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2016 Logan County Farm Outlook Magazine
Lincoln Daily
News.comMarch 24, 2016 7
Predicted decline of
local farm economy
Will farm profitability fall for another year, and
will the Logan County Farmer survive?
It is often said that grain and livestock producers are
“eternal optimists,” but looking into the farm season
ahead, many are wondering if their optimism might be
lost in a quagmire of high costs and low revenues.
A quick review of the 2015 harvest season shows that
yields on corn, which appears to be the predominant
crop in Logan County, were down considerably over
2014 and 2015. The price per bushel at the elevator
was also down, making for a “lose-lose” situation for
farmers in the Midwest, and particularly in the heart
of Illinois.
What was the cause? There are several factors
playing into this new recession in the Ag industry.
The weather did play a big role in production this year
as heavy rains in the early growing season drowned
out fields, and affected yields on a large portion of
Logan County Farms. The end result, an average
yield that was about 50 bushels per acre lower than
2014 and also lower than the national average.
In the big picture, this might be a good thing. How
can that be? Because we are experiencing record
stockpiles of corn in the U.S., and that goes back to
the basic economic rule of supply and demand. The
value will drop as supply increases, and this is a part
of the reason grain crops are falling consistently.
But why do we have such a supply, with little
demand?
There was a time when the local agricultural
community only knew what was going on at the
local elevator, and there was less understanding of
how the world markets and world trade impact local
farms. Today we have, through technology, a greater
understanding of the role the world plays in our local
economy. And the world is not in good shape.
The U.S dollar is strong in the world markets right
now, and that should be a good thing, but for foreign
buyers it is not. Because we have added value to our
currency, countries like China that are suffering a very
weak economy right now, cannot afford to purchase
our products.
According to an article written by Philip Abbot,
Professor of Agricultural Economics at Purdue
University, “The reduction in export sales is a key
influence on sharply lowering U.S. farm income.” He
goes on to state that Ag exports dropped $12.6 billion
in 2015 compared to 2014, and he predicts additional
declines in 2016.
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