With all of the world’s depressing economic news taking the lion’s share of the media’s attention, a funny thing has happened on the farm. According to one economist at the University of Illinois, the period beginning in 2006 and ending “sometime in the future” likely will be viewed as a “Golden Age” for crop farm incomes.
The numbers are quite staggering. According to Gary Schnitkey, professor of agricultural economics, higher commodity prices have led to higher net farm incomes for grain farmers. And for grain farms enrolled in Illinois Farm Business Farm Management (FBFM), net farm income has averaged $66,000 per farm from 2001 through 2006 increasing to $177,000 per farm from 2006 through 2010.
“Net farm incomes on grain farms likely will average over $200,000 in 2011 because of high corn and soybean prices. Current WASDE estimates place the average price during the 2011/12 market year between $6.20 and $7.20 per bushel for corn and between $11.60 and $13.60 per bushel for soybeans,” Schnitkey says.
However, there is a note of caution: “All grain farms need to consider ways of withstanding periods where crop prices are significantly below the long-run averages of $4.50 for corn and $10.50 for soybeans. Understanding how to responds to a $3.50 corn price and $8.50 soybean price will be a worthwhile planning activity,” Schnitkey says. The full report is available here.
So do you have business strategies in place for 2012 and beyond?