Spring 2017 Logan County
Farm Outlook Magazine

2016 featured record soybean yields and decreasing incomes
By John Fulton

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[March 24, 2017]  Logan County enjoyed a record soybean year after all, but farm income continues to decline. The Logan County yield of 66.6 bushels per acre eclipsed the old record of 63.7 bushels per acre set during the 2014 growing season. Continuing with good yields, the corn crop averaged 219.4 bushels per acre in 2016, but was shy of the 230.8 record yield of 2014.

Yields have been on a phenomenal run over the last 30 years. Many improvements in genetics, equipment, timely operation, and support service improvements have all contributed to this run.

However, there is an old adage which states something like “production isn’t the only measure of profit.” In a recent article from Gary Schnitkey and Darrel Good, University of Illinois Extension Specialists, income calculations were based on 203 bushel corn and 61 bushel soybean averages. Those are some lofty numbers which are about 10% over 10 year average figures for Logan County.

Another side to the profit triangle is the markets for selling grain. Average price estimates for 2017 were $3.60 corn and $10 soybeans. Again lofty numbers for historical prices. The third part of profit is the expenses for producing the crop. Costs of all inputs except land cost totaled $521 per acre for corn and $291 per acre for soybeans. Those figures are before land costs, in many cases this would be the cash rent figure.

Schnitkey and Good calculated at half corn and half soybeans produced, a cash rent of $240 would leave $11 per acre for return to the tenant. That’s if everything plays out with production, price received, and staying at the estimated cost level.

Historically, this would be a razor-thin margin to provide for the living expenses for the farm family. The last sustained period of these types of returns was about 35 years ago. The main differences are that the interest rates are about one-third of what they were then, and we are dealing with a much larger scale in terms of acres and dollars invested and received. The old “rule-of-thumb” was you needed to gross $400 per acre on corn and about 85% of that on soybeans. Essentially the numbers have doubled in this period to get to the same levels of profits.

The livestock sector has traditionally been able to help balance farm income. Today, not many farms have any livestock on them. The prices received for sheep and cattle have been bright spots in the livestock markets. Surely you’ve noticed the prices paid for eggs, milk, and pork products in the grocery store. Eggs and milk are to the point of ridiculous in many cases, running half the cost of producing them.

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All “gloom and doom?” Not really. We’re coming off of an era of unprecedented profits. Those who saved some back are weathering the situation better. Many replaced equipment, and thereby reduced some of the costs associated with their operations. The scale of production has also increased with farm size expanding for the commercial producers. This allows for smaller profit margins per acre and still maintaining some semblance of making a living. Input costs also continue to decline, but not as fast as the income side has faded.

Specialty production and sales also are a bright spot. Community Supported Agriculture and Farmer’s Markets offer small-scale opportunities for increasing income. The same goes for specialty livestock markets. These don’t offset expenses for large-scale commercial operations, but do offer some opportunities for producers of all sizes to have concentrated income on a few acres.

As the spring planting season approaches, everyone involved in agriculture is an optimist. The thought of nurturing a crop through the season, and producing a bountiful harvest, is why producers continue to ride the roller coaster of farm income. And, if anyone can figure out how to make it work, it would be the farmer.

Read all the articles in our new
Spring 2017 Logan County
Farm Outlook Magazine

2016 featured record soybean yields and decreasing incomes 4
The conundrum of corn 7
The prospect of higher ag prices 11
Price increase for US feed forecast 14
A suspicious character in town:  Bacterial Leaf Streak 17
Why some central Illinois farmers are giving cover crops a try 20
John Fulton to retire after a productive career helping others 24
Weather...and panning for gold in the 2017 growing season 33
2016 County Crop Yields Released 40

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