Despite not knowing exactly what you’ll have on the floor or in the shop, farm equipment dealers should know what risks customers may face next year.
In a recent analysis, agricultural economists projected very high break-even prices to cover total costs at $4.73 per bushel for corn and $11.06 per bushel for soybeans. While current fall bids are above break-even levels, the 2022 projects present risks.
The economists jointly authored an article for farmdoc Daily. They were Gary Schnitkey, Nick Paulson, and Krista Swanson, all in the Department of Agricultural and Consumer Economics at the University of Illinois; and Carl Zulauf, Department of Agricultural, Environmental and Development Economics at The Ohio State University
Corn and soybean production costs will increase to record levels due to high commodity prices and supply disruptions pushed by consumer demands creating inflationary pressures.
For 2022, total costs for corn are projected at $1,064 per acre, with $755 in non-land costs and $309 in cash rent. Total costs are projected at record levels, exceeding 2021 costs. Record levels of costs, including the still-unknown cost of fertilizer, will then lead to the higher break-even price projections.
While weather would change everything, the economists don’t foresee farmers collecting significant revenues from commodity payments (e.g., Agriculture Risk Coverage and Price Loss Coverage), crop insurance, and ad hoc Federal payments.
Having commodity prices at break-even levels will not result in financial stability for farmers, the economists noted, with net income equaling zero. Without income on the positive side of the ledger, farmers may be hard-pressed to cover necessary family living expenses and provide funds for debt repayments and capital replacement. Commodity prices will need to remain at historically high levels for profitable crop production to occur, they added.