University of Illinois Extension Macon County
Resource Review
http://web.extension.uiuc.edu/macon/rr/
For more information, please contact:
Macon County Unit
2535 Millikin Parkway
Decatur, IL 62526
Phone: 217-877-6042 / Fax: 217-877-4564
E-mail: macon_co@extension.uiuc.edu
If you are signing up for the new Farm Program, you are likely asking yourself: "Which option do I take?" and "Do I really have to go through all my records to prove my yields?" To answer the first question, you have to find the proof of your yields to complete the calculation enabling you to select the right option.
University of Illinois Extension in Macon County has helped over 100 farmers use the Farm Bill Decision Spreadsheet in the mobile computer lab or by appointments. They have all discovered that the calculation is necessary to select the best option for their farm and their situation. The same will be for you. There are no magic solutions to pick an option; you have to run the calculations.
University of Illinois Extension and Iowa State Extension have developed an Excel program computer spreadsheet that requires the following information per FSA number to make the calculations:
2002 PFC Base Acres, Corn, Soybeans, Wheat
2002 PFC Base Yield, Corn, Soybeans, Wheat
1998 through 2001 Actual Acres Planted, Corn, Soybeans, Wheat
1998 through 2001 Actual Yields that can be proven, Corn, Soybeans, Wheat
It takes about 20 minutes per FSA number to input the information into the spreadsheet and print off the results once the data is collected. You can obtain the spreadsheet on the internet at the Farmdoc website located at:
The important thing to remember is that you will have to live with the option you pick for the next six years. A significant amount of money can be missed, by picking an option that doesn't maximize your income.
The mobile computer lab with the Farm Bill program will be returning to the Extension Conference Center on January 6 and 7, 2003. Also, if you would like to make an appointment for help with the calculation, contact: Paul Mariman, Farm Business Educator at 877-6042.
Reduced Government Payments Means Tight Cash Flow
After four years of low grain prices, most producers have welcomed the price upswing. However, higher prices may not completely offset lower revenue caused by lower yields as a result of adverse weather conditions. In addition, higher grain prices will reduce the amount of farm program payments. There will be little, if any, loan deficiency and counter cyclical payments this fall. In addition, the new farm bill does not contain provisions for market loss assistance and oilseed payments that have been paid out the past few years. These payments expired with the old farm program.
Higher grain prices will offset much of the drop in farm program payments for producers with average or above average yields. This will not be the case for producers with a shortfall in production. Even for producers with normal yields, their cash flow will be altered considerably this year due to the drop in farm program payments. Some producers will need to sell 2002 crop production this fall to make up for the cash flow shortfall. Others, who typically prepay expenses before the end of the year, may decide not to this year.
Result of Higher Grain Prices on Farm Program Payments
Expected lower production of corn, soybeans and wheat has resulted in significantly higher prices for these commodities. Higher prices are going to result in lower or no government loan deficiency and counter cyclical payments this year. Early in November market prices for corn were about 25 cents per bushel above the level in which producers would start receiving LDP's. Beans were about 40 cents over that level, and wheat prices were about $1.25 above the LDP price level. USDA indicated it would not make any advance counter cyclical payments for corn, soybeans and wheat because the estimated marketing year price for these commodities was above the price level that would trigger counter cyclical payments. USDA will evaluate this again in February of 2003. A significant drop in grain prices could result in some counter cyclical payments in 2003. For producers with average or above average yields, the higher market prices to a great extent will offset the lower government payments. However, for producers with a significant shortfall in production, the higher market prices will not totally offset the lower counter cyclical payments and the elimination of market loss assistance payments.
Summary
Implementation of the 2002 Farm Bill combined with higher grain prices will result in significantly less government payments to producers this year. Lower payments are mainly due to higher prices resulting in limited or no loan deficiency and counter cyclical payments. A significant drop in grain prices could change that. The fact that there will not be any market loss assistance and oilseed payments this year is also a major factor in lower farm program payments. For producers with average or above average yields, the drop in farm program payments will be offset by higher grain prices. Higher grain prices will not offset the drop in farm program payments for producers with a significant drop in production. For some producers, crop insurance proceeds will offset some of the loss in revenue due to lower yields. The drop in farm program payments also has cash flow and income tax planning ramifications that producers need to examine.
Harvest is done and the next challenge is to analyze profit and loss, your financial position, and your tax liability. There are a number of tools on the Farmdoc Internet website that can make the paper work much easier. The tools range from loan analysis to investment analysis and from financial analysis to farm management. The web site has been nationally recognized for design and content. Perhaps the best part is all the information is free to down load to your computer. The site is:
If you have a slow Internet connection, you can order a subscription to FAST Tools. For $60 per year, you receive software and a help manual. Every quarter you will also receive an updated Compact Disk of the complete FAST Tool set. You can order from the website.
Farm Income 2003
Plan to attend the regional farm marketing and management conference presented by University of Illinois Extension. Entitled "Decision-Making Challenges in A Risky Environment" it will focus on the new Farm Bill, changes in price outlooks, and changes in agricultural law and policies.
The program will include:
Illinois Farm Income Situation
Outlook for Commodity Prices
Making Sense of Farm Lease Options
Agricultural Policy and Law Issues
Making Sound Crop Insurance Decisions with a New Farm Bill
Keys to Developing Successful Grain Marketing Programs
Which America Will Produce Soybeans?
The nearest conference will be Dec. 11 at the Crowne Plaza at Springfield. If you cannot attend that day, the same conference will also be presented:
December 10, 2002, Holiday Inn at Mt. Vernon
December 12, 2002, Hickory Grove Civic Center at Rochelle
December 17, 2002, Holiday Inn at Urbana
Pre-registration fee is $25 and $30 at the door. Fee includes all workshop materials and lunch. Registration can be done on the web site at www.farmdoc.uiuc.edu or by contacting Sue Esposito, University of Illinois, 1301 W. Gregory Drive, 326 Munford Hall, Urbana, Il. 61801. For more information or questions call 217-333-5506.
An Idea to Consider
What have you heard about "agri-tourism?" Plenty of magazine articles have been written in recent years about farmers in recent years who have developed value-added ventures to attract visitors to their enterprise. It takes time to consider, plan, and create such an endeavor, but it can be done.
Extension will be convening a group of folks interested in that idea to meet and discuss the ramifications and what it might mean for the community and the agricultural ventures involved.
Such operations might parallel "Black Bart's Pumpkin Patch" northwest of Warrensburg, or a bed and breakfast operation, or a homegrown museum of farm implements and tools. It might also involve hiding things on your farm and letting folks with a GPS receiver come look for "treasure." It could also involve a pasture full of exotic livestock, hay/sleigh rides, bale mazes, corn mazes, or anything that will bolster your revenue and bring traffic and economic development to the area.
If you are starting to get some ideas, don't let the cat out of the bag yet, but let us know of your interest, and if you would like to attend a meeting in the next several weeks that would explore such ideas and discuss the pros and cons. Call us at 877-6042 and tell us to put your name on the list for attending the agri-tourism meeting. When the date is set and details are finalized, you'll be notified.
We Need Your Help, So We Can Help You
You are busy. Your time is valuable. But we need your input on the types of seminars and workshops, which would be important to you. Any issue or topic will be considered.
What programs would you like to see this winter?
Please tell us what programs that you would suggest that Extension develop and present.
Would you attend meetings: Mornings___ Afternoons____Nights____Weekends_____
The following sessions are currently scheduled:
Nov. 12 Private Pesticide Applicator Training 8:00 pm to 12:00 pm Dec.11 Farm Income 2003 Springfield (see above) Dec. 17 Farm Income 2003 Urbana (see above) Dec. 3 Private Pesticide Applicator Training 6:00 pm to 9:00 pm Feb. 28 Crop Insurance Decision Meeting Mar. 4 Private Pesticide Applicator Training 6:00 pm to 9:00 pm
Clip off and mail to:
University of Illinois Extension 2535 Millikin Parkway Decatur, IL 62526
