This is planting season in the Farm Belt, and Midwest farmers are revving up for a big year ahead. Global demand for corn, soybeans and other basic commodities remains strong, supplies are tight and producers have plenty of money to invest in their crops as they eye a third straight year of robust farm incomes.
The result, we hope, will be a bin-buster.
As ever, though, farmers face uncertainties far beyond their control, from geopolitical events like the Ukraine War to an emerging Pacific Ocean weather phenomenon known as El Niño that could bring scorching heat and drought to the heartland.
Illinois residents can take pride in this productive and competitive sector of the local economy, whether they live in Chicago high-rises, or on the fertile plains covering the center of the state. The Land of Lincoln has plenty of faults, as this page regularly points out, but it also has world-beaters steering its combines.
For most Illinois residents, farm meets table at the supermarket, and shopping for food has gotten much more expensive, peaking at a 13.5% annual inflation rate as of last August. Government efforts to curb inflation have brought that number down, and retail food prices overall have started to decline, falling in March for the first time since September 2020.
Even the price of eggs is coming back to earth, after having shot up amid an avian-flu epidemic and profit-taking by producers. Costs continue to rise for baby formula, lettuce and several other common products laboring under special circumstances. But the adage that nothing cures high commodity prices like high commodity prices is indeed working to encourage greater production.
Corn is Illinois' biggest cash crop, and the U.S. Department of Agriculture expects planted acreage to rise by 4% from last year, as farmers take advantage of high commodity prices and lower fertilizer costs to plant fencerow to fencerow. Soybean acreage will be up slightly from 2022 across the Farm Belt, which could be enough to set a record for acreage in Illinois, while wheat acres are projected to increase by more than 4 million from last year.
The result, according to the USDA's early forecast, will be bumper crops. Domestic corn production of 15.3 billion bushels will be up about 10% from last year, based on the increased planted acreage. And while the planted area for soybeans isn't up as much, yields are expected to increase from last year. Greater production of those foodstuffs will lead to lower prices for meat over time, as livestock feed costs moderate, as well as for everyday products from milk to cooking oil that typically rise and fall roughly in step with the most basic commodities.
One reason why Illinois farmers are riding high today: their fast-growing bank accounts.
Net farm income, a broad measure of farm profitability, is currently forecasted at $137 billion for this year, on top of 2022′s $163 billion and 2021′s $141 billion. Those three years combined represent a 77% increase over farm income in the previous three years, even though government payments to farmers are lower because profits went so high.
The financial bonanza helps to explain all those shiny new pickup trucks you might encounter in farm country these days, and it also puts farmers on a strong footing to invest in top-of-the-line seed and fertilizer, plus other inputs and technology that stand to make their land more productive.
On the cost side, expenses are expected to increase for the sixth consecutive year, but by less than in the recent past. Like many other business owners, farmers have had to grapple with higher costs for labor, utilities and lines of credit, which have contributed to higher food prices. Lower fuel costs this year will help offset the upward pressure.
Keep in mind that the rosy forecast for a big year on the farm depends above all on Mother Nature, and she may have other ideas.
As the Wall Street Journal recently reported, an El Niño weather system is developing over the Pacific Ocean, as warmer-than-normal water drifts toward the west coast of the Americas. Sometimes, El Niño climate patterns herald a period of extreme weather that can dry out crops under withering heat -- or wash them away with flooding downpours. U.S. government meteorologists put the odds of a strong event this year at a disturbingly high 55%. But, as the Journal noted, even strong El Niños in the past haven't always ushered in poor conditions for the nation's breadbasket.
Like farmers in general, we're staying optimistic. This crop year is off to a strong start, and while everything from Vladimir Putin's Russia to bathtub-temperature seawater could change the outlook, the table is set for Midwest farmers to do what they do best: Feed our hungry world.
-- Chicago Tribune, May 19