Farm Programs

Arriving at equitable land bushel for corn and $13.30 rental rates is always an per bushel for soybeans. ongoing challenge for farm (Market year average pricoperators and landlords es are the average farmalike; and will likely be an level prices calculated from even bigger challenge for Sept. 1 in the year of harthe 2023 growing season. vest until Aug. 31 of the following year.) The market year average prices in recent years for corn were $4.53 per bushel in 2020-21, $3.56 in 2019-20, $3.61 in 2018-19, and $3.36 in 2017-18 Recent market year average soybean prices were $10.80 per bushel in 2020-21, $8.57 in 2019-20, $8.48 in 2018-19, and $9.33 in 2017-18. As of Nov. 1, USDA is estimating the market year average prices for the 2022-23 marketing year at $6.80 for corn and $14.00 for soybeans. Many times, land rental rates for a coming crop year are based on the profitability in crop production in the previous year or two before. In some cases, this can present profitability challenges for farm operators if grain prices drop or there are yield challenges. On the other hand, there can be extra profit for farm operators in years with above-average yields and higher levels of crop prices. Many landlords have gradually been increasing cash rental rates since 2019. FARM PROGRAMS By Kent Thiesse MARKETING Approximately two-thirds of the farmland in the upper Midwest is under some type of cash rental agreement. Based on farm business management land rental data compiled by the University of Minnesota, average rental rates from 2015 to 2019 in Minnesota declined by 10-20 percent after showing an average increase of 40 to 50 percent from 2010 to 2014. Based on the U of M data, average land rental rates in the region for 2020 and 2021 increased by 5 to 10 percent. According to a U.S. Department of Agriculture Cash Rental Summary released in late Current cash corn prices for Fall delivery for the 2023 crop year are near $5.50 to $5.75 per bushel at many locations in the upper Midwest; while 2023 cash soybean prices are near $13.00 to $13.50 per bushel. The USDA Farm Service Agency is using $5.40 per bushel for corn and $12.40 per bushel for soybeans as 2023 planning prices for FSA-based annual farm loans. However, FSA is using only $4.00 per bushel for corn and $10.00 per bushel for soybeans as planning prices on FSA loans longer than one year. August, average cash rental rates in Many farm operators will have sigmost counties increased by 5 to 10 nificantly higher crop input costs in percent in 2022 compared to average 2023 compared to 2022 or 2021, and 2021 rental rates, and have increased could face some challenging breakeven by 15 to 20 percent since 2019. Farm price levels next year if 2023 land management analysts expect 2023 rental rates are set at high levels. cash rental rates to again show a sig- Based on Southern Minnesota Farm nificant increase in most areas, given Business Management records, the the current strong corn and soybean average total direct cost in 2021 for prices. seed, fertilizer, chemicals, fuel, etc. The commodity prices for corn and soybeans in 2022 reached the highest levels since 2012-13, due to increased domestic usage and higher export levels of U.S. corn and soybeans — along with associated decreases in the nation’s grain supplies. (excluding land rents) on cash rental corn acres was near $460 per acre; and was near $245 per acre on cash rented soybean acres. Average direct expenses for 2022 increased considerably for many farm operators — mainly due to higher fertilizer, chemical, fuel, labor and repair expenses. The

The final USDA national market 2021 FBM records showed an average year average crop prices for the 2021- of $106 per acre on cash rented corn 2022 marketing year were $6.00 per acres and $68 per acre on soybean acres for overhead expenses, which includes machinery costs, hired labor, insurance, and other ongoing expenses; but does not include any net return to the farm operator. Most farm management analysts expect total direct and overhead expenses for corn production to increase by 15 to 20 percent in 2023, with an increase of 10 to 15 percent for soybean production. be approximately $5.71 per bushel, which would drop to $5.00 per bushel with a corn yield of 200 bushels per acre. If a $60 per acre allocation for labor and management (family living expenses) is included, the corn price breakeven levels would rise to $6.05 per bushel with a 175 bushel per acre yield, and $5.30 per bushel with a 200 bushel per acre yield. If the cash rental rate or other expenses are $50 per acre higher than estimates, breakeven levels increase to $6.34

According to a U.S. Department per bushel at 175 bushels per of Agriculture Cash Rental acre and to $5.55 per bushel at

Summary released in late 200 bushels per acre.

August, average cash rental Similarly, with soybeans, using rates in most counties increased direct expenses of $300 per acre, by 5 to 10 percent in 2022 com- overhead expenses of $85 per pared to average 2021 rental acre, and land rent of $280 per rates, and have increased by 15 acre, total costs would be $665 to 20 percent since 2019. Farm per acre. The breakeven soybean management analysts expect 2023 cash rental rates to again show a significant increase in most areas, given the current strong corn and soybean prices. price to cover the cost of production and land rent would be about $13.30 per bushel with a yield of 50 bushels per acre, which would decline to $11.08 per bushel with a yield of 60 bushels per acre. If a $60 per acre allocation is included

Typically, southern and western for labor and management, the soyMinnesota farm operators use average bean breakeven price increases to yields between 175 and 200 bushels $14.50 per bushel at a 50 bushel per per acre for corn and 50 to 60 bushels acre yield, and $12.08 per bushel at a per acre for soybeans for cash flow 60 bushel per acre yield. planning purposes. If the direct expenses for corn are $600 per acre, with overhead expenses of $120 per acre, and a land rental rate at $280 per acre, the total expenses — before any allocation for labor and management — would be $1,000 per acre. With a corn yield of 175 bushels per acre, the breakeven price to cover the There can be big differences in crop yields and expenses from farm-tofarm, which can cause breakeven prices to vary compared to the average. Based on 2021 FBM records for southern Minnesota, the average breakeven price for corn on cash rented land to cover direct expenses and overhead cost of production and land rent would See THIESSE, pg. 15

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