Midwestern farmers will likely need large reductions in rental rates on cropland in 2019 to have a chance of making money on corn or soybeans, said economist Gary Schnitkey of the University of Illinois. A $20-an-acre payment from the Trump administration’s farm bailout package “is not projected to cause profitability for either corn or soybeans in 2018,” said Schnitkey in reviewing the revenue outlook for producers for this year and next.
“The outlook for 2019 simply is not good at this point,” wrote Schnitkey at the farmdoc Daily blog. “Serious discussion of lowering cash rent will need to occur this fall.”
Based on current market prices and expected increases in fertilizer, pesticide, and interest costs, “Any cash rent over $200 per acre will result in losses of farmers,” wrote Schnitkey. Rental rates are about $264 an acre for highly productive land in Illinois this year.
In constructing “budgets” to illustrate costs and revenue from corn and soybeans, Schnitkey chose, as an example, a $20-an-acre payment from the White House aid package. (The USDA has not yet specified payment rates.) “If a $20 payment occurred on all of the 170.5 million corn and soybean acres projected to be harvested in the United States, the total government outlay on corn and soybeans would be near $3.4 billion, well below the $12 billion allocated for trade disruption programs. Larger payments are possible,” he said.
“A $20-per-acre Market Loss Facilitation payment is not projected to cause profitability for either corn or soybeans in 2018.”