Farm Economics 101 Leadership for Midwestern Watersheds Dubuque, Iowa Nov. 1, 2016 Chad Hart Associate Professor/Crop Markets Specialist chart@iastate.edu 515-294-9911 1 1

Iowa’s Economy

Iowa Corn Prices vs. Costs

U.S. Corn Supply and Use 2012 2013 2014 2015 2016 Area Planted (mil. acres) 97.3 95.4 90.6 88.0 94.5 Yield (bu./acre) 123.1 158.1 171.0 168.4 173.4 Production (mil. bu.) 10,755 13,829 14,216 13,601 15,057 Beg. Stocks 989 821 1,232 1,731 1,738 Imports 160 36 32 67 50 Total Supply 11,904 14,686 15,479 15,400 16,845 Feed & Residual 4,315 5,040 5,324 5,192 5,650 Ethanol 4,641 5,124 5,200 5,206 5,275 Food, Seed, & Other 1,397 1,369 1,360 1,367 1,375 Exports 730 1,920 1,864 1,898 2,225 Total Use 11,083 13,454 13,748 13,662 14,525 Ending Stocks 2,320 Season-Average Price ($/bu.) 6.89 4.46 3.70 3.61 3.25 Source: USDA-WAOB, modified 4 4

Corn Yield Estimates Top: 2016 Yield Bottom: Change from last month Units: Bushels/acre Source: USDA-NASS

World Corn Production Source: USDA-WAOB 6 6

Value of Crop Production Source: USDA-ERS

U.S. Meat Production & Prices Source: USDA-WAOB 8 8

Hog Crush Margin The Crush Margin is the return after the pig, corn and soybean meal costs. Carcass weight: 200 pounds Pig price: 50% of 5 mth out lean hog futures Corn: 10 bushels per pig Soybean meal: 150 pounds per pig Source: ISU Extension

Cattle Crush Margin The Crush Margin is the return after the feeder steer and corn costs. Live weight: 1250 pounds Feeder weight: 750 pounds Corn: 50 bushels per head Source: ISU Extension

Value of Livestock Production Source: USDA-ERS

Farm Production Expenses Source: USDA-ERS

2016/17 Crop Margins @ Trend Yields

2016/17 Crop Margins @ Actual Yields

Net Farm Income Source: USDA-ERS

Iowa Farm Financial Stats Sources: ISU Extension and Iowa Farm Bus. Assoc.

Tracking Specific Farms Using data from the Iowa Farm Business Association, we have been able to track 316 farms over the course of 2015. The average amount of working capital on the farm dropped by $90,000 during the year. Current Ratio Jan. 2015 Jan. 2016 Vulnerable (CR < 1.3) 29% 36% Cautionary (1.3 < CR < 2.0) 20% 21% Strong (CR > 2.0) 51% 43% Debt to Asset Ratio Jan. 2015 Jan. 2016 Vulnerable (DA > 0.6) 19% 22% Cautionary (0.3 < DA < 0.6) 37% Strong (DA < 0.3) 44% 41% Sources: ISU Extension and Iowa Farm Bus. Assoc.

Iowa Land Values

2015 Iowa Land Values - % Change

Thank you for your time. Any questions. My web site: http://www2. econ Thank you for your time! Any questions? My web site: http://www2.econ.iastate.edu/faculty/hart/ Iowa Farm Outlook: http://www2.econ.iastate.edu/ifo/ Ag Decision Maker: http://www.extension.iastate.edu/agdm/