Take the average corn farm in Illinois. From 2010 to 2013, about $1,000 was a reasonable expectation for gross revenue per acre.
Since then, the grain markets have tanked, taking with them a good chunk of that revenue potential to the point at which today, those gross revenues range between $700 and $800, according to a University of Illinois Extension economist who adds that these figures are likely to remain true under current price expecatations through this calendar year.
"In 2015 for corn, gross revenues are projected in the mid- to high $800-per-acre range for farms in northern and central Illinois with high-productivity farmland. Gross revenues in the low $800-per-acre range are projected for farms with lower-productivity farmland in central Illinois. Gross revenues in the low $700 range are projected for southern Illinois farms. These 2015 levels are about $200 per acre below average gross revenue levels for 2010-13," says economist Gary Schnitkey. "As long as prices are below $4.50, gross revenues in the above ranges are to be expected."
There are essentially three key variables in this equation to keep your eye on moving through the growing season, Schnitkey says. First, he says the numbers support lower corn yields than last year, at least in his state of Illinois. Why? It's really all on paper; last year's yields were "exceptionally high" and will likely be closer to trend this year. Yet, the second variable -- price -- will likely see at least some improvement, especially considering the lower projected yield output. That generally means his state will see gross corn income only slightly lower than last year. A lot depends on your location, or what locale in Illinois to which your farm is most similar.
"The combination of lower yields and higher prices has different impacts on crop revenue across regions. In northern Illinois, crop revenue in 2015 is projected higher than crop revenue in 2014: $816 in 2015 vs. $790 in 2014. In the other regions, 2015 crop revenue is projected below 2014 revenue. In central Illinois, 2015 crop revenue is projected at $833 per acre compared to $866 per acre in 2014. In general, northern Illinois yields in 2014 were not as much above average as the other Illinois regions," Schnitkey says. "As a result, a return to trend yields is not as large as a decrease in northern Illinois. The relatively lower yields in northern Illinois also resulted in higher 2014 crop insurance payments ($46 per acre) and a higher estimated 2014 ARC payment ($50 per acre) than in other regions of Illinois."
Between 2010 and 2013, gross corn revenue averaged just over $1,000 an acre in northern Illinois, he adds.
Another variable to throw into this year's corn revenue equation: federal crop insurance programs. If you chose the Agricultural Risk Coverage (ARC) program with the county option, you're likely to get a payment in places like northern Illinois, where that's less of a certainty in central and southern parts of that Corn Belt state. If you opted for PLC, "at a $3.70 price, PLC payments will not occur," Schnitkey says.
