Articles

Agriculture Outlook in 2021 and Beyond

Dr. Gary Schnitkey, of the University of Illinois College of ACES, opened the Chicago Farmers 2021 season with an in-person meeting on Monday, September 13, with a discussion on grain and land prices.

The prices for corn and soybeans in 2021 are up from 2019: corn-$5.45 per bushel and soybeans-$12.90. The soybean price is the highest recorded price since 2012, Dr. Schnitkey noted. He added that the continuing use of corn in ethanol and strong import prices could see corn rise to $6 per bushel and soybeans increase to $14 per bushel. Dr. Schnitkey said that a plateau has not been reached yet.

He went on to say that ethanol is beginning to bounce back and the export of corn is increasing; a lot of this is driven by China. Whether this situation is permanent or transitory largely depends on the Chinese continuing to eat more meat. If that is the case, the Chinese will need more feed corn. Dr. Schnitkey shared that soybeans are at record levels due to export demand. The soybeans are being exported out of the United States to support meat consumption in other countries.

In discussing trends, Dr. Schnitkey pointed out that the corn trend was at 196 bushels per acre, while the actual yield was 214 bushels per acre. He said there are high yields in Illinois and he hasn’t seen a reduction in trend yields since 2012 in Illinois. At the same time, North and South Dakota and other western states are experiencing lower yields. States such as Indiana, Illinois, and Iowa are having good corn yield years. In regard to soybeans, the trend is at 80 bushels, but the actual yield is 64 bushels.

Also during 2021, there has been an increase in non-land costs, such as in machinery, fertilizer, seed, and storage. However, interest expenses are not increasing and the total amount of debt carried by farmers is decreasing. Dr. Schnitkey said the increases in non-land costs are partly labor and Covid-19 related and there is an inflationary environment. As an example of fertilizer cost increases, Dr. Schnitkey said that anhydrous ammonia currently is at $746 per ton and it was in the mid-$400s one year ago. “All fertilizers’ costs are increasing and I don’t see it going down,” said Dr. Schnitkey. “I expect costs to be up 8 to 10 percent.”

Regarding machinery, Dr. Schnitkey said that people are having difficulty getting parts for the coming year.

In discussing grain farm net income, Dr. Schnitkey said that 2021 is expected to see it rise from $73,000 to $220,000. At the same time, cash rents will rise. He noted that cash rent farmland in Illinois and in surrounding states is:

• Illinois, 50 percent (Northern Illinois, 60 percent, Central Illinois, 42 percent
• Indiana, 45 percent
• Iowa 41 percent
• Ohio, 37 percent.

The average cash rent is $222 per acre, according to the USDA, he said and noted that rents have been stable since 2016. The 2021 cash rents are the highest in Northern Illinois. In Central Illinois in Macon County, the highest cash rent was $311 and the lowest could be found in Southern Illinois at $52 per acre. Additionally, professionally managed farmland commands higher rents. Cash rent on land that has excellent productivity levels is projected to rise from $315 in 2021 to $350 in 2022.

Projected cash rents for 2021:

• Excellent farmland, $350
• Good farmland, $299
• Average farmland, $239
• Fair farmland, $210

Dr. Schnitkey said the farmland price outlook shows increasing prices, but not continued large growth. Farmland values in Illinois, Iowa, and Indiana with excellent quality soil have increased 20 percent since January 2021 to September.

In response to an audience question about ethanol, Dr. Schnitkey said that corn growers and others are going to try to get the use of corn increased, but he is uncertain if they will be successful. He said he believed that gas prices in the United States would stay where they are and ethanol use will be based on gasoline demand for the next five years. The long run is the question because of the uncertainty of the popularity of electric cars, he noted.

Regarding the African swine fever that is happening in China and its effect on exports, Dr. Schnitkey said that he did not believe the Chinese would be big consumers of beef because it is not their culture. He thought the fever was being better managed than press reports indicate.

In response to a question about students in the College of ACES, Dr. Schnitkey said there were good jobs in agriculture, outside of farming. He said that every senior will have a job at the end of this school year. He said that many of the students have large amounts of debt that weigh heavily on their minds. He said the students tend to worry more than students in the past. He went on to say that there are 700 students in the College of ACES and only “two to three handfuls” will return to the farm. “Most are not going back to the farm,” said Dr. Schnitkey. “And that is true at schools like Purdue also. Farmland is a good investment, but it does not provide cash flow. Many of the students going into farming need another source of cash.”

JJC Scholarship Recipients

The Chicago Farmers recently awarded scholarships to four Joliet Junior College students. The students include Karli Franklin, Joshua Granger, Matthew Kindlespire, and Garett Severson. All of the students are in Joliet Junior College’s agriculture program.

Karli is majoring in Agriculture Business with a 3.0 GPA. With the completion of her Associate’s degree in Agriculture Business, Karli also hopes to graduate with a certification in social media marketing from JJC. With these accomplishments, Karli plans to work with or own/manage an agricultural product retail business, as well as working as a freelance social media marketing agent for a variety of companies in the United States. Overall, she said that she hopes to work in sales, whether it is for a larger agriculture business or her own agriculture retail business, while working in the marketing field as well.

Joshua holds a 4.0 GPA as a major in Agriculture Production and Management. In his second semester of agricultural classes at Joliet Junior College, Joshua is a 2020 graduate of Bishop McNamara Catholic High School and also completed two years of welding at the Kankakee Area Career Center.

Matthew is an Agriculture Production and Management major and has a 3.8 GPA. He is completing his second full-time semester in JJC’s Agriculture Department. While pursuing an Associate’s degree in his chosen major, Matthew also is employed by his family farm. He hopes to use the knowledge he is obtaining at JJC to further improve the efficiency and production of the family farm’s operations.

Garett holds a 3.3 GPA and is majoring in Agriculture Production and Management. Following completion of his Associate’s degree in his major, Garett said he would become a partner in his family’s farm.