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Archive of Illinois AgriNews Columns

 

These columns were originally published in Illinois AgriNews during the month indicated and are reprinted here by permission.

2011
  New Regulatory Pathways for Genetically Engineered Plants (December 29)
Recent USDA approval for the commercialization of a Kentucky Bluegrass (Poa pratensis L.) genetically engineered (GE) for tolerance to glyphosate has the potential to drastically alter the exiting regulatory framework for USDA’s review of new GE plants. This may be especially true in the context of new GE bioenergy crops that do not have a residual use for food and/or animal feed. A potential easing of federal review, however, could prompt increased scrutiny at the state/local level under existing noxious weed laws, leading to an even more complex regulatory system. Click here to read the column...
 
  You Could Have a Partnership (November 30)
Because the size of farming operations has grown, many farmers have entered into agreements with other farmers or family members. For convenience sake, they treat these operations as joint ventures. Each party files their own Schedule F. Each reports their share of income and expense. They each report their share of depreciation of jointly owned equipment on their individual depreciation schedules. However, the IRS could determine that this was not a joint venture but a partnership. Consequently, partnership tax rules come into play. Click here to read the column...
 
  Shift from Income Support to Revenue-Based Risk Management in Farm Programs (November 3)
Changes to Commodity Title programs in the 2012 Farm Bill currently hinge on the budget decisions which will come out of the Joint Committee on Deficit Reduction’s (commonly referred to as the “Super Committee”) charge to come up with $1.2 trillion in savings over the next 10 years. Existing proposals as to how cuts to agricultural programs will contribute to total savings range from $23 billion to $33 billion. For example, the Obama administration’s proposal outlined $33 billion in cuts to farm programs, including the elimination of direct payments and vaguely defined cuts to the crop insurance program. The recent proposal from ranking members of the both the Senate and House Ag Committees suggested $23 billion in reductions to farm bill spending, primarily through the consolidation of existing farm programs. Click here to read the column...
 
  Concerns about Corn Demand (October 3)
The USDA’s September Crop Production report forecast the 2011 U.S. corn crop at 12.497 billion bushels, marginally larger than the 2010 crop, but well below early season expectations. The October Crop Production report will likely contain a more accurate crop forecast as additional yield and acreage information will be available. In addition, the supply of U.S. corn available for the 2011-12 marketing year will be influenced by the size of old crop inventories at the start of the year. The USDA will release that estimate on September 30. Click here to read the column...
 
  Illinois Farmland Investment Performance,... Revisited,... Again... (August 2011)
USDA recently released the 2011 version of its annual summary of farmland values and rental rates, with final values for cropland in Illinois of $5,800/acre representing an 18% increase.  Cash rent serves as a proxy for current income, and averaged about 3.2% for the same period.  Total farm real estate values increased by roughly 16.3% for the year.  Except for 2009, the past seven years have each seen double digit capital gains, and 3-4% annual current income.  This performance during a period of unprecedented equity market volatility has resulted in substantially increased attention to the asset class, with an attendant increase in visibility of institutional investors, and resulted in some highly notable sales.  Some have begun to question the sustainability or rationality of the current levels, and have used phrases including "bubble" and "overheated". Click here to read the column...
 
  Time to Review Your 2011 Tax Situation (July 2011)
Before you get into the field for harvest, you should take a few minutes to review your income tax situation. Many Illinois farmers experienced excellent yields in 2010 and were able to sell their crops at a high price. Consequently, it does not matter what the 2011 yield is; 2011 will be a year that can create a huge income and self-employment tax liability. In addition, the 2% increase in Illinois state income tax will also take another bite out of your profit. Unless you plan, you could miss out on possible deductions or be required to recognize more income than you expected. Click here to read the column...
 
  New Law Will Ease Regulatory Burdens for Small Food Producers (June 2011)
In late May, the Illinois legislature passed Senate Bill 840, which exempts small, home-based food businesses producing certain “non-hazardous” food from state licensing and inspection oversight. The aim of the bill, which now awaits Governor Quinn’s signature, is to ease the regulatory burdens that these small “cottage food” producers face when trying to sell their products directly to consumers. This represents a significant change to the state’s regulatory scheme for food products – previously, all food sold to consumers had to be made in commercial kitchens licensed and inspected by the Illinois Department of Public Health (IDPH). In passing the Bill, the Illinois legislature follows on the heels of at least twenty other states that have either passed or are considering similar legislation. Click here to read the column...
 
  Interest Rate Risk - Know Your Exposure (May 2011)
Easing U.S. monetary policy has resulted in low interest rates for borrowers and savers. The Federal Reserve has kept interest rates near zero for two and a half years and purchased more than $2 trillion in long-term securities. The Federal Reserve’s second round of easing, commonly referred to as QE2, is scheduled to end in June 2011. Federal Reserve chairman Ben Bernanke has indicated the Federal Reserve is in no hurry to increase interest rates after the most recent central bank policy meeting. Most market investors assume the Federal Reserve will maintain the low federal fund rate policy to the end of 2011 with potential interest rate increases in 2012. The timing and magnitude of increases will depend on improvements in domestic and international economic growth as well as inflationary expectations. Click here to read the column...
 
  The ACRE Program Decision for 2011 (April 2011)
The ACRE program is now entering its third year of being offered in the 2011/12 marketing year. In 2009, ACRE triggered payments on Illinois corn and wheat acres. Corn farms enrolled in the program received an average payment of $25.17 per acre, while enrolled farms planted to wheat received an average payment of $89.41 per acre. ACRE payments in 2010 are unlikely for enrolled farms planted to corn or soybeans in Illinois due to marketing year price projections for 2010/11 being well above the levels needed to trigger payments. Farms planted to wheat and enrolled in the ACRE program are likely to receive payments again in 2010. Based on the April 8th USDA projection for the 2010/11 marketing year price and 2010 Illinois wheat yields, the average payment will probably be around $40-45 per acre. Click here to read the column...
 
  Ethanol Production Remains Strong (March 2011)
A number of factors have contributed to the increase in corn prices that began on June 30, 2010. Two factors stand out. First was the shortfall in the size of the U.S. crop. While the 2010 crop was not “small” in the traditional sense, it was more than 900 million bushels (7 percent) smaller than the USDA’s August forecast and more than a billion bushels smaller than some of the early season private forecasts. The second factor has been the rapid increase in ethanol production and the corresponding increase in corn consumption. Both exports and domestic feed consumption of corn during the current marketing year are expected to be near the level of last year’s consumption. However, the use of corn for ethanol production is forecast at 4.95 billion bushels, 382 million more than used last year and 250 million above the USDA projection in September 2010. Click here to read the column...
 
  Suggestions for the COMBO Product (February 2011)
Like in previous years, Illinois farmers have till March 15th to change their crop insurance coverage for corn and soybeans. Unlike previous years, farmers will not have Crop Revenue Coverage (CRC), Revenue Assurance (RA), Income Protection (IP), and Actual Production History (APH) policies to choose from. These farm-level products have been replaced by the COMBO product. Click here to read the column...
 
  SURE Payment Signup (January 2011)
The sign-up period for the 2009 Supplemental Revenue Assistance Payments (SURE) program is from January 10 through July 29, 2010. SURE is a standing disaster assistance program instituted as part of the 2008 Farm Bill. It is a whole farm program making payments when whole-farm revenue falls below a guarantee. Click here to read the column...
 
2010
  Local Foods: State and Federal Incentives for Economic Development (December 2010)
One would assume that with 76,000 farms, 950 food processing facilities and a strong agricultural constituency, a majority of the $28 billion annually spent by Illinois consumers on food would be for “Illinois Grown” products. The reality is quite different—only 4% of food consumed in Illinois is grown within the state. Given its agricultural productivity and proximity to urban markets, however, Illinois is well positioned to capitalize on the social and economic opportunities presented by increased demand for local foods (estimated at $30 billion annually through the multiplier effect). A recent USDA report, Local Food Systems: Concepts, Impacts, and Issues, explored the other potential benefits of local food systems. Click here to read the column...
 
  Illinois Cash and Share Rental Trends (November 2010)
The increasing levels of cash rents are an issue of primary concern for farmers in Illinois and throughout the Corn Belt region. According to University of Illinois crop budgets, land costs have represented 30-35% of total production costs for Illinois grain operations over the past 6 years. Despite consistent upward trends in cash rent levels, this actually represents a decline in similar measures from the early 90s. Since 1990, the average cash rent in Illinois has increased by about 70% from $100 per acre to $169 per in 2010 according to USDA’s Agricultural Land Values and Cash Rents Annual Summary. Over the same twenty year period, both crop revenues and non-land production costs for grain operations have more than doubled. These trends have been most pronounced over the past 5 years due to the significant rise in both agricultural commodity and energy prices. Click here to read the column...
 
  Reducing the Tax Bite in 2010 (October 2010)
Legislation passed by Congress and signed by the President on September 27, 2010 will reduce the tax bite for many farmers this year. Three of the provisions of the Small Business Jobs Act of 2010 (SBJA) may have a major impact on small businesses including farmers. All three affect the amount of self-employment tax liability for 2010. Click here to read the column...
 
  Convergence Issues Resurface (September 2010)
Lack of convergence of cash and futures prices at locations approved for delivery of the CBOT corn, soybean, and wheat contracts emerged in mid 2005, as cash prices generally remained well below futures prices at delivery locations at contract maturity. Since late 2008, convergence has generally occurred for the corn and soybean contracts. Except for the September and December 2007 and March 2008 contracts lack of convergence persisted for the wheat contract. Click here to read the column...
 
  Wall Street Reform -- Rural Route Impacts (August 2010)
President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law in July 2010.  It has been described as the "..most sweeping and comprehensive reform of the financial regulatory system since the great depression" and at the same time as "haphazard and dangerous.. it looks like they're just blowing up everything for the sake of change", (Ed Yingling). Click here to read the column...
 
  Form 1099 Reporting Changes (July 2010)
Most farmers understand the reporting requirements for Form 1099-MISC, Miscellaneous Income. However, they may not realize the Patient Protection and Affordable Care Act of 2010 (PPACA) has dramatically increased the number of Forms 1099-MISC they will be required to file each year. If you are not familiar with the PPACA, it is the official name of the Health Care bill. You may wonder why is a health care bill causing me to file more 1099s? The answer is revenue. The Treasury department estimates this provision will produce $17.1 billion of revenue over ten years. Click here to read the column...
 
  Landowner Legal Issues in Geologic Carbon Sequestration Projects (June 2010)
Carbon-intensive industries (e.g., electric power generation, petroleum refining) seeking innovative technologies to reduce carbon dioxide (CO2) emissions increasingly have explored the feasibility of permanently sequestering CO2 in geologic formations deep below the surface. Much of the state of Illinois lies above one of the best potential geologic formations for carbon sequestration—the Mount Simon Basin. From a landowner’s perspective, geologic carbon sequestration (CGS) activities raise several novel legal issues, including property rights (e.g, who owns the pore space used to sequester the injected CO2) and who is responsible for potential injuries to property or the environment caused by the sub-surface injection. Due to the experimental nature of this activity, many of these legal issues remain unresolved. Click here to read the column...
 
  Financial Crisis: The Aftermath for Ag Credit Markets (May 2010)
The global financial crisis caused significant economic turmoil across most economic sectors. The agricultural sector was not impervious to the impacts of the financial crisis. So what has happened in the last 20 months since the initial shockwaves of the global crisis? The International Monetary Fund estimates that global writedowns since the onset of the crisis have been $2.3 trillion. Declines in the stock market exceeded 40% in March 2009, but have since recovered to within 10% of the August 2008 levels. Nationally, housing prices declines have exceeded 27%. Click here to read the column...
 
  ACRE: A 2009 Recap and Looking Ahead for 2010 (April 2010)
While the final price component used to determine actual revenues for the ACRE program will not be finalized until the end of the marketing year, at this point we are able to estimate with reasonable accuracy the level of payments which will be generated in the state of Illinois for the 2009 crop year. As of April 9th, the Farm Service Agency (FSA) was reporting actual yield levels of 173, 46, and 55.4 bushels per acre for Illinois corn, soybeans, and wheat.  Marketing year average price estimates obtained from farmdoc’s ACRE Payment Estimator FAST tool are $3.50 for corn, $9.54 for soybeans, and $4.92 for wheat. These price estimates are based on actual monthly prices received by U.S. producers through March, and futures prices less historical basis through the remainder of the marketing year for each crop. Click here to read the column...
 
  Any Need To Worry About Corn Yields? (March 2010)
There has been a persistent increase in the US average corn yield over time. These higher yields are generally associated with improved corn production practices and the development and adoption of yield-enhancing technology. Some believe that the trend yield has been increasing at a faster rate since the mid-1990s and will increase at an even faster rate in the future due to biotechnology-driven improvements in seed genetics. In a similar vein, the consistency of annual average yields near trend value since 1996 is cited as evidence of reduced risk of a one-time weather-related shortfall in corn production. There appears to be growing confidence within the corn production industry that corn yields are “bullet proof.” As the yield shortfalls of the 1970s, 1980s, and early 1990s appear further in the rear view mirror, less concern is expressed about such risks in the future. Click here to read the column...
 
  Crop Insurance Decisions in 2010 (February 2010)
The most popular crop insurance products used in Illinois are Crop Revenue Coverage (CRC), Revenue Assurance (RA), and Group Risk Income Plan (GRIP). Of corn acres insured in 2009, 68% were insured with CRC, 7% with RA, and 13% with GRIP. For soybean acres, 57% were insured with CRC, 15% with RA, and 10% with GRIP. In 2009, 88% of the corn acres and 82% of the soybean acres were insured with one of these three products. Click here to read the column...
 
  Crop Production Costs Lower in 2010 (January 2010)
Production costs for corn and soybeans in 2010 are likely to decline from historic high levels in 2009. Current estimates for 2010 non-land production costs are $452 per acre for corn and $297 per acre for soybeans. Corn costs are projected to decline by $114 per acre from the $566 per acre costs in 2009. Soybean costs are projected to decline by $27 per acre from the $327 per acres cost in 2009. Click here to read the column...
 
2009
 
  Climate Change Policy and Agriculture (December 2009)
Elevated atmospheric levels of greenhouse gases (GHG) such as carbon dioxide (CO2), methane (CH4) and Nitrous Oxide (N2O) may have both positive and negative impacts on agricultural production.  For example, field trials at the University of Illinois documented increased yields for crops grown under increased CO2 levels and warmer temperatures.  Follow-on trials, however, examined the yield suppressing effects of increased ozone concentrations.  From a productivity perspective, agriculture will have to adapt to changing atmospheric conditions accompanying climate change. Click here to read the column...
   
  Flexibility of Depreciation Deduction (November 2009)
Now is the time for farmers to review their income for the year and make plans on how to control their income tax liability. This is typically accomplished by prepaying expenses and either accelerating or delaying crop sales. This is a more difficult process this year because of the weather. Many farmers faced delayed planting due to the wet spring, and the wet fall has prevented many from completing the harvest. Some grain that would usually be stored on the farm is being sold due to high moisture content or quality issues. Click here to read the column...
   
  Stable Land Prices (October 2009)
Farmland prices in Illinois have remained relatively stable since September 2008, when problems within the U.S. financial sector became evident.  The U.S. Department of Agriculture (U.S.D.A.) reported that the average price of farmland in Illinois on January 1, 2009 was $4,550 per acre, down -$20 per acre from the 2008 price of $4,530. Click here to read the column...
   
  Anticipating the Size of South American Crops (September 2009)
The jury is still out on the size of the 2009 U.S. corn and soybean crops. The markets are still trying to decide if large crops will get larger or if late maturity will result in smaller than expected crops. Click here to read the column...
   
 

Illinois Farmland in Perspective (August 2009)
First, consider a small sample of recent headlines and comments gleaned from professionals about the farmland market in 2009: "quarterly decrease of 6%" , "the largest quarterly decline since 1985", "It's Confirmed: Farmland Prices are Correcting" and "...both Bloomberg and the WSJ are reporting the first annual drop in U.S. farmland prices in 20 years of an average of -3.2%".Click here to read the column...

   
  IRS Examines Hedging Loss (July 2009)
While the rules for deducting hedging losses have not changed, farmers who hedge their grain can expect to have their records closely scrutinized. The Grain Farmer Audit Technique Guide devotes seven pages to examining hedging transactions. As the IRS is currently hiring an additional 1,700 auditors, farmers selected for audit should expect the Revenue Agent to have studied this guide. Click here to read the column...
   
  U.S. and Canada Sign Organic Agriculture Trade Agreement (June 2009)
Despite the current economic downturn, domestic sales of USDA certified organic food products grew 15.8% in 2008.  Moreover, a 2009 study commissioned by the Organic Trade Association found that 31% of U.S. families actually increased their spending on organic during this difficult economic period. Although a sustained recession may dampen growth, two other factors present more immediate challenges: sourcing certified organic ingredients and standards-based trade barriers. Click here to read the column...
   
  The Financial Crisis: Linkages and Impacts in Agriculture (May 2009)
What is now often simply called "The Crisis" refers to a set of interconnected financial market transactions with culminating results including: a drop in the Dow from around 14,000 to under 6,500; effectively frozen term debt markets in late 2008; unprecedented government interventions aimed to improve investor confidence and unfreeze funding channels; government takeovers of GSEs and private firms; virtual elimination of the investment banking sector; and widespread failures of firms that in many cases were considered blue-chip industries only months earlier. These effects followed a period of unprecedented ag-commodity price volatility during summer 2008 which left many producers unable to effectively hedge, added to the difficulty in managing input commitments, and altered capital replacement and/or expansion decisions. The Crisis hopefully peaked in the fourth quarter of 2008, but it may be years before the economy fully recovers, and it remains to be seen how the effects will ripple through the ag sector. Click here to read the column...
   
  Farm-Level Yields and ACRE Payment Eligibility (April 2009)
One of the most confusing aspects of the new Average Crop Revenue Election (ACRE) program is the need to collect historical farm-level yield information from program participants.  While the size of ACRE payments is largely determined by a revenue index based on national price and state yield levels, farm-level performance is assessed to determine whether a producer is eligible for an ACRE payment.  Specifically, a revenue index based on national prices and individual farm yields must fall below the farm’s benchmark revenue measure.  A farm’s benchmark revenue is based on the moving 2-year average of national prices and a moving 5-year average of farm yields.  Producers can also include the paid portion of their crop insurance premiums in their farm-level revenue benchmark. Click here to read the column...
   
  New Crop Basis Much Stronger Than That of a Year Ago (March 2009)
On March 18,2009, average new crop cash bids for 2009 harvest delivery of corn in the seven Illinois price reporting districts used by the USDA’s Agricultural Marketing Service ranged from $.40 to $.49 cents under December 2009 futures.  On the same date in 2008, average harvest delivery bids in those regions ranged from $.53 to $.72 under December 2008 futures.  The stronger basis this year reflects the general trend towards more normal basis levels, particularly the spot basis for the 2008 crop. Click here to read the column...
   
  Enterprise Units Subsidies and Crop Insurance Unit Choices (February 2009)
Crop Revenue Coverage (CRC) and Revenue Assurance (RA) crop insurance policies can be purchased using enterprise units. The 2008 Farm Bill increases subsidy levels on enterprise units, thereby reducing farmer-paid premiums on policies using enterprise units. Click here to read the column...
   
  The ACRE Decision (January 2009)
The 2008 Farm Bill gives a choice on how Federal commodity payments can be received. Payments can continue in the traditional manner through direct, marketing loan, and counter-cyclical programs. Alternatively, an Average Crop Revenue Election (ACRE) alternative can be selected. ACRE makes three changes relative to the traditional alternative: 1) direct payments are lowered by 20 percent, 2) loan rates are lowered by 30 percent, and 3) ACRE payments are received rather than counter-cyclical payments. Click here to read the column...
 
2008
 
  National Standards for Sustainable Agriculture: A Process Update (December 2008)
In April 2007, Scientific Certification Systems (SCS) proposed a draft Sustainable Agriculture Practice Standard for Food, Fiber and Biofuel Crop Producers and Agricultural Product Handlers and Processors (commonly referred to as SCS-001). SCS’s goal is to formalize this standard as an American National Standard under the American National Standards Institute (ANSI), and eventually an International Standard under the International Organization for Standardization (ISO) in Geneva, Switzerland. Click here to read the column...
   
  Tax Break for Farmers Affected by 2008 Floods (November 2008)
In its attempt to stimulate the economy and encourage redevelopment in the areas hit by the 2008 weather disasters, Congress has enhanced some depreciation deductions. One of the enhancements affects all business taxpayers including farmers. Click here to read the column...
   
  2009 Rental Decisions Given Volatile Commodity Prices and Higher Input Costs (October 2008)
Turmoil within the financial sector has caused concerns about the performance of economies around the world. These concerns have lead to dramatic declines in commodity prices with current cash bids in the $3.50 per bushel range for corn and the $8.50 range for soybeans. Click here to read the column...
   
  A Long-Term Perspective on Grain Prices (September 2008)
In the past year grain prices reached all time record highs. Volatility in grain prices is normal, so the question on everyone’s mind is whether grain prices will trend upwards over time, stabilize at a higher than historical level, or resume the 150-year downward trend (after adjusting for inflation) that had resulted from investments in agricultural research raising productivity faster than global grain consumption grew. Click here to read the column...
   
  Financial Crisis in Housing: What About My Agricultural Lender? (August 2008)
There has been substantial media attention to the recent problems in housing. The banking sector as a whole is slogging through its worst economic times in many decades. Many of the Wall Street financial institutions and large banks have suffered deep losses, cut dividends and sought additional capital. Click here to read the column...
   
  Oil Pipeline Easments (July 2008)
Increasing energy demands are creating the need for more pipelines to carry petroleum resources to consumers. Two pipeline companies are currently contacting Illinois landowners to purchase easements through their farmland. Click here to read the column...
   
 

Developments in Local and Organic Food Production (June 2008)
Although Illinois ranks fourth nationally in the value of agricultural commodity exports, it ranks fifth in the loss of farmland. The average food item consumed in the state travels more than 1,500 miles before landing on a dinner plate and less than five percent of the organic food sold in Illinois was grown and/or processed within the state. Click here to read the column...

   
  So What do Prices Tell us About, well, … other Prices? (May 2008)
Most of us are only 1 or 2 clicks away from near real-time market quotes on a dizzying array of financial securities, interest rate instruments, commodity futures, options and indexes based on other securities or baskets of positions. And, most accept the notion that these current market prices reflect the “best” possible information about the future. Click here to read the column...
   
  The Farm Bill Saga Continues as Congress Tries to Solve the Problem of Financing (April 2008)
Both the House and Senate passed another short-term extension to the 2002 Farm Bill this week as lawmakers continue to work towards a new bill that can be agreed to in both chambers of Congress. A number of issues have slowed negotiations, the greatest of which have been disagreements over spending levels and financing across the Farm Bill titles. To further complicate the matter, the Bush administration has issued a veto threat unless the new Farm Bill exhibits serious levels of reform to farm policy to improve both program performance and the ability to justify U.S. farm support in trade talks among members of the World Trade Organization. Furthermore, the administration has also stated that they are unwilling to accept any legislation which finances additional spending through higher taxes. Click here to read the column...
   
  Soybean Basis Remains in the Tank (March 2008)
The soybean basis at many interior locations has been generally weak for the past year. The weakness has accelerated in 2008. On March 20, 2008, for example, the overnight cash bids for soybeans in Illinois, as reported by the Illinois Department of Agriculture, ranged from $11.21 to $11.47, reflecting a basis relative to July 2008 futures of -$.60 to -$.86 per bushel. The basis was slightly weaker than that of a year ago, $.20 to $.30 weaker than the basis of two years ago, and $.40 to $.50 weaker than the basis of three years ago. Click here to read the column...
   
  Crop Insurance Decisions: Why Not the Same as Last Year? (February 2008)
A good place to begin when making 2008 crop insurance choices is with 2007 choices. Most Illinois farmers chose revenue insurance products in 2007. Of the insured acres, 34 percent of corn acres where insured using Crop Revenue Coverage, 22 percent with Revenue Assurance (RA), and 29 percent with Group Risk Income Plan (GRIP). While changes to revenue products have occurred, one of these three revenue products will be a good choice in 2008. Click here to read the column...
   
  Corn and Soybean Costs Continue to Increase (January 2008)
Production costs will be considerably higher in 2008 as compared to 2007 levels. Non-land costs for high-productivity farmland are estimated to be $370 per acre for corn, an increase of near $50 over 2007 levels. Soybean costs for 2008 are projected at $220 per acre, an increase of near $20 per acre over 2007 levels. Click here to read the column...
 
2007
 
  A Shifting Biotechnology Policy: Federal and Industry Initiatives (December 2007)
At first glance, the domestic regulatory structure for agro-biotechnology appears to function adequately as new genetically modified (GM) crops regularly receive government approval. While the current 20-year old system has led to a few trade disruptions and litigation, changes on the horizon present uncertainty to the regulated community. Unfortunately, these proposals, particularly regarding the presence of unapproved GM crops, could hamstring coexistence efforts and complicate international trade. The biotech industry, however, is attempting to fill this regulatory gap. Click here to read the column...
   
  Year-End Tax Planning (November 2007)
Due to record breaking incomes in 2007, is this the year to establish a retirement plan? Many farmers have the attitude that excess income should be invested in additional farm land. However, this may require liquidation of the land at the time of retirement to produce income sufficient to allow the retiree to maintain his accustomed standard of living. A retirement plan, on the other hand, is designed to produce cash to meet retirement needs. Click here to read the column...
   
  Farm Incomes in 2007 and Beyond (October 2007)
Higher commodity prices since the latter half of 2006 have led to relatively high farm incomes. In 2006, net incomes for grain farms enrolled in Illinois Farm Business Farm Management (FBFM) averaged over $100,000 per farm. Click here to read the column...
   
  The 2007 Farm Bill and the WTO Trade Negotiations (September 2007)
The House of Representatives passed its farm bill in July, the Senate will take up its version this fall, and a deal is starting to emerge in the WTO agricultural trade negotiations. Unfortunately, the direction taken in the House farm bill is threatening to undermine successful conclusion of the trade negotiations. Click here to read the column...
   
  Investing Extra Cash Flows: Be Sure to Look at All Alternatives (August 2007)
Strong projected yields through much of Illinois and higher than average commodity prices may result in higher levels of cash flow and income for many producers. A common question is how to allocate any excess profits and cash flows across potential alternatives. Click here to read the column...
   
  Thinking About the 2008 Corn Crop (July 2007)
With 2007 corn acreage 2.4 million above intentions reported in March and crop conditions in mid-July near normal, it appears that the 2007 crop will be large enough to meet growing demand at “reasonable” prices for the year ahead. Click here to read the column...
   
  Whither Direct Payments? (June 2007)
As Congress starts writing the 2007 Farm Bill, its biggest headache is the budget constraint. To get federal spending under control, Congress has adopted a pay-as-you-go policy. To spend more on some program, it has to reduce expenditures on something else. Click here to read the column...
   
  Illinois Farmland Markets: Recent Performance and Future Trends (May 2007)
The Illinois Society of Professional Farm Managers and Rural Appraisers (conducts an annual survey to assess farmland valuesand trends in lease rates by land type and use in Illinois. Click here to read the column...
   
  Farm Tenants: Be Cautious with Permanent Improvements to Leased Land (April 2007)
Farm tenants may identify how rented land could be made more productive (e.g., by installing drainage tile or applying lime), or how the farming operation could be made more efficient (e.g., by constructing on-farm grain storage). Such improvements often increase the value of the land, or at a minimum have multi-year benefits, and are typically the responsibility of the landowner. Click here to read the column...
   
  Will Corn Storage Be a Problem? (March 2007)
Expectations of a large increase in planted acreage of corn in 2007 have resulted in some concerns about capacity to store the crop if average yields are also high. If planted acreage increases by 10 million, to a total of 88.3 million acres, area harvested for grain could be near 81 million acres. Click here to read the column...
   
  Crop Insurance Decisions in 2007 (February 2007)
This year's higher commodity prices will have impacts on crop insurance products that are revenue based. Specifically, base prices used in determining revenue guarantees are going to be considerably higher than in recent years. Click here to read the column...
 
2006
 
  Adjustable Cash Rents and Farm Program Payments (December 2006)
Renewed interest in “adjustable cash rent leases” makes the legal issue of how such leases might affect the division of farm program payments between landowner and farm tenant even more important.Click here to read the column...
   
  Year-End Tax Planning (November 2006)
Harvest is coming to an end as this article is being written. It appears yields are up and prices are well above average. Consequently, many producers will be faced with higher net farm profits. Along with higher profits come higher federal and state income taxes and self-employment tax. In order to defer these taxes, many farmers will prepay 2007 expenses or enter into contracts deferring the receipts from the 2006 crop until 2007. These transactions must be approached with caution to withstand IRS scrutiny. Click here to read the column...
   
  Projected Corn and Soybean Returns in 2007 (October 2006)
At present, corn and soybean prices for 2007 are projected to be much higher than in recent years. Besides being higher, forecast prices for 2007 indicate that corn production will be more profitable than soybean production on many Illinois farms. Click here to read the column...
   
 

Why Some People Question Our Farm Programs (September 2006)
When U.S. farm programs began in the 1930s, we were deep in the Great Depression. Farm family incomes were below those of other Americans. The original objective of farm programs was to reduce poverty on the farm. Click here to read the column...

 
  Where Does a Crop Insurance Dollar Go? (August 2006)
The Risk Management Agency establishes crop insurance premiums on a crop-by-crop and county-by-county basis with the intent to reflect actuarial or break-even costs of insurance over the long run. To make participation attractive, RMA subsidizes farmer paid premiums, and pays administrative and overhead (A&O) subsidies to insurance companies to insure that all products are offered on an equal basis to all eligible producers. To understand “where the dollars go”, it is important to understand premium subsidies, loss ratios, and market shares of products sold. Click here to read the column...
 
  Ready to Grow More Corn? (July 2006)
The corn market in the US has historically been characterized by large supplies and generally low prices, often below the total economic cost of production, with occasional price spikes associated with production shortfalls. That landscape appears to be changing. The main driver is the rapid expansion in corn used for ethanol production, encouraged by a combination of political and economic forces. Click here to read the column...
 
 

Whither Food Aid? (June 2006)
One of the most important breakthroughs in the current WTO trade negotiations has been getting the European Union's commitment to eliminate all agricultural export subsidies. Export subsidies have been banned since the 1960s in everything except agricultural products. The EU is the main place that still subsidizes ag exports. After it buys agricultural commodities to support market prices, the EU uses subsidies to move the inventories out into the world market, often depressing world market prices in the process. If the EU can't subsidize exports, it will have to reduce its support prices enough to bring their production down into line with their market demand. This would be a good thing. Click here to read the column...

 
  Renting Money: Another Increasing Cost for Farmers (May 2006)
Significant attention has been given to the increasing costs of fuel, fertilizer, chemicals, seed, and cash rent on Illinois farms. Rising interest rates, or the cost of “renting” money, have also lowered profit margins for Illinois farms. On May 10 th the Federal Open Market Committee of the Federal Reserve decided to raise its target for the federal funds rate by 25 basis points to 5%.  This is the fifteen consecutive rate increase dating back to June 2004. The federal funds rate is closely linked to the interest rates of short-term loans. Click here to read the column...
 
  The WTO's Interim Decision in the US-EU Biotech Dispute: A Limited, Precautionary Ruling (April 2006)
In May 2003, the United States, along with Canada and Argentina, filed a dispute with the World Trade Organization (WTO) alleging that the European Union's moratorium on the approval of genetically engineered agricultural products violated WTO rules. The alleged moratorium restricted the import of agricultural and food products into member states of the EU. The United States also challenged the refusal of some EU member states to allow the importation of genetically engineered products previously approved by the EU. For example, Italy prohibited the import of some varieties of Bt-11 maize despite approval by EU regulatory bodies. Click here to read the column...
 
  Do Fundamentals Matter? (March 2006)
It is not uncommon to hear the comment that fundamentals are no longer important in determining prices of agricultural commodities. Soybean prices, in particular, have been the subject of such comments. Rather than fundamentals of supply and demand, it is believed that prices are determined by such things as the whims of fund traders and/or technical indicators. In fact, fundamentals are very much at the center of price determination. Click here to read the column...
 
  Changes to Crop Insurance Products in 2006 (February 2006)
The Risk Management Agency did not make major changes to multi-peril crop insurance products except for Group Risk Income Plan (GRIP). Three changes have been made to GRIP, a revenue insurance that uses county yields in calculating its payments. Click here to read the column...
 
 

Higher Crop Production Costs in 2006 (January 2006)
Production costs for corn and soybeans will be higher in 2006 than in 2005. Increases in energy prices have caused large increases in per acre costs for fertilizer and fuel. In addition, per acre seed and pesticides costs are likely to increase in 2006. Click here to read the column...

   
  2005
   
 

New Illinois Laws Create Triple Threat to Farm Trespassers (December 2005)
Many Illinois farmers believe that trespassing is a growing problem, especially incidents involving ATVs or other vehicles. The Illinois legislature has responded with a triple threat. Click here to read the column...

 
  Some Farmers Entitled to New Deduction on 2005 Returns (November 2005)
In an attempt to satisfy the World Trade Organization and its challenge of the Exterritorial Income Exclusion (ETI), Congress enacted Internal Revenue Code Section 199 (Domestic Production Income Deduction) as a part of the American Jobs Creation Act of 2004. At the same time, the ETI exclusion is phasing down in 2005 and 2006 and will be entirely eliminated by 2007. While ETI only applied to taxpayers who exported products outside of the United States , the new Domestic Production Activities Deduction applies to all manufacturers, including farmers. Click here to read the column...
 
 

Lower Farm Earnings Projected for 2005 (October 2005)
Illinois farm incomes in 2005 are likely to average over 50 percent lower than the very good incomes recorded in 2004. This projection is based on data from over 800 grain farms in which 2005 projected income is compared to 2004 actual incomes. Projections are made by personnel in the Department of Agricultural and Consumer Economics at the University of Illinois. Click here to read the column...

 
 

Cash Rents in 2006 (September 2005)
The level at which cash rents will be negotiated for the 2006 cropping year is an open question. Budgets suggest that 2006 cash rents should be lower than in previous years. However, lowering rents would go against historical trends of cash rent increases. Click here to read the column...

 
  The Performance of Illinois Farmland as an Investment (August 2005)
The National Agricultural Statistics Service recently published their 2005 estimates of farmland values and rental rates, indicating that the average value of Illinois farmland increased by approximately 11.1% and generated cash rent of approximately 4.3% of value. Subtracting property taxes estimated at roughly .75% results in a total annual return of roughly 14.65% from the perspective of an Illinois farmland owner whose returns are in the form of cash rent and capital gains, less property taxes. This performance directly follows several years of strong appreciation rates and increasing cash rents, and naturally leads to the question: how does Illinois farmland compare to alternative investments? In evaluating investment performance, the level and variability of returns should be considered as well as the relationship to other investments held, and the role of the investment in protecting against inflation. Click here to read the column...
     
  Anticipating South American Soybean Production (July 2005)
Entering the final two months of the 2005 growing season there is still considerable uncertainty about the size of the US soybean crop. Declining crop ratings and forecasts for additional stressful weather, along with insect and disease pressure, suggests that the crop will be small enough to result in a significant decline in US stocks by the end of the 2005-06 marketing year. The important question is whether the crop will be small enough to also require a reduction in the rate of use of US soybeans during the year ahead. The price implications of adequate supplies but small year-ending stocks are much different than a short supply situation that requires rationing of use. Click here to read the column...
   
  History of High Priced Soybeans (June 2005)
Soybean prices moved sharply higher from mid-May through mid-June. The average spot cash price in central Illinois increased by $1.12 and November 2005 futures increased by $1.32 from May 13 through June 17. During that same period, November futures moved from a $.05 discount to July futures to a $.17 premium. Several fundamental factors supported the month long rally, including the higher than projected rate of consumption. Year-ending stocks will be more than adequate, near 300 million bushels, but well below the early season projections that were as high as 460 million bushels. Click here to read the column...
   
  An Agricultural Perspective of Consumer Credit Reporting (May 2005)
There has been a recent surge of media attention regarding consumers accessing their credit information. Consumers are using credit at an increasing rate and institutions are using credit information for many purposes beyond acquiring credit. So what does this mean for the agricultural producer? What information is being stored? Who has access to the information? How long is the information stored? Click here to read the column..
   
 

Performance of Market Advisory Services For Corn and Soybeans, 1995 Through 2003 (April 2005)
Surveys suggest that farmers believe market advisory services are important in managing price risk, implying a need for information on the performance of market advisory services to assist in the selection and use of advisory services. The Agricultural Market Advisory Service (AgMAS) project at the University of Illinois has evaluated the pricing performance of market advisory services for the 1995 through 2003 corn and soybean crops, with no fewer than 23 market advisory programs included each year. Click here to read the column...

   
  Focus on Biotechnology—Farmer Liability for Commingled Biotech Crop Shipments (March 2005)
Emerging regulations for overseas grain shipments ultimately may result in farmer liability for the commingling of even trace amounts of genetically engineered crops. The European Union now requires labeling of all products (including bulk grain shipments) that contain more than 0.9% of genetically modified organisms (GMOs). Moreover, there is zero tolerance for unapproved biotech products in the European Union, such as StarLink corn. Click here to read the column...
   
 

Crop Insurance Decisions in 2005 (February 2005)
Illinois farmers and share-rent landowners have until March 15 th to make changes to their crop insurance programs. If no changes are reported to insurance agents, the same products and coverage levels used in 2004 will be in affect for 2005. Click here to read the column...

   
  Production Costs Rise in 2005 (January 2005)
Costs of producing corn and soybeans will be higher in 2005 than in 2004. Projections of variable costs are made for northern, central (high productivity farmland), central (low productivity farmland) and southern Illinois . These projections are available from the “Crop Cost from 2000 through 2005” tool in the management section of farmdoc .Click here to read the column...
 
2004
 
 

Dog-Bite and Landlord's Liability Risk (December 2004)
If tenant's dog bites a guest of the tenant, is the tenant's landlord liable for injuries arising from the bite? In May 2004 an Illinois appellate court considered this question in a way that should make landlords happy. Click here to read the column...

   
  Taxability of Non-Starlink Litigation Payment (November 2004)
Farmers have now received their debit card if they participated in the non-StarLink litigation and their claim was accepted. Questions have arisen regarding how the payment should be reported to the Internal Revenue Service.
Click here to read the column...
   
  Early Indications Suggest Improved 2004 Farm Earnings (October 2004)
Illinois farm incomes in 2004 are likely to average over 20% higher than in 2003. This projection is based on data from over 750 grain farms in which 2004 projected income is compared to 2003 actual incomes. Projections are made by personnel in the Department of Agricultural and Consumer Economics at the University of Illinois. Click here to read the column...
   
  LDPs Are Back (October 2004)
Just over 5 months ago, cash corn prices in Illinois were over $3 and cash soybean prices were over $10. Now, corn prices are well under $2 and soybean prices are under $5. Prospects for large crops, following soybean shortages and early crop worries for corn, have been the primary factor driving prices down. Corn and soybean prices have dropped below the Commodity Credit Corporation loan rate and Loan Deficiency Payments (LDPs) are once again in positive territory. Click here to read the column...
   
  Retooling Your Farm Management Decision Toolkit (August 2004)
Technology has changed our wor king environment. Yield monitors, GPS equipment, and cellular phones are common farm investments. The Internet has provided a wealth of information at our fingertips. Growth in electronic commerce continues to exceed forecasts.
How has your decision toolkit kept pace? Are you ta king advantage of computer and hardware technology? Are your calculator, pencil, and back of the envelope still your most valuable tools? Click here to read the column...
   
  Understanding and Using USDA's Weekly Report of Crop Conditions (July 2004)
The USDA's weekly report of crop conditions is one of the most widely followed indicators of corn and soybean yield potential. The survey and estimating procedures for this report are much different than for most surveys conducted by the USDA. For example, the monthly corn and soybean production forecasts rely on a June acreage estimate based on a survey of farmers and on a separate area frame sample. Monthly yield forecasts are also based on a survey of farmers and objective yield estimates based on an area frame sampling design where fields are randomly selected for observation and measurement. Click here to read column...
   
  Are Consumers Fat Because of Agricultural Subsidies? (June 2004)
The recent passing of President Reagan has prompted numerous media sound bites and para phrases on the philosophy (or at least the rhetoric) that less government is better than more. Of course, as a taxpayer, it is easy to buy into the concept of "less government."As a policy analyst, however, the challenge is often in assessing more practical questions involving impacts of government intervention. We will always have intervention, so the relevant question is, "how much should we have?" Click here to read the column...
   
  What's Keeping Illinois Farmland Markets so Strong? (May 2004)
What factors are contributing most to strong farmland values? While traditional explanations of farmland values focus on farm income as a primary determinant of farmland values, it is increasingly important to account for factors unrelated to the value of farm production. Click here to read the column...
   
  Crop Costs Higher in 2004 (April 2004)
Variable costs for producing corn and soybeans are projected to be higher in 2004 when compared to costs in 2003. Variable costs, which include fertilizer, pesticides, seed, drying and storage, and machinery (repair, fuel, and hire) categories, are projected to increase by $5 to $7 per acre for corn and $3 to $4 per acre on soybeans.Cost projections are made for corn and soybeans in northern, central, and southern Illinois . Central Illinois projections are further broken down into projections for high productivity farmland (167 bu. average corn yield) and low productivity farmland (157 bushel average corn yield).These projections are available at farmdoc in the management section from the historic crop cost tool which compares 2004 projections to actual costs from 1999 through 2003. Actual costs are obtained from farms enrolled in Illinois Farm Business Farm Management (FBFM). Click here to read the column...
   
  Tracking Corn Market Fundamentals (March 2004)
The record US corn crop of 2003 was not enough to satisfy domestic and world needs, resulting in high prices and declining stocks. Early prospects suggest a continuation of strong demand in the 2004-05 marketing year, led by increases in ethanol production and declining Chinese exports, requiring another large harvest in 2004. This environment of strong demand and uncertain production suggests a continuation of high, but volatile prices and marketing challenges for producers over the next several months. It will be important to keep current with changing supply and demand prospects and the implication for prices. Click here to read the column...
   
  New Prices and Products for Crop Insurance (February 2004)
Premiums on many crop insurance products will be higher in 2004 than in 2003. In addition, Group Risk Income Plan – Harvest Revenue option (GRIP-HR) is available for the first time in 2004. An updated is provided below. Click here to read the column...
   
  Sizing Up Farm Bill Safety Nets (January 2004)
How does the commodity program of the current Farm Bill stack up against past programs? The good news for Illinois corn and soybean producers is that, under reasonable price expectations, the current program provides a larger safety net than those provided by past programs. The bad news is that this increased support creates a political risk that needs to be fully recognized when making long-term investments. Click here to read the column...

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