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Ag economist warns about postponing cuts

Midwest farmers experiencing lower net incomes because of the drop in grain prices WILL have management options but an ag economist raises a red flag.

Gary Schnitkey, with the University of Illinois, says some farmers will use their financial strength built up during higher incomes between 2006 and 2013 to postpone making tough decisions for cutting 2016 production costs and cash rents.

Schnitkey says net incomes this year could drop lower than 1998 to 2002 levels, the last time commodity prices fell sharply after a period of higher prices.

Areas they need to look at cutting for next year, Schnitkey says, are: Machinery purchases, something he says most farms have already done; seed, fertilizer, and chemical costs; cash rents; and, family living withdrawals.