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Farm financial management in 2017

An economics professor says farmers need to continue evaluating their financial management options in 2017. Gary Schnitkey with the University of Illinois says looking ahead to next year, commodity prices are projected to remain low.

“Unless something traumatic happens we’re going to be still looking at pretty low commodity prices, particularly for corn. We’re projecting right now for 2017 to be a very low income year for grain farms,” says Schnitkey.

Schnitkey tells Brownfield the Agricultural Risk Coverage (ARC) payments at the county level will also be greatly diminished moving into next year.

“ARC-County uses a guarantee which is based on a benchmark price and a benchmark yield. The benchmark price is coming down because it’s a moving average of the last five years and as we roll on lower prices that benchmark price comes down and causes lower payments,” says Schnitkey.

He says some counties will only pay half of what farmers were paid in 2016 and some may pay zero. Schnitkey says farmers should continue consulting with their financial advisers and lenders to determine financial management options in 2017.

Audio: Gary Schnitkey, Economics, University of Illinois