Grain farmers should brace for a drop in net incomes this year as the prices for corn, soybeans and wheat have fallen significantly from recent years, according to the American Farm Bureau Federation.
The latest Agricultural Prices report, released by the National Agricultural Statistics Service, indicated the index of prices received for crop production was down 11 percentage points from the same time last year, while the prices-paid index was unchanged. The situation for corn and soybeans is even more telling, with corn prices down by more than 20 percent from last year and soybeans off nearly one-third.
“Farmers will be tightening up and planning carefully to help control their costs,” said Bob Young, chief economist for AFBF. “There’s a lot less room for error at these prices.”
A report last week by the University of Illinois’ Dr. Gary Schnitkey suggested farmers will need to look at four areas in the months and possibly years ahead. These include reducing machinery purchases, closely managing seed, fertilizer and chemical costs, trying to negotiate lower cash rents and reducing family living withdrawals from the farm.
“With domestic demand growth relatively flat and a strong dollar giving us a challenge in export markets, we can expect prices to have a hard time moving above this level for the next couple years at least,” Young said. “Farmers have made equipment purchases and many are well positioned to face the challenges that changing weather and fluctuating prices may bring their way, but they will need sharp pencils.”