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Farm income to stay close to 2005 trend
Illinois Correspondent

URBANA, Ill. — Average incomes for Illinois farm families for 2006 will likely resemble 2005’s figures, which saw a dip of more than $10,000 below the five-year average, unless farmers can somehow produce a crop similar to the bin-busting yields producers realized in 2004, said Dale Lattz, a University of Illinois Extension economist.

Lattz’s remarks came during the extension’s annual farm income workshop in Urbana last month. He cited an increase in 2005 farm expenses of 8 percent for crop inputs, 50 percent for fuel and oil, and 5 percent for machinery costs, coupled with lower prices for corn and soybeans, as drivers behind the decline in average farm income.

Lattz told conference attendees that research conducted by the University of Illinois shows that trend should continue in 2006. A study from the University of Illinois’ Department of Agriculture, Consumer and Environmental Sciences (ACES), released December 28, said average farm income in 2005 was $43,600, which is lower than average incomes for 2003 and 2004 but higher than those of 2001 and 2002.

Income projections were based on yield estimates obtained from a November ’05 report from the Illinois Agricultural Statistics Service.

Average yields for Illinois farmers were estimated at 145 bushels for corn and 46 bushels for soybeans, with corn fetching $1.80 and soybeans $5.40. The figures were based on information provided by 805 grain farms enrolled in the Illinois Farm Business Farm Management Association.

According to the study, Farm Economics Facts & Opinions, farm incomes from 2005 are projected to be more than $47,100 per farm lower compared to actual farm incomes in ’04, and will be lower than the previous five-year average income.

Due to yield variations, incomes across the state will vary, according to the report. The highest farm incomes are projected across the east and central regions of Illinois, with lowest incomes projected for growers in the northeast region. All districts reported lower corn yields, with the east district reporting the smallest decline in yields (15 bushels).

Soybean yields declined less drastically than corn yields, with the northeast region reporting the largest decline (seven bushels). The highest yield was reported by the eastern district, with 51 bushels per acre.

In a report made in August, 2005 yields were expected to be much lower, with corn projected at 125 bushels and soybeans at 39 bushels.

Projected incomes for 2005 would have been much lower if the August report would have been used instead of the final November report, the study’s authors said.

Lattz advised farmers attending the Urbana workshop, one of several held in the state in December, to “proceed with caution this year” when making financial plans for the upcoming growing season.

In addition, government farm program payments are expected to play a significant role in supporting farm incomes, primarily due to lower grain prices, said Lattz, who co-authored the study with Gary Schnitkey and Paul Ellinger of the University of Illinois’ ACES Department.

Published in the January 4, 2006 issue of Farm World.