EDITOR'S NOTE: Steve Johnson is an Iowa State University Extension farm management specialist. Contact him at 515-957-5790 or [email protected].
Farm Credit Services of America (FCSAmerica) is hosting 17 GrowingOn meetings across Iowa during January to help farmers plan for the 2016 growing season. Any farmer or landowner who is interested in attending is welcome but you must preregister in advance.
Steve Johnson, farm management specialist with Iowa State University Extension and Outreach, is the keynote speaker. He will be joined on the program with FCSAmerica representatives to discuss farmland values, interest rates, working capital constraints and strategies to narrow the gap between 2016 revenue protection coverage and the cost of crop production.
Crop marketing and risk management to be discussed
Johnson will present "Solutions for Success" that will focus on the tight crop profit margins expected for 2016. He will highlight three case study farms that refinanced existing debt and he will share both old and new crop marketing strategies. He will also discuss estimated crop production costs for 2016. Crop costs will decline slightly in 2016, but corn and soybean prices are not expected to change much without major weather events. Crop insurance strategies can still be leveraged to help manage declining revenue.
"If the cash crop price trends of $3.80 corn and $8.50 soybeans continue, most all expenses will continue to be scrutinized," says Johnson. "Marketing and risk management strategies are going to be more important than ever. Most farms are well capitalized and they will weather the challenging economic environment ahead. However, farms with liquidity and working capital constraints in addition to unpriced corn and soybeans in storage will need to work with their primary lenders this winter."
Know what to expect from USDA farm program payments
Statewide farmers in Iowa elected the five-year Agricultural Risk Coverage County (ARC-CO) program last spring on over 97% of the acres. The 2015 payments expected to be made in October 2016 should be slightly smaller on corn base acres due to record county yields. These payments on soybean base acres could actually be higher for many counties despite the record yields. That's because the national average cash price for soybeans is expected to drop below $9.00 per bushel for the 2015-16 marketing year.
The 2016 ARC-CO payments to be made in October 2017 will decline significantly as the five-year Olympic average national cash price drops (based on 2011 through 2015). Thus, the county revenue guarantees will decline. Enrollment for the 2016 ARC-CO program is currently underway at Farm Service Agency (FSA) county offices.
Crop insurance will again be a valuable risk management tool
Crop insurance will continue to be the most valuable government farm program for most row crop farms. The challenge for 2016 is the increasing gap per acre between a farm's revenue protection guarantee and crop cost estimates. Most farms will likely want to keep higher levels of coverage to minimize this gap. The deadline to make changes for 2016 crop insurance coverage is March 15.
FCSAmerica crop insurance specialists will discuss some of these changes for 2016. "The new farm bill clearly makes crop insurance an increasingly important component of the federal safety net for crop farms," says Christa Wilson, vice president-crop insurance for FCSAmerica in eastern Iowa. Wilson advises producers to contact their crop insurance agents and provide 2015 crop production evidence. This will allow time to update the Actual Production History (APH) data well in advance of the March 15 deadline.
Preregister now and plan to attend a meeting near you
In Iowa, the "GrowingOn 2016" farm financial management meetings will be held beginning January 4 and will go through January 21 at the following locations: Festina, Manchester, Davenport, Mt. Pleasant, Cedar Rapids, Perry, Eddyville, Carroll, Emmetsburg, Webster City, Clear Lake, Cedar Falls, South Sioux City, Storm Lake, Harlan, Lenox, Newton and Marshalltown. The program at each meeting is 2½ hours in length.
Preregistration is required. Specific times, locations and registration details can be found at cropinsurancespecialists.com or by calling your local FCSAmerica office or 800-884-FARM.
For farm management information and analysis visit ISU's Ag Decision Maker site at www.extension.iastate.edu/agdm; ISU farm management specialist Steve Johnson's site is at www.extension.iastate.edu/polk/farm-management.