November 27, 2002
LOWER, HIGHLY VARIABLE INCOMES PROJECTED FOR 2002
The November, 2002 Illinois Agricultural Statistical Service (IASS)
yield estimates for Illinois (see http://www.agstats.state.il.us/releases/crop.htm)
indicated state average corn, soybean and wheat yields will be lower
for 2002 compared to 2001. However, yields varied considerably between
the different Crop Reporting Districts (CRD) in the state. These
yields, a $2.40 corn price, a $5.60 soybean price, significantly
lower government farm program payments and slight adjustments in
operating expenses are used to project 2002 net farm incomes for
993 Illinois grain farms. The farms used in the study come from
a sample of grain farms enrolled in the Illinois Farm Business Farm
Management (FBFM) Association.
For these 993 farms, our projections indicate that 2002 net farm
income will average $17,499 per farm (Figure 1), down by $12,187
from the 2001 income of $29,686. Projected 2002 income is below
the average income for the last five years of $28,924. The projected
2002 income is the second lowest since 1997. Only the 1998 income
of $12,621 was lower.
Yield Variability Between Crop Reporting Districts
According to the IASS, the average 2002 corn yield for Illinois
is projected at 138 bushels per acre compared to 152 in 2001. The
average soybean yield for 2002 is projected at 41 bushels per acre
compared to 45 in 2001. Changes in yields between 2001 and 2002
vary considerably by crop reporting district. Districts in the northern
and central areas of the state reported changes in corn yields from
no change to 9 bushels per acre less in 2002 compared to 2001 while
the two far southern districts reported a 57 and 65 bushel decrease
in average corn yields.
Changes in soybean yields were similar. The two northern districts
reported 1 to 4 bushels per acre less soybean yield in 2002 compared
to 2001, the three districts through central Illinois reported no
change in average soybean yields while the two southern districts
reported average soybean yields 11 to 14 bushels per acre less in
2002 compared to 2001.
Average yields used in the study are adjusted to reflect the historical
difference between the IASS yields and actual yields reported by
the FBFM farms.
Income Variability Between Districts
Projected incomes are quite variable between the different districts
in the state due to the variability in projected yields (Figure
2). The highest incomes ($33,088 to $39,351) are projected in the
central, west, east and west southwest districts in the state. The
two northern districts are lower ($17,969 to $18,449). The east
southeast district's income is about breakeven (negative $534) while
the lowest incomes are projected in the two southern districts (negative
$27,235 to negative $55,333). The projected incomes for northern
Illinois for 2002 were about the same as 2001, central Illinois
higher, and southern Illinois significantly lower than the year
Government Farm Program Payments
Total government farm program payments will be significantly less
in 2002 than in 2001 due to the new farm program, higher grain prices
and no additional market loss assistance payments paid in 2002.
The Production Flexibility Contract (AMTA) payments under the old
program were replaced by Direct Payments under the new program.
The Market Loss Assistance and Oilseed Payments which were legislated
year-to-year in the past were somewhat replaced by Counter-Cyclical
Payments which are paid when market prices are below a certain "trigger"
level. The loan deficiency payment program under the new farm bill
is the same as under the old farm bill.
Total farm program payments are estimated to be about $15,000 in
2002 compared to over $50,000 in 2001. No loan deficiency or counter-cyclical
payments were projected in the 2002 income figure due to higher
grain prices. Only direct payments were included. Although there
was a short period of time when a small LDP could have been received
for soybeans. Net farm income would only be slightly positive in
2002 without government farm program payments.
Accuracy of Projections
Actual average income will vary from these projections. Most of
the variation will result from changes in yields and prices:
Corn yield: A one bushel change in corn yield changes average income
Soybean yield: A one bushel change in soybean yield changes average
income by $1,754.
Corn price: A $.05 change in corn price changes average income by
Soybean price: A $.10 change soybean price changes average income
There will be considerable variability in income across farms.
This year, more than most years, yields varied tremendously in small
geographical areas as well as among different regions in the state.
Overall, however, projections indicate slightly less income for
northern Illinois in 2002 than in 2001, higher income in central
Illinois and significantly lower income in southern Illinois. Because
of the significant drop in income in southern Illinois, the average
income for the whole state is projected lower in 2002 than in 2001.
Issued by: Dale
Lattz, Gary Schnitkey,
Ellinger, Department of Agricultural and Consumer Economics