What is in this article?:
Cause for concern
Projected corn demand is strong enough to keep average projected crop prices above pre-2007 levels, says Pat Westhoff, director of the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri.
The average corn farm price is projected at $5.96 for the current marketing year, and then suggests the average price may hover around the $4.80 mark for the next several years, FAPRI says. But corn prices could be under $3.50 or more than $6/bu. in any given year, the analysis suggests.
FAPRI economists suggest lower crop prices and higher production costs could contribute to a modest reduction in net farm income over the next three years. Actual net farm income will continue to vary because of volatile prices, production and expenses.
"Given current tight corn supplies, the market will be sensitive to news about 2012 supply and demand prospects,” the current FAPRI report says. “After years of rapid growth, ethanol production also is expected to remain fairly stable for the next two years."
Westhoff adds, "Obviously, what someone can afford to pay in rent will be closely tied to crop prices and yields." FAPRI's baseline estimates net returns over variable expenses – the amount left to cover rent and other fixed expenses – and indicates just how uncertain those net returns might be. Market net return per acre estimate for corn producers is $550.88 for the current marketing year, and then drops back to $427.51 for next year.
Net farm income in Illinois for example, reflects today’s robust economy, but also the potential for future declines. Farms enrolled in Illinois Farm Business Farm Management (FBFM), for example, averaged net farm income of $66,000/farm from 2001 through 2006. Net farm income rose to $177,000/farm from 2006 through 2010, and averaged more than $200,000 in 2011.