Showing posts from November, 2019

MFP Payments and 2020 Cash Rents

MFP payments have had impacts on land rental rates. Moreover, uncertainty about the continuation of MFP in 2020 presents issues in setting cash rental rates. Given this uncertainty, we present the idea of setting cash rents at appropriate levels given the price and yield environment, likely lower than 2019 cash rent rates, with contingencies for cases in which MFP payments occur. By doing this, base cash rent is set at a level that allows the farmer to generate profits and leaves open the option for both parties to benefit if MFP payments occur in 2020. by Gary Schniteky, ILLINOIS Extension link to farmdocDaily article Market Facilitation Program (MFP) payments have served as a significant source of revenue on grain farms in 2018 and 2019. Without MFP payments, average farmer returns would be negative in 2019, and far below any level since consistent records began in 2000. Without MFP payments, 2020 returns are projected to be negative. It is unknown at this time if MFP payments


2019 was a truly historic and in many ways unbelievable year for Illinois agriculture. The ongoing trade war with China and the on- and off-again efforts to reach an agreement dominated headlines much of the year. As if this wasn’t enough uncertainty for one year, Illinois was hit by one of the wettest spring planting seasons on record. Looking forward, the story of Illinois agriculture will continue to be one of managing volatility and financial difficulties. The stress of a prolonged period of low corn, soybean, and wheat prices, was amplified for producers experiencing low yields this year due to poor planting and summer growing season weather. Producers and landowners continue to face a series of difficult management challenges as they grapple with adjusting to this highly volatile economic environment. What is the prospect for a recovery in grain prices? Should cash rents be lower? And if so, how much? How much will government programs offset some of the financial stress? The

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Projected Net Incomes on Illinois Grain Farms in 2019 and 2020

by Gary Schnitkey, ILLINOIS Extension Due to lower corn and soybean yields, 2019 net farm incomes on Illinois grain farms are projected to decline more than $80,000 per farm from 2018 levels. The low yields are partially offset by higher corn and soybean prices and higher MFP payments in 2019 as compared to 2018. Incomes in 2020 are projected to be negative if yields are at trend levels and Market Facilitation Program (MFP) payments do not occur. Historic Net Incomes on Illinois Grain Farms Figure 1 shows average yearly net incomes on grain farms enrolled in Illinois Farm Business Farm Management (FBFM). These net incomes are averages across all grain farms in Illinois. Size, tenure relationships, and financial structures vary across these farms. Many farms are below 1,000 tillable acres, and some farms have over 8,000 acres. Over time, the size of farms has grown. In 2018, the average number of tillable acres was around 1,500 acres. As can be seen in Figure 1, there are thr

Adding the Costs of Conservation to a Farm Lease

Farmers and landowners alike are wanting to try more conservation practices. Todd Gleason reports the timing and amount of nitrogen applications along with the use of cover crops can all be written into a farm lease. farmdoc farm lease page link (1) Soil Health and Conservation Addendum The Soil Health and Conservation Addendum is for a landowner who seeks to reach clear understanding with the farm-tenant about practices on the land under lease. The addendum is a fillable pdf and the parties can negotiate the specific provisions to include in the addendum, memorializing the agreement by selecting the specific provisions. The provisions and fillable pdf are designed to be additive: each selected provision will be incorporated in the lease agreement. Included among the provisions that can be selected are those for tillage practices and cover crop practices. There are also specific provisions pertaining to other conservation efforts that may be present on the farmland, such as dit