Nearly every agricultural publication I have come across recently has had a pretty optimistic outlook for the coming years in farming.
The Corn Belt continues to be the most productive land in the world, and as developing countries continue to grow, the demand for ag products will rise along with it.
Additionally, technology, information, and genetic improvements continue to push crop production to unprecedented levels. However, input costs that rose along with the yield and price boom from previous years have not yet dropped, particularly the price of land.
Many established farmers have dealt with these situations before and may be prepared to ride the price waves.
Younger farmers may need some assistance as they adapt to the new farming climate. As we look ahead to 2020 (and the years to come), I would like to take this time to point out some helpful tools that agriculture economics specialists at Purdue have developed to help farmers navigate these times and help them better manage risks.
For up-to-date analysis and programming on economics, I highly recommend monitoring Purdue’s Center for Commercial Agriculture website: https://ag.purdue.edu/commercialag/home. Here you will find timely articles and webinars for the upcoming year, including information on the Farm Bill, global trade, cash rent and land value trends, and upcoming programs going on around the state.
Additionally, as you navigate local and state commodity markets, you can access their “Crop Basis Tool,” which can be used to examine weekly nearby and deferred basis prices for corn and soybeans. Daily cash price data from individual grain elevators and processors are averaged within each crop reporting district to create a regional average cash price series.
The regional average cash price data is used to compute weekly basis (cash price minus futures price) for corn and soybeans, using Wednesday cash and futures prices to generate weekly basis data for each crop and crop reporting region.
Of course, marketing is just one of the many risks farmers will be facing in the coming years, thus a major portion of the website is devoted to managing farm risk.
The website, which is part of a partnership with the Indiana Soybean Alliance and Indiana Corn Marketing Council, offers many valuable resources, and can help you evaluate your current situation and tailor resources to help manage and better prepare you for potential risks.
Much of our focus is so often on production, but with margins squeezed as tight as they are, managing these potential risks could be the key in any given operation between success and failure.