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Low crop prices, high rentals mean risk for farmers in 2014

According to a U of M Extension analysis, without a significant rebound in crop prices, farmers face a losing year in 2014

December 20, 2013
By Steve Browne , Marshall Independent

MARSHALL - If corn and soy prices remain low, farmers might not make a profit in 2014, according to a report by the University of Minnesota Extension.

U of M Extension Educator Dave Bau calculated the increase of cropland rental rates over the past five years at 10.8 percent for the state overall and 12.1 percent for the 14 counties of southwest Minnesota. Assuming a 12.1 percent rate of increase, cropland rental in the region will average about $264 per acre.

Bau has just completed a series of 25 farmland rental workshops across the state where he discussed the dramatic change in the outlook for 2014 compared with 2013. Calculating all input costs, including cropland rental, Bau said if current prices remain the same, farmers will suffer losses next year.

"If prices don't rebound, farmers will lose money next year," Bau said. "If farmers get $5 a bushel for corn and $12 a bushel for soybeans next year it'll work out. If they don't, it won't be very nice."

Input costs include seed, fertilizer, fuel, and maintenance as well as land rental. However land rental prices may be most subject to market pressure to decline or at least remain constant, according to Bau.

"It's a topic that's been coming up frequently among farmers who are our core members and the board," said Adam Czech, public relations manager of the Minnesota Corn Growers Association. "Prices are down, but we're not seeing input costs and rental coming down. Landowners may be thinking they can still get prices they have and not really have to drop yet. It's taking the land rental market a little bit longer to work itself out."

When corn rose to $7 per bushel, many farmers went to corn-on-corn cropping in subsequent years and putting more of their land in corn and less in soy. Current price trends may favor a more balanced approach to planting.

"If 48 bushels an acre of soy at $11.50 per bushel makes up for loss of income from corn in 2014, well, there's been a lot of discussion of less corn-on-corn and more 50-50," said Sam Ziegler, director of marketing programs for Minnesota Soy. "Prices are telling farmers soybeans are looking to be more attractive."

 
 

 

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