Archive: 2020 Illinois Farm Economics Summit

In a year stricken by the coronavirus pandemic and an extremely severe economic contraction, corn and soybean prices have risen to levels that seemed impossible just a couple of months ago.  A critical question for 2021 is the likelihood of sustaining corn prices near $4 and soybeans near $11.  In this webinar, we discuss the 2021 supply and demand outlook for corn and soybeans and the longer-term outlook for trade with China.

Grain farm incomes in 2020 were supported by above-trend yields, higher prices than expected, and several forms of Federal payments. These 2020 incomes serve as a backdrop for 2021 income projections. Sufficient 2021 incomes will be dependent on a combination of above-trend yields and continued Federal payments. Risk management will be critical, and several new tools are available this year. Levels of cash rental likely will depend on continued Federal payments.

The election and enrollment period for the ARC and PLC programs for the 2021 crop year is now open, and decisions must be made by March 15^th.  A new crop insurance program, the Enhanced Coverage Option (ECO), will also be available for crops produced throughout the Midwest. ECO is a county-based program, similar to the Supplemental Coverage Option (SCO) that can be used to supplement underlying multi-peril coverage for eligible crops.  This session will address these decisions, and provide some examples and recommendations for typical Illinois farm situations.

We consider both the short- and medium-run outlook for US farm policy following the 2020 election. We provide an updated review of three years and four rounds of ad hoc farm payments, including an analysis of payment distribution and program design for the Market Facilitation Program (MFP) and Coronavirus Food Assistance Programs (CFAP). We discuss what the perceived need for ad hoc assistance says about standing farm programs such as Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) and the implications for future coronavirus-related relief and the prospective 2023 Farm Bill.

Farmland is receiving significantly increased attention by owners and investors seeking to make sense out of the scrambled economic signals of the recent past.  Historically, the conventional narrative around farmland as a financial asset is that the returns are positively correlated with inflation, have low or negative correlation with equities, and have positive portfolio benefits in well-diversified holdings due to the relative lack of response to short-term broad market movements.  The Fed has signaled an intent to target higher inflation, and the changing posture on trade and world demand could drive commodity prices, though perhaps not as clearly linked to dollar prices.  This session examines the relative returns to farmland over differing macro-environment periods of the past, and suggests the strength of relationship to expect in the future to financial assets, interest rate indexes, and inflation.