Corn and soybean growers will need to trim their cash flow again in 2016 if commodity prices repeat this year’s comparatively low levels, says economist Gary Schnitkey of U-Illinois. “If 2016 returns hold as projected … farmers will have a third straight year of losses on farmland that is cash rented at average levels,” Schnitkey wrote at farmdoc daily. He used crop budgets that assume an average farm-gate price of $4.20 a bushel for corn and $10 a bushel for soybeans. Schnitkey’s calculations show a return of $251 per acre to growers with a 50-50 corn-soybean split after they pay for seeds, fuel, fertilizer, pesticides, machinery, hired labor and insurance – everything except land.
The average cash rental for highly productive farmland in central Illinois was $293 an acre – roughly $40 an acre higher than the amount growers are projected to see after production costs. And that’s aside from the income farmers need for themselves. Growers made an average $40 an acre from 2000-05, says Schnitkey. “Projected 2016 budgets suggest the need to reduce cash flow, leading to a difficult planning period for 2016 crop production. Input price releases will determine the need to reduce cash rents for 2016.”