Farm Income, Grain Prices Lower, But Farmers Likely to Stick with Corn, Soybeans in 2016
December 29, 2015
Corn Belt farmers faced a down year in 2015, according to Agriculture Department numbers. Demand for grain was high, but farmers hauled in an enormous supply of corn and soybeans, keeping prices low. USDA says overall farm income in 2015 is likely to be down 55 percent compared to a peak in 2013.
Still, that may not push farmers away from these staple crops. A few farmers may put more land aside for conservation or switch to organic.
“In most cases, though, what they find is the traditional cropping systems are the ones that offer [profitability],” says Iowa State University economist Chad Hart. “That’s the reason we did them in the past, that’s the reason we’re likely continue them in the future.”
Hart says for the most part farmers will be able to weather this dip as just part of the cycle of agriculture. The impact on state economies may vary, though.
“When you’re looking at the state of Iowa and our economy, ag is still a major component there. But we tend to over-blow how big it is,” he says. Production agriculture plus associated businesses make up about 25 percent of the Iowa economy. “We’ve taken the ag hit, but we’ve been able to balance it off with other industries within the state.”
Conversely, during the recent recession in the general economy, Hart says agriculture was doing well and helped shore-up Iowa’s economy. Other states remain more dependent upon agriculture.
“I was just up in North Dakota a couple of weeks ago and there you’re seeing where there’s been a heavy concentration in ag and energy,” Hart says. “And now both those sectors are down and the state is feeling the pinch.”
He says it’s important to consider that USDA’s projections for 2015 farm income reflect all agriculture, including livestock and crops from across the country. In any year, a given farm could see a boom or bust.
But chances are good corn fields will be aplenty next summer across the region.