Crop profitability a bleak picture in 2016, 2017

first_imgShare Facebook Twitter Google + LinkedIn Pinterest Ohio State’s Barry Ward took a look at possible crop profitability in 2017, and as you may imagine, the picture isn’t too bright.“It’s not as good of an outlook as what we would like. Obviously the numbers are pretty negative at this point,” Ward said. “We’ve got a cost structure that’s still a legacy of what we had during those real profitable years. And with prices being lower as a result of maybe bumper crops around most of the Midwest, not Ohio necessarily, we’re looking at some very low to negative returns on all of our major row crops.“If we look at some of the variable costs that we’re expecting for our three major crops — corn for instance — we’re right around $360 an acre for next year, at least our projects right now. And that’s just slightly lower than last year. The only real mover that we’re seeing right now is slightly lower fertilizer prices.”Rent prices also remain a concern, especially with a lengthy turnaround in reevaluation of tax formulas.“We’re continuing to see downward pressure. Interest rates being as low as they are continue to at least prop up to some degree land values,” he said. “One thing that we’re battling right now out in Ohio is higher CAUV value and the property taxes that go along with those.“What we’re seeing is in the calculation that’s occurring for the value is that we’ve got some lags in the numbers, so we do see those property taxes kind of lag what’s going on in the farm economy. And so we’re battling that right now.”With regard to tips for farmers, Ward had the following to say.“Know where you’re at obviously and make sure you have a good read on your equity position is. Make sure that you’re completing a balance sheet each year. Understand what your working capital is so that you know where you’re at presently and what kind of cash that you have to deal with because it’s all about cash flow going forward. Just making sure that you’re paying attention to family living expenses, lowering some of that possibly, examining your machinery and equipment expenses, and looking at all your input costs and looking at return on investment on all of those.”last_img