Lower Grain Farm Income is the Word from U of I Economists

In 2015 and 2016, average net incomes on grain farms in Illinois are projected at levels similar to those from 1998 through 2002, the last time very low incomes occurred in agriculture. Current projections place average net income on Illinois grain farms at about $20,000 per farm, considerably below the $104,000 per farm average for 2014. At current projections of commodity prices, net incomes in 2016 likely will be low as well. That's the word from University of Illinois economists.

Net income in 2015 will be lower than in 2014. There are three major factors leading to lower 2015 incomes:

• Lower corn yields. Many farms will have lower yields in 2015 as compared to 2014. USDA estimates average corn yield in Illinois for 2015 at 168 bushels per acre, down by 32 bushels from a 200 bushels per acre yield in 2014. USDA estimates soybean yields the same for both 2014 and 2015 at 56 bushels per acre.
• Lower soybean prices. Price received for soybeans produced in 2014 averaged $10.20 per bushel. The estimate of the 2015 average soybean price is $8.90 per bushel. Corn prices are at roughly similar levels.
• Lower marketing gains. Most net income statements for farms are prepared using modified cost principles. Grain revenues typically include crop sales and changes in grain inventory values between beginning and ending balance sheets. Much of the grain produced and un-priced in 2013 was valued on the end-of-year 2013 balance sheet at prices lower than the grain sold in 2014. The resulting gain contributed around $50 per acre to 2014 net income. Marketing gains likely will be small or negative in 2015.