Articles

Longtime TCF Speaker Returns to Share His Expertise

Dr. Gary Schnitkey, professor of Agricultural and Consumer Economics at the University of Illinois Urbana-Champaign, discussed crop farm income, cash rents and farmland prices during his presentation at the Chicago Farmers September 11, 2017 meeting. Dr. Schnitkey has been keeping TCF members well informed through his presentations since 1998. “He is a wealth of information,” said TCF President Barbara Clark.

Dr. Schnitkey related that 2015 was a low income year, but income bounced back in 2016 with an average income of $90,000 per farm. This was due to good yields in Illinois. However, he suggested that incomes in 2017 could be less, averaging around $60,000.

“Of course, much depends on where crop prices go as we move forward,” said Dr. Schnitkey. “Income is down because prices have not changed a lot and the yields this year are projected to be down.”

Dr. Schnitkey said that soybean and corn yields have been above the trend in recent years, but he said that projections are down for soybeans in Illinois. He noted that 50 percent of this country’s soybeans are exported, with the vast majority going to China, which also imports soybeans from Brazil. “The hope from farmers’ perspective is that this export situation to China continues to grow so that soybeans remain in a positive situation,” said Dr. Schnitkey.

Other information shared by Dr. Schnitkey:

• Static prices for corn and soybeans: 2017 price per bushel for corn - $3.30, soybean - $9.50; 2018 projection: corn - $3.80, soybean - $9.50

• ARC payments are expected to decrease and will vary by county; however, recipients should expect one-half or less of what they received last year

• Costs are expected to be less in 2018 than they were in 2017; fertilizer costs have come down as well as fuel costs

• Seed costs have not come down

• For Central Illinois, soybeans are more profitable than corn; corn costs and seed costs increased more than costs for soybeans

• Corn demand is static in comparison to soybean demand

• There will be downward pressure on cash rents

• Farmers and landowners should consider moving into variable cash rents

• Little movement in farmland prices; prices have come down 10-15 percent off their peak; prices could come down another one to two percent

• Anything that causes trade to slow in regard to NAFTA would be a negative; grain farmers want free trade

• Regarding real estate taxes, use-valuation should be coming down

• Projections indicate that the federal government will not do anything with ethanol; Brazil is raising a lot of corn that can be used for ethanol; the overall use of corn in ethanol is static

• The United States could possibly begin exporting more corn, primarily to China, which now uses soybeans to feed animals

• It doesn’t appear that water constraints will cause land to go out of production; Dr. Schnitkey thinks we will see more land coming into production due to Asian countries beginning to eat more meat: “As long as growing increases, land will be brought into production.”