Indiana's farm economy: Some improvements in 2019.

• Author: Hurt, Chris

After three years of depressed income, the Indiana farm economy will show signs of moderate recovery in 2019. The recovery will be led by record corn and soybean yields in the fall of 2018 with a large portion of the crop sold in 2019. Government trade assistance due to the damaging tariffs will be important in supporting farm incomes as well.

How low has farm income been? From 2008 to 2014, Indiana farm income averaged more than $3.1 billion annually. However, for the last three years from 2015 to 2017, that figure dropped to an average of $1.4 billion annually (see Figure 1). That is more than a 50 percent drop in average annual income. Recent years have been characterized by negative cash flows and declining equity for many farm families. Farmers have responded by pushing costs downward and striving to increase efficiencies. Many have had to increase their debt loads with their lenders.

Cropping agriculture

Income prospects for crop farms should improve in 2019 when much of the 2018 fall crops will be sold. The U.S. Department of Agriculture (USDA) expects the state to have record corn yields of 194 bushels per acre. This is about 13 percent above the normal yield for 2018. Corn prices are also expected to be somewhat higher as well. The U.S. average corn price for the 2017 crop was $3.36 per bushel and is expected to rise to $3.60 a bushel for the 2018 crop. Revenues per acre will be about $95 higher than for the 2017 crop. Costs of production were $10-$15 per acre higher, so net returns are up about $80-$85.

Soybean prices have been severely harmed by Chinese tariffs, but U.S. government trade assistance will help compensate for these large tariff losses. Indiana yields are forecast at a record 60 bushels per acre. This is 14 percent above normal yields for 2018. U.S. prices averaged $9.33 per bushel for the 2017 crop, but with the Chinese tariff in place are anticipated to fall to an $8.60 average for the current 2018 crop.

Due to the price damage from the tariffs, the Trump administration provided financial assistance to a number of farm commodities. Soybeans were judged by USDA analysts to have suffered the most damage due to the huge magnitude of Chinese purchases. Farmers are to receive $1.65 per bushel on the first one-half of their 2018 soybean production. This is equivalent to $0.825 on all of their production. When the $0.825 per bushel of trade assistance is added to a market price of $8.60, this provides a total revenue of...