Inflation: One Big Difference Between Today and the 70’s and 80’s

Inflation

by Brent Gloy

As the farm sector lurches through a painful economic slowdown, many are leery of another farm financial crisis. While a full discussion of the differences and similarities of these periods would require a significant amount of discussion and analysis, we thought that it would be useful to examine one key area in which the current situation differs significantly from the 1970’s farm boom and 1980’s bust. Continue reading

A Case for Lower Corn Seed Expenses

by
David A. Widmar

August 24: corn-sign rows

While most of the 2014 corn crop is still in the field, planning for the 2015 crop is underway. Long before the combines start fall harvest, the importance of the 2015 budget will begin to come into focus.

The big story in 2015 will be lower commodity prices, especially for corn and soybeans. The question on many producer’s minds is how much, if any, relief might come from lower input prices?

A look at 13 years of historic Purdue Crop budgets reveals an interesting trend in corn seed expenses.

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Long Range Corn Prices and Farmland Values, Part I

By Brent A. Gloy

Farmland values should reflect the expected present value of the future earnings that the farm might generate. This sounds nice in theory, but requires that one make forecasts of the present value of future farmland earnings, something that is inherently difficult to do well. Understanding how people think about this has been something of an obsession for me.  We have asked many different people questions about their estimates of farmland values and forecasts of future earnings and have been surprised to find the lack of a strong positive relationship between these variables.

Recently, the USDA long-range commodity price baseline projections caught my eye.  I generally pay little attention to the baseline as it is not really meant to be a forecasts of the future, but rather what the future might look like if today’s conditions persist over the next 10 years. However, I also realize that in order to come up with an estimate of the expected value of future earnings we must be able to say something about future prices, yields, and costs, all of which the USDA considers, so we decided to give them a second look.

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