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Net Farm Income Projected to Plunge

by Stan Maddux

Published: Friday, November 19, 2021

Skyrocketing inflation could make 2022 a very challenging year for the pocketbooks of farmers after a very profitable 2021.

A percentage of farmers raising corn in 2021 might switch to soybeans next year to help ease the pain of shrinking margins if there's no let-up in rising input costs.

That's was the main message out of last Wednesday's monthly corn and soybean report webinar hosted by Purdue University.

"It's not a pretty picture," said Michael Langemeier, associate director of the Center for Commercial Agriculture at the West Lafayette campus.

Statistics presented during the webinar project the very good net farm income of $270 per acre this year will drop below $100 per acre next year.

Jim Mintert, director of the Center for Commercial Agricultural, said the sharp increase in farm operating expenses is historical at least in recent memory, especially with fertilizer.

He seemed particularly disturbed about the possibility of anhydrous ammonia costing a whopping $1,350 per ton in early November going up, to as much as $1,500 per ton during the spring planting season.

"The numbers are shocking," Mintert said.

Mintert said the result could be net farm income next year being more in line with profits from 2016 through 2019, when farmers struggled from very low corn and soybean prices.

Right now, Langemeier said the projected cost of other nutrients like phosphorous, potassium, pot ash and nitrogen costing nearly $1.40 per bushel next year compared to 80 cents per bushel in 2021.

"I don't think we've ever seen a rise in production costs as rapid and as large as what we've seen in the last few months," Mintert said.

"It's definitely unprecedented, particularly for corn," Langemeier said.

Langemeier said the breakeven point for corn next year is projected to be 15 percent higher than last year and 10 percent more than 2021 for soybeans.

On the surface, he said corn doesn't appear to be a very good option next year but urged farmers to wait before deciding whether to plant corn or switch to soybeans.

"I don't think you want to give up on corn. Corn is still hanging in there," he said.

Mintert said corn hasn't been negatively impacted as much as soybeans on projected reductions in exports from countries like China, and the market for corn from ethanol plants in the U.S. remains strong.

"This is something you're going to have to monitor over the course of the winter to see how things shake out," he said.

Mintert said another challenge to farmers next year could be delays in receiving fertilizer.

He said farmers might have to stretch supplies by cutting back on how much they apply in the fields until the next shipment comes in.

Mintert also said he was a bit surprised USDA this month reduced its projected soybean yields nationwide only slightly from October.

"It's still a big soybean crop by historical standards. It's just not quite as big as people were expecting," he said.

USDA also projected soybeans in Indiana at 57 bushels per acre, which was a 5 percent drop from the previous month's forecast.

The 50 bushels of soybeans per acre in Michigan projected by USDA was unchanged from the October forecast.

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