Corn prices are on the rise, while soybean prices are projected to continue their dip this year before recovering a bit in 2020, according to government projections.
And this year, national net farm income, which takes into account many commodities not grown in Ohio, is projected to increase 10% over last year’s total, USDA forecasts show.
“These are not the best of times, but it’s stable,” says Ani Katchova, associate professor and chair of the farm income enhancement program at Ohio State University College of Food, Agricultural, and Environmental Sciences (CFAES).
Low commodity prices can put financial stress on growers, but the bankruptcy and loan delinquency rates — indicators of the financial health of farms — have not fluctuated much in recent years, adds Katchova, one of the authors of a new CFAES report on farm income forecasts.
Not a crisis
“It’s definitely not a crisis,” she says. “Farmers are generally not distressed, although many face tight profit margins.”
In years with low profit levels, farmers are increasingly leaning on crop revenue insurance, buying higher and higher coverage levels to help compensate, Katchova says. “Due to crop insurance, we see better farm incomes.”
Commodity prices remain low, however, with modest projected increases. The average per-bushel price for corn, $3.36 last year, is projected to increase to $3.50 this year. By 2020, the price will rise to $3.90, according to USDA estimates released March 13.
At the same time, the average per bushel price of soybeans, which was $9.33 last year, is projected to drop to $8.60 this year before rising a bit to $8.75 by 2020.
National net farm income began declining in 2014 and continued to do so until 2017, when it rose slightly — before dropping again in 2018.
“Even though you have this expectation of an increase in farm income, it’s still tighter times,” says Ana Claudia Sant’Anna, a CFAES postdoctoral researcher who co-authored the new report with Katchova and Ben Brown, manager of CFAES’ farm management program.
It might take about a decade or more for profit levels to return to what they were in 2014, Sant’Anna says.
One positive for farmers in many states, including those in Ohio, is that agricultural land has maintained its value.
“If there’s a bright spot in farm balance sheets, it’s the land values,” Brown says.
Overall, the value of Ohio cropland has changed very little.
If land prices were dropping, that might be cause for concern, Katchova notes, “but farmers are not massively selling land.”
Not surprisingly, expenses on the farm are projected to climb in 2019, with the largest increases being in farm labor, feed purchases, interest and property taxes.
Corn and soybean farmers in Ohio likely will break even or potentially experience a loss on this year’s crop if they don’t own the land they cultivate, Brown says. Land costs factor significantly into growers’ net profit, and growers who own their land are likely to see a profit on this year’s crop.
Last year’s onetime boosters
Two factors boosted income on the 2018 crop that might not recur this year. New government aid to compensate for foreign tariffs may not be reissued, and 2018’s record-high corn and soybean yields might not be repeated this year.
The aid to compensate for foreign tariffs helped bolster profit, particularly for soybeans. The aid amounted to an average payment of $95.70 per acre for soybeans to Ohio farmers and $1.88 per acre for corn, Brown says.
“I can’t emphasize enough the significance of those payments,” Brown says. “For corn and soybean farmers, they really helped income statements.”