Big in Ag: Sliding incomes and what you can do
Farm incomes have been, in general, running high in the last few years, with some data showing 2013 income levels were the highest in decades. But, there's a shift underway, one that many see sending incomes lower in 2014 and beyond. See some of the latest information from the latter part of 2013 here, including ways you can prepare your farm for the foreseen slide.
It's been 40 years since farm incomes were as strong as they'll likely wind up in 2013, according to data released by the USDA Economic Research Service (ERS) in late November. Some sectors of the livestock industry also saw a huge year, with income from cattle specifically hitting record levels.
The farm income slide is typified by the corn sector; corn market prices could be at or near the break-even point "over the next several years" in the heart of the Corn Belt if recent projections reach fruition, one ag economist said in early November. Yet there remains some wiggle room.
Do breakevens even matter to you when planning your crop management and marketing? Some say it's critical to keep it in mind, while others say it's less important. "When push comes to shove, I try to get the best price I can for my grain," one farmer said in Marketing Talk in early November.
Though the darkening income picture is troubling for many farms, there's a silver lining to the cloud, one economist said in late November. "The reality is that setbacks in markets like these are good, in how they allow people to reset expectations," said Purdue University Extension ag economist Chris Hurt.
Alongside changing farm income projections for the coming year has come a lot of information about how to stay afloat during a downturn. In October, one economist said two major expenditures -- big-ticket machinery purchases and farmland rents -- can be adjusted to trim the expense side of the balance sheet. How else can you trim your costs?
Another thing to watch closely as farm income margins tighten: interest rates. They've been low for a long time, and they're expected to rise in the next couple of years, but not necessarily until there's a period of 'nondecreasing' rates. That type of action can be just as damaging to your bottom line if you're not careful, one expert said in late November.
How else can you cut back? There are marketing tools and other ways to stay in touch with specific parts of the crop balance sheet that can help make up for potential losses. See what one specialist said about some of these tools and strategies in October, and see how things like diesel prices and other inputs can come into play.
Though farm incomes are seen declining in the coming year, experts offer ways to keep your farm afloat during the expected downturn.