Acres of Knowledge All issues concerning Small Farms, Agriculture, Local Food Systems, and the Natural Resources. Sun, 15 May 2005 13:02:08 -0500 New, New Era of Grain Prices Fri, 21 Dec 2018 10:36:00 +0000 I recently attended one of the 2018 Farm Economic Summit meeting and heard a presentation given by Dr. Scott Irwin, Dept. of Agricultural & Consumer Economics at University of Illinois. In this talk, we were shown the similarities between the price trends of the past 70 years.

During this period, Scott showed when new demand for grain caused prices to rise to higher levels and that occurred three times in the past 70 years – the late 1940's, the mid-1970's and then recently 2007-2013. These high demand, high grain price periods were then followed by periods of stagnant to declining prices as world grain supply outgrew demand growth. During these periods of lower world demand, there were still spikes to higher prices due to supply disruptions from weather problems, but they were short-lived, as in 1980, 1983, and 1996.

All this leads to Dr. Irwin's premise that grain prices are currently in a period of oversupply and lower demand, which leads to the need for grain producers to readjust their price expectations for financial planning and budgeting. The forecasted new normal range for corn prices is $2.75 to 5.50 with the average in the upper $3 range. For soybeans, the new price range is $7 to $13 with the $9 being the average. As mentioned before, the higher prices of these ranges will be due to weather problems causing short-term supply shortages.

With the likelihood of grain prices averaging less than what we have seen during the 6-year period of 2007 to 2013, grain farmers need to know their cost of production to the penny. The efficient and lowest-cost producers will make money in this lower price environment.

For more information on this and other farm business and management topics, visit the farmdoc DAILY website: .]]>
Tips for Temporary Corn Storage in Grain (Silo) Bags Mon, 15 Oct 2018 13:11:00 +0000 A lot of this year's harvested corn is going into big grain bags on the ground for temporary storage till more permanent storage is available. Here are some helpful tips from Dr. Klein Ileleji at Purdue University on how to manage grain stored in the field in grain storage bags.
  1. Locate the bags on firm, well-drained ground that is smooth and level, that has plenty of room for loading and unloading equipment to maneuver. You do not want any debris to be present that could puncture the bag.
  2. Orient the bags in a north-south direction to minimize temperature variation along the length of the bag.
  3. Avoid grain spills near the bags, since these will attract vermin to the bags. Rodents and vermin increase the likelihood of bag damage by chewing or clawing.
  4. Keep folds at the base of the plastic bag to a minimum when filling, since folds are easy places for rodents to chew on the plastic grain bags.
  5. Inform your insurance company that grain is being stored temporarily in grain bags.
  6. Dry grain stored in grain bags is NOT hermetically sealed. Insects and molds can grow in these storage bags.
  7. Corn and soybeans stored in bags should be at or below 15% and 13%, respectively.
  8. Inspect bags frequently for tears and holes. Repairs should be made with sealants and tapes available from the bag's manufacturer.
  9. Grain should not be stored in bags past the spring warm up. It is highly recommended to not store in bags longer than 4 months and never past the spring thaw.
For more information, read Dr. Klein Ileleji's article, "Use of Silo Bags for Commodity Grain Storage in Indiana".
Market Facilitation Program: Impacts and Initial Analysis Wed, 05 Sep 2018 13:22:00 +0000 This is the title of an article authored by agricultural economists from the University of Illinois and the Ohio State University. The Market Facilitation Program (MFP) is an effort by the USDA to provide aid to farmers because of trade disputes with our major foreign grain buyers. It has been estimated that the escalating trade issues in the May to August 2018 period have led to an 11 percent ($1.10) decline in soybean prices and a 5 percent decline ($0.20) in corn prices (farmdoc Daily, Aug. 16, 2018).

The payment rates for the two major crops, here in central Illinois, will be $0.01 per bushel of corn and $1.65 per bushel of soybeans. The initial payments will be make on 50 percent of the reported 2018 production. The effective payment on proven 2018 production is $0.005 per bushel of corn and $0.825 per bushel of soybean. There is a possibility of further MFP payments, but it is not guaranteed.

Using these numbers, the economists are estimating initial MFP payments of about $1 per acre for 200 bushels per acre corn and $53 per acre on 64 bushels per acre soybean. As the article points out, if a farm is 50:50 corn and soybean, then the average per acre payment will be $27 for this initial payment.

The application process for MFP began on September 4. However, the USDA suggests that farmers have "verifiable and relative production record by crop, type, practice, intended use, and acres if not already on file". The application process ends on January 15, 2019. More information on MFP is available at: .

To access this article, visit farmdoc Daily at: and click on "Market Facilitation Program: Impacts and Initial Analysis"; Schnitkey, G., J. Coppess, N. Paulson, K. Swanson and C. Zulauf.]]>
What about a Flexible Cash Rent Lease Fri, 17 Aug 2018 13:07:00 +0000 It must be August, because my office phone has been lighting up with calls from farmland owners wanting to know about the direction of cash rent values for lands here in east-central Illinois. This is never easy to answer, because no one can accurately forecast the future. Currently at this moment with the projected above average harvest of field corn and soybean, and the continuing trade disputes with our major foreign grain buyers, the outlook for cash grain income is not as "rosy" as it was 4 months ago.

With all this uncertainty in the marketplace, farmland owners and operators may want to shift from the more traditional cash rent farmland lease to either a flexible cash rent lease or a hybrid of these two, the "base rent + bonus" cash rent type of lease. These types of leases allow for increasing cash rent if cash grain incomes rise.

The Iowa State University has two good publications that describe the basics of these leases as well as giving examples. "Flexible Farm Lease Agreements -- -- C2-21" and "Flexible Cash Rent Lease Examples -- C2-22" are both available from their website and include a "flexible cash rent" analyzer where you can analyze different yield and price scenarios to come up with an equitable lease for both parties.

The University of Illinois "farmdoc" has fillable cash rent lease forms that can be used for either straight cash rent or a flexible type of rent. Short fact sheets on the each of the various farmland lease types can be found on the "farmdoc" Management page under "Farm Leasing Fact Sheets". Additionally, "farmdoc" in its FAST Tools section under the Farm Management heading has a Farmland Lease Analysis and Cash Rent with Bonus calculators that are available.

Interest Rates and Cropland Land Values Thu, 12 Apr 2018 13:45:00 +0000
In summarizing the results of their research, the group pointed out that "land rents were twice as important as declining interest rates to the increase in cropland prices between 2003-2006 and 2015-2016."

However, they point out that, "Higher interest rates clearly generate headwinds for cropland values and increase risk for cropland buyers, owners, and lenders."

The last point of the article was to look at the entire cropland price picture when trying to predict land price movements. "It is important to watch interest rates but also important to watch rent and other factors that impact cropland prices, and in particular are the three sets of factors reinforcing each other or offsetting each other."

Source: Zulauf, C., G. Schnitkey, J. Coppess, and N. Paulson. "Interest Rate and Current U.S. Cropland Prices." farmdoc daily (8):64, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, April 11, 2018.]]>
What is Soil Health? Thu, 12 Apr 2018 12:10:00 +0000 In agriculture, we heart a the term "soil health", which has been used for about five years, now. Yet what does it mean. the USDA Natural Resource Conservation Service (NRCS) defines soil health as "the continued capacity of soil to function as a vital living ecosystem that sustains plants, animals and humans." this is a great definition, but it really does not tell me much about how a farmer or landowner can put in place practices that will encourage or sustain soil health on their land.

In a recent article by Christina Curell of Michigan State University, she points out that the key concept behind soil health is the protecting and nurturing of soil biota. Further, according to the NRCS, there are four key principles to maintaining and enhancing the organisms within our soils.

The four principles are:

  1. Keep the soil covered as much as possible;
  2. Disturb (till) the soil as little as possible;
  3. Keep growing plants on the soil as long as possible to feed the soil organisms; and
  4. A diversified crop rotation the includes cover crops.

These are new ideas about soil management for many in agriculture, but new soil science research continues to shed light on the importance of these four principles to ensuring healthy soil, which leads to increased soil nutrient cycling, improved water infiltration and improved soil structure.


Habits of the Most Profitable Central Illinois Farmers Fri, 19 Jan 2018 10:11:00 +0000 At the recent Illinois Farm Economic Summit (IFES) meetings, Drs. Nick Paulson and Dale Lattz of the farmdoc team shared the results of two studies that highlighted the differences in profitability between the top third and bottom third of farms in Illinois and the typical management practices of the top earners.

Nick Paulson's graph shows in 2015 that farmers in the top third of farm revenues generated had over $60 per acre of increased income than the bottom third. This may not sound like a lot of money, but if you multiply 1500 acres by the $60 additional that nets a $90,000 increase in income.

In looking at grain farms in east and central Illinois, their work showed an $85 per acre difference in revenue between the top third and middle third of farm generated revenues when averaged over the years 2014 to 2016. If you use the same 1500 acre farm and multiply each acre by $85, you see that is over $127,000 in increased farm revenue.

These big differences in revenues generated per acre were the reason for the second study, which tried to determine if there were any common factors among the top revenue generating farms. Dale Lattz shared the results of a study, where a group of soybean farmers in east and central Illinois in the top third of farm revenues were interviewed on their practices. The results showed a number of commonalities within this group of more profitable soybean farmers. These are:

  • Attention to details in all aspects of the farm's operations - field operations, crop management, marketing and risk management;
  • Had appropriately sized and well maintained equipment;
  • Strived for the most profitable yields per acre not the highest yields per acre;
  • Seeked out information from a variety of sources; and
  • The importance of input cost control.

These two presentations can be viewed at farmdoc 2017 IFES presentations: Dr. Paulson's and Dr. Lattz's.