University analysis predicts lower grain-farm net incomes this year

Courtesy of the University of Illinois

University of Illinois economists released a report on Friday predicting that net incomes at grain farms will be lower in 2015. 

The report said this decrease is expected to surpass recent downturns, with the potential to fall below levels experienced between 1998 and 2002. Despite this, they report that previous high incomes experienced in 2010, 2011 and 2012 could provide a cushion to some farms when incomes are expected to fall.

The report said many farms in the state improved their balance sheets, including increased values in land and machinery owned, increased asset values and decreased debt-to-asset positions. With higher past incomes, many farms were able to fortify marketable securities and inventories, as well as cover additional prepaid expenses.

Economists expect that farms will experience cash shortfalls. They suggest that farms should utilize any available working capital to bridge expected cash shortfalls. They also suggest that cost-cutting measures will likely need to be taken throughout 2016 because many costs associated with 2015 already have been incurred.

Suggested cost-cutting measures include reducing family living expenses, cash rents, and machinery, seed, fertilizer and chemical purchases.

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University of Illinois Extension

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