November 25, 2014
Discussion of Fixed Cash Lease (Short Form for One Year)
A new farmland lease form called "Fixed Cash Lease (Short Form for One Year)" is available on the farmdoc
website. This lease is for a fixed cash rent that is one-year in length. The form allows for extensions to be made at the end of the one-year term. Many of the issues that have to be dealt with in longer-termed leases do not have to be dealt with in a lease of one-year in length. Terms and performance can be evaluated at the end of each year. As a result, this lease form is fairly short, only requiring two pages printed on front and back. This lease form was developed based on comments from landowners and farmers who desired a shorter lease form.
Posted by Donald Uchtmann and Gary Schnitkey
November 24, 2014
Hog and Pork Prices Return to Reality
When historians look back on hog prices in 2014, they are going to ask, "What was going on?" Hog and pork prices were launched to almost unexplainable heights by concerns over reduced pork supplies from PED in the spring and summer. More recently, prices have been in descent and now have returned to more realistic levels.
Posted by Chris Hurt
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