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Oct. 27, 2016
2016 Logan County Fall Farm Outlook Magazine
Lincoln Daily News
value of the corn crop has fallen significantly.
Despite significant gains on the production
side, the major consumers of corn: ethanol
production (no growth), animal feeds (some
growth), hi fructose corn syrup (declined),
other sweeteners (minor growth), alcohol and
beverages (minor growth), cereal and food (no
growth), starch (declined), seed (no growth,
and export (declined), are not consuming
more corn. Their total consumption numbers
over the last five years have largely remained
static, with no overall growth. Great gains in
production and no growth in consumption have
caused significant downward price pressure.
Unless new markets are found for all the corn
we are growing, prices will likely continue to
fall. Logan County producers who are farming
owned ground are currently experiencing low
profitability on their corn crop, adequate to
pay for the inputs and taxes on the ground
they farm, with some left over to sustain the
farm. Producers in the county who are farming
cash rent ground are really hurting (the degree
dependent on the amount of cash rent they
are paying). Cash rent farmers are likely
experiencing negative cash flow.
One of the current strategies employed by
Logan County farmers is to try to “out-
produce” the low prices. If they can produce
more bushels per acre, they can beat the low
prices and sustain the farm. This may be a good
short term strategy. In 2016, Iowa farmers are
experiencing an average of 165 – 185 bushels
per acre, while many Logan County farmers
are experiencing 230-250 bushels per acre.
While this higher production raises the cost of
inputs, it provides a significantly higher gross
income for the farm and brings the possibility
of profit much closer. But in the long term
greater production will only continue the cycle
of growth in production while consumption
remains flat, thereby later causing more
downward pressure on prices.
Another strategy employed by farmers across
the country and especially in Logan County is
to increase the amount of on-farm storage. The
corn cash price at the beginning of harvest this
year was $3.18 per bushel, and has since gone
to $3.50. Farmers are holding back the larger
portion of their corn crop in storage looking
for significant increases in price, selling only
what they need to pay the bills, waiting for the
magic numbers. By controlling the supply they
hope to increase the demand. But studies have
shown that the magic number for cash rent
farmers is likely to be breakeven at $3.85 per
bushel, a number that is not likely to be met if
the USDA is correct about the estimated size of
the crop this year.
A third recommended strategy recommended
for farmers is to diversify the crops they grow
away from corn into alternative crops which
bring substantially higher gross incomes per
acre. In the past five years quite a number of
acres which previously grew cotton or wheat or
oil seed or other crops around the world have
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