November 21, 2014
A Closer Look at the Impacts of Olympic Averaging of Prices and Yields
Several provisions of the 2014 Farm Bill depend critically on revenue thresholds calculated from the product of the Olympic average of 5-year trailing national marketing year average prices, and the Olympic average of trailing county yields. This post more closely examines the implications of using truncated samples or Olympic averages to construct measures termed Benchmark Revenue, and also examines some specific implications given the price and yield patterns that occurred recently, and thus which are included in near-term future Benchmark Revenue calculations.
Posted by Bruce Sherrick
November 20, 2014
The Forgotten Variable: Yield and the Choice of Farm Program Option
Price has been the focus of almost all discussions about the one time irrevocable opportunity to choose among Agriculture Risk Coverage - county (ARC-CO), Agriculture Risk Coverage - individual (ARC-IC), and Price Loss Coverage (PLC). This article instead focuses on the forgotten variable: yield. It concludes yield can play an important role in the decision.
Posted by Carl Zulauf, Gary Schnitkey, Jonathan Coppess, and Nick Paulson
November 19, 2014
The Impact of Urban Areas on Farmland Prices in Illinois
Farmers and farmland owners often cite urban pressure as a key driver of farmland prices in areas surrounding metropolitan centers. While the influence of urban areas on farmland markets is widely recognized, it is difficult for economists to quantify the extent to which urban centers drive farmland prices. New research offers one potential measure based on observed farmland transactions.
Posted by Todd Kuethe, Benoit Delbecq, and Allison Borchers
November 18, 2014
Overview of Commodity Program Decisions from the 2014 Farm Bill
This article provides an overview of the commodity program decisions of the 2014 Farm Bill, thereby provide a context for each decision that must be made. More details for each decision are available on the Farm Bill Toolbox. In summary, the article covers the following: 1) the definition of FSA farms; 2) the three decisions that will be made for each FSA farm; 3) the nature of the decisions that will be made; 4) linkages between commodity program and crop insurance decisions; and 5) payments and Adjusted Gross Income (AGI) limits.
Posted by Gary Schnitkey, Carl Zulauf, Jonathan Coppess, and Nick Paulson
November 17, 2014
Corn and Soybean Acreage Questions Persist
Recent USDA reports have left some unresolved questions about the magnitude of planted and harvested acreage of corn and soybeans in 2014. The questions stem from the large differences between the planted acreage estimates from the National Agricultural Statistics Service (NASS) in the November 10 Crop Production
report and the planted acreage that has been reported to the Farm Service Agency (FSA) as reflected in the Crop Acreage Data
report released on November 13.
Posted by Darrel Good
November 14, 2014
U.S. Farm Input Price Dynamics, 1981-2013
The sharp drop in crop prices over the last 2 years has focused attention on farm input prices. In particular, how closely do farm input prices follow crop prices? To put this question in historical perspective, this article looks at various aspects of the dynamics of U.S. farm input prices since 1981. Findings include that, after adjusting for general price inflation, not all farm input prices have increased, that farm input prices do adjust with crop prices, that the adjustment varies by input but is a lag process that becomes larger over time, and that, on average across the inputs examined in this article, the adjustment process appears to reach closure after approximately 5 years.
Posted by Carl Zulauf and Nick Rettig
November 13, 2014
A Different Look at Non-Farm Expenses?
The 17 October 2014 farmdoc daily
article reviewed the average family living (non-farm) expenses in Figure 1 and on a 'per operator acre' basis in Figure 2 for a ten year period. Today's article will review some of that same data, but from a different perspective.
Posted by Bradley L. Zwilling, Brandy Krapf and Dwight Raab
November 12, 2014
Do Falling Gasoline Prices Threaten the Competitiveness of Ethanol?
Wholesale (CBOB) gasoline prices in the U.S. have declined by about a dollar per gallon, or one-third, since June. The CBOB price last week was $2.11 per gallon, the lowest level since autumn 2010. This decline was mainly due to the drop in crude oil prices from around $105 per barrel to $80 over the same time period. The question addressed in today's article is whether the decline in gasoline prices has been large enough to threaten the competiveness of ethanol in gasoline blends. The answer to that question depends on the assumed breakeven price of ethanol relative to the price of gasoline and that is a major focus of the analysis.
Posted by Scott Irwin and Darrel Good
November 11, 2014
Lower Fuel Prices Unlikely to have Large Impact on Non-Land Corn and Soybean Costs
Crude oil prices have decreased in recent weeks, leading to decreases in gasoline and diesel fuel prices. Lower fuel for producing corn and soybeans in 2015 will occur if fuel prices remain lower through the 2015 growing season. However, fuel costs are a low proportion of total costs of producing corn and soybeans. As a result, oil and fuel price declines will have a small impact on 2015 production costs.
Posted by Gary Schnitkey
November 10, 2014
USDA Reports Provide Some Surprises, Particularly for Corn
Based on the worn adage that "big crops get bigger", analysts generally expected the USDA's November Crop Production
report to contain larger forecasts for the size of the current U.S. corn and soybean harvest. The soybean production forecast was larger, but the corn forecast was smaller than the October forecast.
Posted by Darrel Good