Expect High Grain Prices, Strong Farm Income

The headline says it all, according to the 2008 agriculture outlook from economists with the Food and Agricultural Policy Research Institute (FAPRI).

Grain prices increased dramatically in the last two years and are expected to remain well above pre-2006 levels, report FAPRI economists.

Higher prices increase revenues for crop producers but also increase feed costs for livestock producers. Overall, net farm income goes up, some government farm program payments drop, and consumers see higher food costs.

Those current and future farm changes are in a 68-page 2008 FAPRI Baseline Briefing Book delivered to the U.S. Congress and USDA by the agricultural economists from a multi-university think tank. The independent analysis which projects the agricultural economy for 10 years is requested annually by Congress.

“Agricultural market outlooks appear more uncertain than in past years,” says Pat Westhoff, co-director of the University of Missouri FAPRI, Columbia, MO. “Petroleum prices and biofuel policies drive most of the changes.”

Some highlights from the report include:

  • This year, corn faces price competition from soybeans and wheat in a “battle for acres,” Westhoff says. FAPRI expects 2008 soybean acreage to increase about 6 million acres with wheat acreage increasing as well. Corn retreats 2 million acres from its post-World War II high recorded in 2007.
  • Plantings of 12 major crops are expected to increase 4 million acres in 2008, following a 3 million-acre increase in 2007. Most new acres come from double-crop soybeans and wheat, reduced fallow ground, and expiring contracts on Conservation Reserve Program acres.
  • The biggest change in agriculture is a shift to supplying biofuels, both in corn for ethanol and soybeans for biodiesel. FAPRI reports that trend will continue because of high petroleum prices and mandates in energy legislation.
  • Corn receives major attention in the report. Ethanol demand for corn almost doubled from 2005 to 2007, with nearly 4 billion bushels to be used from the crop to be harvested this fall. FAPRI projects corn for ethanol will almost equal the bushels fed to U.S. livestock by 2015, Brown says. “In spite of rising production costs, net returns to corn farmers remain very high by historical standards,” Westhoff adds.
  • Soybean production dropped sharply last year, with an acreage shift to corn. However, strong domestic and international demand for vegetable oil — caused in part by growing biodiesel production in the U.S. and Europe — helped reverse that shift.

FAPRI at the University of Missouri in Columbia prepared the briefing book, with help from other states. FAPRI at Iowa Sate University gave international and crop insurance outlooks. Other sectors include rice by the University of Arkansas, fruits and vegetables by Arizona State University. and cotton by Texas Tech University. Texas A&M University translated national trends to farm and ranch levels.

The full report is at http://www.fapri.missouri.edu/.

 

Leave a Reply

Management Stories

ManagementAgriculture 3.5: A Bumpy Road Ahead
May 24, 2016
You may have read my article a few years ago on Agriculture 3.0, which is a term I coined to Read More
Southern States Cooperative
glyphosate
Crop InputsWHO: Glyphosate ‘Unlikely’ To Cause Cancer
May 16, 2016
Via Reuters.com reporter Kate Kelland: The weed-killing pesticide glyphosate, made by Monsanto and widely used in agriculture and by gardeners, Read More
dicamba, Roundup Ready 2 Xtend
Crop InputsASA: No Dicamba On Roundup Ready 2 Xtend In 2016
May 16, 2016
While Roundup Ready 2 Xtend (RR2X) are tolerant to dicamba and glyphosate herbicides, no dicamba herbicides will be approved for Read More
Trending Articles
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Eyeing Monsanto For Possible Mega-Merger
May 16, 2016
Bayer AG is exploring a potential bid for U.S. competitor Monsanto Co. in a deal that would create the world’s Read More
Aerial Drone
Precision AgA Deeper Dive Into The Future Of Precision Ag
May 9, 2016
For about two decades now, through the good and the bad times, the ups and the downs inherent in agriculture, Read More
Palmer amaranth in soybean stubble
HerbicidesWSSA: Billions In Potential Economic Losses From Uncontrolled Weeds
May 4, 2016
What losses would corn and soybean growers experience if they were forced to eliminate herbicides and other control techniques from Read More
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
Latest News
ManagementAgriculture 3.5: A Bumpy Road Ahead
May 24, 2016
You may have read my article a few years ago on Agriculture 3.0, which is a term I coined to Read More
Topcon’s X30 display with CropSpec sensors
EquipmentGPS Autosteer Systems: Product Updates From Precision A…
May 24, 2016
Throughout 2015 GPS Steering solutions continued to evolve from what was once an after-market add on, to today’s cab where Read More
Trimble TMX-2050 In-Cab Display
Eric SfiligojThe Precision Ag Revolution Continues
May 24, 2016
It’s funny how much “the first time” tends to mean to someone as they get older. I sometimes can’t recall Read More
Eric Wintemute, AMVAC
Precision AgAMVAC Ups The Ante With New Precision Ag Technology
May 24, 2016
A potentially industry-changing at-plant soil treatment system from American Vanguard Corp., or AMVAC, is coming soon to large growers in Read More
Dry and Liquid Plant
CropLife 100CropLife 100 Map
May 24, 2016
The new CropLife 100 map shows the locations of each of the headquarters of the 2015 CropLife 100 retailers. The interactive Read More
Southern States Cooperative
Corn Field
Industry NewsTiger-Sul Names Veteran Account Manager To Lead Central…
May 23, 2016
With the continuing growth of the sulphur bentonite and precision crop nutrient industry, global agriculture firm H.J. Baker has announced that Read More
Bayer sign
Industry NewsReuters: Bayer Defies Critics With $62 Billion Monsanto…
May 23, 2016
German drugs and crop chemicals group Bayer has offered to buy U.S. seeds company Monsanto for $62 billion in cash, Read More
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Industry NewsCompass Minerals Hires Industry Veteran To Lead Plant N…
May 19, 2016
Compass Minerals has hired plant nutrition industry veteran Vatren Jurin to steer the company’s portfolio expansion into specialty liquid micronutrient Read More
ASMARK Retailers LIVE! Tour 2016 Group shot The Andersons
CropLife 100The Andersons Rejects Unsolicited Proposal From HC2
May 19, 2016
The Andersons, Inc. has announced that its Board of Directors has rejected two non-binding, highly conditional, unsolicited proposals from HC2 Read More
glyphosate
Crop InputsWHO: Glyphosate ‘Unlikely’ To Cause Cancer
May 16, 2016
Via Reuters.com reporter Kate Kelland: The weed-killing pesticide glyphosate, made by Monsanto and widely used in agriculture and by gardeners, Read More
dicamba, Roundup Ready 2 Xtend
Crop InputsASA: No Dicamba On Roundup Ready 2 Xtend In 2016
May 16, 2016
While Roundup Ready 2 Xtend (RR2X) are tolerant to dicamba and glyphosate herbicides, no dicamba herbicides will be approved for Read More
CPP, glyphosate, dicamba, atrazine,
Crop InputsReport: Congress Pressing EPA On Glyphosate Review Hand…
May 16, 2016
Via Reuters.com reporter P.J. Huffstutter: U.S. lawmakers have asked EPA to explain why it published – and then withdrew – Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Eyeing Monsanto For Possible Mega-Merger
May 16, 2016
Bayer AG is exploring a potential bid for U.S. competitor Monsanto Co. in a deal that would create the world’s Read More
ManagementAsmark Institute Tour Observations
May 12, 2016
Special Guest CropLife Field Editor Matthew Grassi discusses his week-long visit with 45 ag retailers as part of the Asmark Read More
MicronutrientsCompass Minerals Expands Trial Work For Wolf Trax Innov…
May 12, 2016
Fertilizer manufacturer Compass Minerals continues to expand the evaluation program for its Wolf Trax micronutrient fertilizer products, according to a Read More
Young Corn Closeup
Industry NewsArysta Adds To Marketing Team
May 12, 2016
Arysta LifeScience North America recently announced the addition of David Davies to its marketing team. As marketing manager, Davies will Read More