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 Special feature from the 2013 Farm Outlook magazine

2013 year in review

By John Fulton

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[October 28, 2013]  The 2013 year has been one of ups and downs again. Up are the corn and soybean yields being harvested by local producers. Down are the prices. Net income for farmers could be well below the 2012-2013 marketing season. Also up were the input costs to grow an acre of corn or soybeans.

The 2013 Illinois Crop Budgets showed $563 per acre in non-land costs, and subtracting this from the estimated income left $409 for operator and land costs (source: Gary Schnitkey, University of Illinois). That was figuring 198-bushel corn yields at $4.80 per bushel. Yields are somewhat variable, but the cash price is running well short of the $4.80.

On the soybean side, the same crop budgets were figured on 57-bushel soybean yields at $11.75 per acre. The non-land costs were estimated at $350 per acre, leaving $342 per acre for operator return and land costs. Soybean yields have also had some variation, but prices have allowed October sales above those levels.

The hay and pasture yields have also been affected by the 2012 drought and the 2013 drought.

Yes, we have once again experienced drought in the central Illinois area, with moderate drought increasing the number of acres affected as fall has progressed. The main difference was that the 2013 year began with more moisture in the soil, and the dry weather appeared about a month later than in 2012.

Hay supplies have remained tight, with relatively high prices, and pastures have either been good or poor, depending on the stand loss experienced last year.

Planting conditions were almost the exact opposite of 2012. The 2013 growing season saw much later planting, cool conditions through the first half of the season and cooler temperatures for much of the summer. We managed to escape widespread damage from an early frost, and that was a worry until we reached October. The crop has also been slow to mature and dry down, but September really moved things along quicker than expected with unseasonably high temperatures.

Livestock producers continued to struggle financially compared with producers having only crop production. Feed prices remained high through the first half of the year, and this limited returns on the additional labor involved in raising livestock. When feed prices became more favorable, the livestock prices began to decline. Raising livestock is still a tough business from a physical and a financial standpoint.

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A major trend that seems to have caught hold is the "locally grown food initiative." People want to know where their food is coming from. There continues to be a move toward retailers buying what they can locally, inclusion of locally grown items on the school lunch menu and direct buying from farmers markets and roadside stands. Several moderate and upscale restaurants have made their names on preparing locally grown items. Locally grown items tend to be fresher, have a better degree of ripeness and a better flavor when served. This trend will continue, but for now, it remains a niche market for specialty growers.

The 2014 prospects mirror the comments made in 2013: Prospects will be dependent on rainfall received in the fall, winter and early spring. Also, the law of supply and demand is alive and well. This means that larger crops mean lower prices. Outside influences such as the renewable fuels mandate, the possible move to including more ethanol or soybean oil in fuels, larger numbers of animals consuming feed grains and oilseeds, and various government programs will all have an impact on this supply and demand.

The agriculture industry always looks forward to the next season with optimism, and we are thankful for the bountiful harvest most experienced in 2013.

[By JOHN FULTON, University of Illinois Extension]

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