchange. The rule that requires the farm business to either provide coverage or pay a penalty has become known as the "play or pay" rule under the Affordable Care Act (ACA).

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Posted by Marc Lovell   Permalink  

August 25, 2014

Looking for a Corn Consumption Response

In the newsletter of August 11, the prospects for corn consumption to respond to lower prices during the 2014-15 marketing year and the potential for a subsequent price recovery were discussed. With the start of the new marketing year only a week away, the process of monitoring corn consumption and corn consumption prospects in the three major categories of feed, ethanol, and exports is underway. Not much is yet known about consumption prospects, but we start what will be an ongoing process of updating those expectations.

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Posted by Darrel Good   Permalink  

August 22, 2014

Highlights of the 2012 Census of Agriculture: Legal Structure of Illinois Farms

Throughout the United States and around the globe, consumers are increasingly concerned with how their food is produced. These concerns range from healthfulness and food safety to the environmental impact of various production methods and the treatment of animals and farm labor. One concern that is often expressed by those both inside and outside of the agricultural community is the belief in the "loss of the family farm" or "the rise in corporate farming."

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Posted by Todd Kuethe   Permalink  

Donating Crops Can Mean Substantial 2014 Tax Savings for Farmers

Farmers seeing a strong 2014 year are beginning to seek tax strategies to minimize 2014 taxes. One strategy to consider is making a charitable donation in the form of crops. There are substantial tax advantages in making a gift of crops that do not exist with the traditional type of charitable donation made with using a check or cash.

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Posted by Marc Lovell   Permalink