University of Illinois projects negative returns for near-record corn crop
Soon, Illinois farmers will harvest corn and soybean crops with the second-highest yields for that state ever. Yet, University of Illinois economists are projecting just small returns on beans and small losses on corn – and only if more USDA payments arrive.
That’s the bottom line presented at a webinar Friday by Dale Lattz, a farmdoc research associate and Gary Schnitkey, an Extension ag economist at the University of Illinois.
Compared with their drought-stricken and windblown Iowa counterparts, Illinois producers are well off. USDA is projecting yields of 207 bushels an acre for corn, 16 bushels above trendline. Soybeans may hit 64 bushels an acre, 8 above trendline.
“Generally speaking we’re looking at very good yields, at least in early estimates,” said Lattz. Both estimates would be the second highest on record.
Even with a cold wet spring, warmer weather that followed and adequate rains in most of the state have set Illinois up for those yields, he said.
Even on high-productivity land in Illinois, economist Schnitkey is not projecting positive returns for corn this year.
For that land, he uses a corn yield of 233 bushels an acre and a marketing year average price of $3.20 a bushel. That will provide $746 an acre in crop revenue. He adds a likely ARC/PLC payment of $45 an acre (which will be received in October 2021). Schnitkey also includes another $50 an acre from CFAP (Coronavirus Food Assistance Program) — even though the federal government hasn’t yet provided that.
“The last couple of years MFP and CFAP have been really critical” for farm income, Schnitkey said. (MFP stands for Market Facilitation Program, meant to offset losses associated with the U.S. trade conflict with China.)
Even with ad hoc disaster assistance payments, the farmer return after paying cash rent of $275 an acre is projected at a negative $3 an acre.
That’s because other production costs haven’t gone down much in recent years. Rent has stayed about the same. Schnitkey put nonland costs at $571 an acre, down slightly from $606 last year and $574 in 2018.
Soybeans are more profitable, using a projected yield of 73 bushels an acre and a price of $8.45 an acre. The USDA payments and land rent are the same as those for corn. Production costs are $359 an acre.
The bottom line for that crop is a positive return of $80 an acre.
Using a 50/50 crop rotation, the farmer return on that productive land would be $39 an acre. Without federal aid it would be a loss of $12 (-$12) per acre.
Schnitkey and Lattz also offered scenarios for 2021 returns on corn and soybeans. Using trendline yields and no CFAP payments, the farmer return on 50/50 corn and soybeans would be a loss of $46 an acre. Using higher yields, the farmer return on corn and beans would be $53 an acre with ad hoc federal payments and only $3 an acre without them.
You can watch Friday’s webinar and download slides by going to this farmdoc daily webpage: