University of Illinois agricultural economist Gary Schnitkey indicated this week at the farmdoc daily blog (“2017 Crop Budgets, 2016 Crop Returns, and 2016 Incomes“) that, “Revised projections of 2016 crop returns and 2017 crop budgets have been released. For 2016, soybeans are projected to have record-setting yields, leading to higher soybean returns than in 2015. Given that non-land costs and cash rent cuts have occurred, higher soybean returns should cause 2016 net incomes to be higher than 2015 incomes. However, crop budgets suggest very low returns and net incomes in 2017.”

Dr. Schnitkey explained that, “Table 1 shows corn and soybean returns for central Illinois farms with high-productivity farmland. The first three columns show revenues, costs, and returns for corn while the second set of three columns show results for soybeans. The 2015 column represents actual results based on data from Illinois Farm Business Farm Management (FBFM). Values for 2016 and 2017 are projections. Similar data are shown for northern, central (low-productivity), and southern Illinois farms in a publication available here. Budgets for 2017 are available here.”

Table 1

The farmdoc update added that, “2016 Crop Revenue for Corn: Corn crop revenue for 2016 is projected at $762 per acre based on a 231 bushels per acre yield and a $3.30 per bushel price (see Table 1). Currently, USDA is projecting Illinois’ state yield at 200 bushels an acre, tying the highest yield for Illinois set in 2014. The 231 bushels per acre used for central Illinois projections is the same as occurred in 2014. A $3.30 per bushel corn price is based on current cash bids and levels of Chicago Mercantile Exchange (CME) futures contracts going into spring. The $3.30 price is $.10 above the midpoint range contained in the September WASDE report. Overall, high yields lead to the $762 corn revenue projection which is $8 per acre higher than 2015 corn revenue.

“2016 Crop Revenue for Soybeans: Soybean crop revenue is projected at $653 per acre based on a 71 bushels per acre yield and a $9.20 price. Currently, USDA is projecting a 61 bushels per acre yield for Illinois, the highest yield ever for the state of Illinois. The 71 bushels per acre yield used for central Illinois would be its highest yield, and is 5 bushels above the next highest yield of 66 bushels per acre that occurred last year. The $9.20 per bushel price is near current cash bids. The $9.20 price is $.15 above the $9.05 midpoint of the WASDE range contained in the September report.”

Dr. Schnitkey also pointed out that, “Land Costs: Land costs shown in Table 1 represent average cash rents. Cash rent in 2016 is projected at $268 per acre, down $10 from the $278 level in 2015.

“Farmer Return is projected at -$28 per acre for corn, $10 per acre higher than the -$38 farmer return in 2015. Soybean return is projected at $63 per acre, up by $53 per acre from the $10 level in 2015.”

DTN Special Correspondent Elizabeth Williams reported yesterday that, “Some Grain Belt analysts question USDA’s latest 2016 farm income estimates as overly optimistic. They doubt growers were able to shed as much in input costs this season as USDA’s revised August estimates indicated.

“Kansas State University economist Allen Featherstone made that case at a joint KSU-Washburn Law School symposium last week. He painted a scenario more dire than USDA’s aggregate farm numbers indicate, potentially setting the stage for hard choices when borrowers seek financing this winter.

“Kansas farmers eked out a small profit last year: $4,500 was the average net farm income for Kansas farms, reported Featherstone, who heads the department of agricultural economics at KSU. That sounds only slightly better when you compare it to the Illinois Farm Business Farm Management Association numbers which showed the average Illinois farmer lost $2,971 last year. (For more details go to http://farmdocdaily.illinois.edu/…).”

Ms. Williams indicated that, “Featherstone wasn’t all doom and gloom. Farmers and ranchers have built up their equity compared to the 1980s, so will possess more staying power to weather tough times. In general, debt is low and interest rates are at historic low levels. However, repayment capacity is shrinking. In 2015 in Kansas, there was $4 in debt per $1 of earnings.

“Repayment capacity numbers are a little alarming, he said. One hundred percent repayment capacity means you have cash available after paying farm expenses to pay debt, family living expense and taxes. Above 100% you have more than enough, below 100% means you can’t cover family living expense, debt and taxes.

“‘Let’s look at the drop in repayment capacity from 1979 to 1981,’ Featherstone noted. In 1979, Kansas producers achieved 153% repayment capacity. By 1981, repayment capacity sunk to a meager 16%. What worries Featherstone is Kansas producers have gone from 149% repayment capacity in 2009 down to only 17% in 2015.”

The DTN article added that, “Another worry is the government safety net is not very strong.”

Reuters writer Karl Plume reported yesterday that, “A U.S. district court judge in Kansas this week said lawsuits brought by U.S. farmers against seed company Syngenta AG over sales of biotech corn seeds not approved for import by China can proceed as a class action, according to a court filing.

“Farmers from the largest U.S. corn-producing states sued the seed maker in 2014 after grain shipments containing traces of Syngenta’s Agrisure Viptera corn were rejected by China, which had not approved the variety for import before it was launched.

“Farmers who did not plant Viptera corn claimed they suffered losses when the rejections that began in November 2013 disrupted trade and dragged down corn prices. Plaintiffs’ attorneys estimate hundreds of thousands of corn growers lost $5 billion to $7 billion in current and future profits.”

Mr. Plume indicated that, “Judge John Lungstrum certified a nationwide class and statewide classes in Arkansas, Illinois, Iowa, Kansas, Missouri, Nebraska, Ohio and South Dakota.”

Yesterday’s article added that, “Syngenta has said it is not responsible for the losses and that it launched Viptera corn in full compliance with all regulatory and legal requirements. The Swiss company is a major agricultural seed producer and the world’s largest crop chemical maker.

“The company said it may appeal the District Court’s decision.”

In a twitter update yesterday, Senate Ag Committee ranking member Debbie Stabenow (D., Mich.) indicated that, “Today I’m announcing the Urban Agriculture Act of 2016 that will help urban farmers!”

A news release yesterday explained that, “[Sen. Stabenow] today announced the most comprehensive urban agriculture bill to be introduced in Congress. The Urban Agriculture Act of 2016 will help create new economic opportunities, giving Michigan families greater access to healthy food and creating a healthier environment in cities and towns across our state. The legislation addresses the unique needs of urban farmers by investing new resources and increasing flexibility through existing programs administered by the [USDA].”

The release added that the legislation would provide new financial tools and support to urban farmers including-

“Loans: Expands existing USDA farm loan programs so urban farmers can cover new farm related activities that improve their business. Now urban farmers can use farm loans to finance food production, marketing, and value-added processing.

“Risk Management Tools: Provides a new affordable risk management tool for urban farmers to protect against crop losses, taking into account the risks, food prices and contracts unique to urban farms.

“New Urban Ag Office: Creates a new urban agriculture office at USDA to coordinate urban agriculture policies across the Department and provide urban farmers with technical assistance.”

And Dana Afana reported yesterday at MichiganLive Online that, “The bill would boost farming cooperatives, encourage rooftop and vertical farms, invest $10 million in research exploring market opportunities for urban agriculture and develop technologies for lowering energy and water needs.”

Ms. Afana added that, “The bill would also increase access to healthy foods with a $5 million investment for tools to develop community gardens and connect farms with families and neighbors.

“Resources would also be provided for best practices in soil remediation, urban composting and reducing waste that would go into landfills.”

A news release on Friday from Senate Ag Committee member John Hoeven (R., N.D.), stated that, “[Sen. Hoeven] today said a D.C. Court of Appeals decision to stop the Occupational Safety and Health Administration’s (OSHA’s) new anhydrous rule is a positive step for farmers in North Dakota and across the nation. The court decision prevents OSHA from going forward with its anhydrous rule until it follows the proper notice-and-comment procedures.”

The release added that, “In December, the senator introduced and worked to pass legislation preventing OSHA from implementing a regulation forcing agricultural retail facilities to comply with the same chemical storage requirements as a wholesale facility. This would have caused many retailers to stop selling to farmers at rural locations and threaten to limit the supply of anhydrous ammonia, a nitrogen fertilizer that is critically important to producers. Earlier this year, Hoeven included language in the Senate Fiscal Year 2017 Labor-HHS appropriations bill prohibiting OSHA from implementing it in 2017. The legislation passed out of committee by a large bipartisan majority vote.

“Rural suppliers have said the OSHA rule would cause them to stop supplying fertilizer, which would create hardship and expense for farmers because they would have to travel further to purchase it. In June, the N.D. Department of Agriculture estimated that as a result of OSHA’s policy change, 275 North Dakota agriculture retail facilities would be subject to this more stringent storage regulation. The resulting cost of compliance could force nearly 90 of them to shut down.”

And Senate Ag Committee member Heidi Heitkamp (D., N.D.) tweeted on Friday that, “Court decision today forced @OSHA_DOL to withdraw the standards b/c it didn’t seek meaningful input from farmers & fertilizer retailers”

The Senate Ag Committee GOP twitter account, in a tweet from Friday included these remarks from Committee Chairman Pat Roberts (R., Kans.) regarding the court decision:  “Today, the courts again ruled against the administration’s misguided regulations that would harm producers and drive up food prices.  The ruling showed that the administration acted illegally imposing a rule which could increase the price of fertilizer without giving producers or retailers time to make their voices heard.  This ruling is good news for farmers and ranchers and for reining in the administration’s harmful, regulatory overreach.”