Corn Economics Corn Production School February 7, 2006 Mike Duffy Director, Beginning Farmer Center

Outline Historical cost division Cost data from Iowa Farm Business Association Impact of higher energy prices Returns Future

Iowa Farm Business Association

Energy Cost Impacts

Government Programs

Average Government Payments, 1995-2004 Source: Environmental Working Group, 2002 Census of Agriculture

Capitalized Value of Government Payments as a Percentage of Land Value

Government Payments/NFI 2000 - 2004 Source:USDA/ERS

Revenue

Future Level and type of government payments will be an issue in profitability without other offsets Ethanol demand could have a significant impact especially over the next few years Energy costs will be more of a factor in the years to come Farmers will need to carefully evaluate technology traits and determine which ones are profitable for them

Future More production and marketing based on attributes will provide a key for profitability The market will continue to segment based on attributes not simply volume For the foreseeable future Iowa will stay in corn production although there may be some geographical shifts

Thank you! For more information contact me or visit our web site; mduffy@iastate.edu (515) 294-6160 www.econ.iastate.edu/faculty/duffy www.extension.iastate.edu/bfc