Agricultural News
Strong Cattle Profits A Feature of the FAPRI Look at the Decade Ahead for Agriculture
Fri, 14 Mar 2014 16:50:05 CDT
A report from the Food and Agricultural Policy Research Institute at the University of Missouri looks ahead to the next decade based on the market information available in January of this year. It also incorporates several key provisions of the new farm bill - though it is noted that the analysis required some assumptions about how the bill would be implemented and how farmers would respond to the new options provided. The figures reported in the baseline briefing represent the average of 500 alternative outcomes based on different assumptions about the weather, oil prices and other factors. Among the results - prices for most crops are likely to remain below recent peaks - with projected corn prices over the next ten years at about four-dollars per bushel under average market conditions and soybean prices around 10-dollars per bushel. The report also projects a four-million acre decline in planted corn area for 2014 - with the area devoted to soybeans and several other crops increasing. While lower prices discourage producing on marginal acres - the FAPRI analysis says more normal weather conditions this spring could allow land not planted in 2013 to return to crop production.
For ethanol production - projected growth over the next several years is limited - with the baseline assuming the Environmental Protection Agency proposal to modify the 2014 Renewable Fuel Standard will be adopted and that a similar approach will be used to set biofuel use mandates in subsequent years.
FAPRI expects record cattle prices due to the reduced cattle numbers - which will limit beef production. The analysis expects cattle prices and returns to cow-calf operators will remain high until herds have a chance to rebuild. In addition - lower projected feed costs will help improve the profitability of livestock production. FAPRI notes one uncertainty is the effect of Porcine Epidemic Diarrhea Virus on the pork sector.
Looking at the new farm bill - the projected cost of major commodity programs - on average - is about five-billion dollars per year according to the FAPRI analysis - with crop insurance costing a little over eight-billion per year on average.
In 2014 - net farm income is projected to decline more than 30-billion dollars - or 24-percent - from the 2013 record as sharply lower crop prices and reduced government payments more than offset the impact of strong cattle and milk prices and a slight reduction in production costs.
Click here for the complete report as released by FAPRI.
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