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10 March 24, 2016
2016 Logan County Farm Outlook Magazine
Lincoln Daily
News.comcontinues, that banker will probably not go the second
year.
So what is the solution to this downward spiral?
Short answer – quit farming. Seriously. Even Graff
noted that he lost money in 2015 and was willing to
lose money in 2016 if it works out that way, but he
said he would not do it in 2017.
For some of the small farmers with less than a
thousand acres, it may be time to look at becoming
a landlord. While cash rents also appear to be on a
downward trend, there is still money in cash rent for
the landlord. With even 500 acres in the low one-
third land quality bracket price of $275 an acre, as
noted in John Fulton’s introduction, the landowner
can yield $137,500. After taxes, and depending on
if there are current farm loans to pay off, this could
bring in enough cash for the family household. The
idea is that the larger farmers can better handle
the risk than the small farm. Considering the risk
involved in being unable to pay a bank loan, that
ultimately over the next year or two could even lead
to bankruptcy, it is a reasonable option, for the small
farmer.
For the larger producer, this may not be the best
option simply because they have too much invested in
their operation, and to simply stop farming would not
solve their financial issues. That will mean that these
farms must determine how to reduce the operating
costs while producing a crop, and hope that the prices
will eventually come back up.
Graff mentioned in his podcast that one plan is to
plant with a lower plant population, thus reducing
seed costs. Another idea, be conservative in chemical
applications and plan on running that combine
another year even though it is depreciating. Also, this
may be the year not to contract fertilizer and other
inputs.
Buying early can often result in lower pricing,
but will it this year? When we buy early, we are
guaranteeing the demand for a product. This could
be a year to offer no guarantees. If the manufacturers
cannot see that demand on the books, will they
respond by lowering prices? Probably so.
And, as frightening as this may sound, our future as
a farming industry may depend much on the federal
government. LaHood recently announced that he will
co-chair a U.S. and China Working group. The goal
is to build the diplomatic relationship between the
U.S. and China and strengthen both economies. If
this program proves to be successful, it could have a
positive impact on many of the economic sectors of
the U.S., including agriculture.
LaHood is also optimistic about improving trade
relationships with Cuba and noted that trade with
Cuba would be good for Illinois farmers, as well as
the Illinois-based manufacturer, Caterpillar.
Another program that sounds good in theory is the
Trans-Pacific Partnership (TPP). Again this is a
program that LaHood supports saying that it will be
good for the farm economy in the Midwest. In that
plan, the U.S. may participate trade in agreements
with several countries that have borders on the
Pacific. Among those are Japan, Vietnam, Singapore,
Brunei, Malaysia, Australia, New Zealand, Chili,
Peru, Mexico, and Canada.
The TPP has met with some negative feedback based
on its composition. The partnership agreement covers
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