November 22, 2017

Tax Legislation and the Specter of Sequestration

A recent analysis by the Congressional Budget Office (CBO) has raised concerns about the potential impact the Congressional tax bills could have on farm programs and the farm bill. In short, the concern raised is that if the tax bills increase the deficit by $1.5 trillion over 10 years, existing statutory requirements for sequestration and Pay-as-you-go (PAYGO) would require automatic reductions to offset the deficit increases. The following reviews the issue from the perspective of the potential implications for farm programs, crop insurance, conservation and the upcoming farm bill debate.

  • Authors: Jonathan Coppess, Carl Zulauf, Gary Schnitkey, and Nick Paulson
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November 21, 2017

Forecast of 2017 Net Income on Grain Farms in Illinois: Lower than in 2016 but Better Than Expected

Average net income on Illinois grain farms is forecast at around $60,000 per farm in 2017. This forecast is for a composite of grain farms enrolled in Illinois Farm Business Farm Management (FBFM). In 2016, these farms had an average income of about $94,000 per farm. Incomes in 2017 are projected lower because of lower corn prices, lower soybean prices, and lower Agricultural Risk Coverage (ARC) payments. Partially offsetting these reductions are lower non-land costs. Overall, 2017 net farm incomes could have been worse as yields on many farms turned out better than expected. Still, deterioration of working capital on most farms should be expected. As always, incomes will vary across farms, with some farms having higher incomes in 2017 than in 2016. Those farms with below average yields will have lower incomes and could potentially face more financial stress.

November 20, 2017

Weekly Outlook: Soybean Export Prospects for 2017-18

U.S. soybean exports will play a significant role in determining soybean prices this marketing year. The recent level of soybean exports from the United States trails last year's pace. The prospect of ending stocks for soybeans once again diminishing throughout the marketing year hinge on increased soybean exports. The development of a lowered ending stock scenario during 2017-18 may require a shortfall in South American production or U.S. exports capturing a greater market share of the world soybean trade.

November 17, 2017

Evaluating Your Capital Debt Repayment Capacity

Many financial measures and ratios assist in evaluating the financial health of a business. Not one of those measures itself can assess the overall financial condition of a farm business. It takes a top down review of many of those measures and ratios to make an overall assessment of a farms financial health. See the website of the Farm Financial Standards Council for more information about measuring the financial health of a farm operation (www.ffsc.org). A farm financial consultant well versed in evaluating farm financial health is invaluable in assessing your farms financial health. This article considers only one of those measures, Capital Debt Repayment Capacity (CDRC), as a means to assess the financial health of a farm business.

  • Authors: Brandy Krapf, Dwight Raab, and Bradley Zwilling
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November 16, 2017

Analysis of the ARC-CO Payment Cap for Corn, Soybeans, and Wheat

Revenue losses driven primarily by low commodity prices in 2014, 2015, and 2016 have triggered ARC-CO payments on corn, soybean, and wheat base in counties across the country. Where payments have been triggered, the level of those payments has varied across counties due to differences in average yields in those counties relative to their ARC-CO benchmark yields.

  • Authors: Nick Paulson, Gary Schnitkey, Carl Zulauf, and Jonathan Coppess
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