Post

Projected 2015 Illinois farm income is down

Projected income for grain farmers who are cash renting is much lower this year than it was in 2014.  Gary Schnitkey, an agriculture economist at the University of Illinois, revised this year’s crop budgets indicating that returns for highly productive central Illinois farmland would be $244 per acre.  But when cash rent is considered, which in that area is about $285 per acre, projected per-acre net income is negative $41.

The projection improves when considering possible marketing gains from selling the previous year’s grain, and other closely related income, such as patronage dividends and custom work.  That brings projected net income for a 1,500 acre grain farm to $7,450 in 2015.  That’s down substantially from $103,500 in 2014.

For share rented farmland, the farmer’s land cost is the landowner’s net share of revenue and costs, plus any cash rent paid by the farmer to the landowner. These land costs are estimated at $243 per acre based on 50-50 sharing of revenue and direct costs between landowner and farmer, plus an additional $25 cash rent paid by the farmer to the landowner. Net income from a share rent acre is $1 per acre.

Land costs for owned land include estimates of $30 an acre in property tax and $115 per acre in mortgage interest. Given the $145 of land costs, net income from an owned acre is $99 per acre.

Reasons for lower 2015 income are that operator and land returns are lower in 2015 as compared to 2014. The 2014 operator and land return for central Illinois highly productive farmland was $294 per acre, compared to the $244 projected for 2015.

Significant marketing gains occurred in 2014 while marketing losses are more likely for 2015. In 2014, many farms had marketing gains of around $20 per acre.  For 2015, the marketing gain is expected to be near zero, if not below that.