Farm Income/ Budget
With costs of production in many crops higher than income there is concern in the farming world. Some farm inputs are coming down such as fuel, land rent in some areas and fertilizer from 10-30%. The debt to asset ratio on the farm is 13.2%. With the proposed cut in crop insurance between 16 to 18 billion dollars over 10 years this could pose problems in securing funding. Currently in crop insurance there is 62% of the premium being subsidized this would go down to 50%. Cost for insurance would increase. The big issue is where does a producer cut costs in the next two years with projected downward price trends in commodities. Does a producer delay equipment purchase? do I keep the high price land rent? Do I look at all my input costs? To grow a high quality crop I need to keep my inputs to those levels and look at generics or really have a good management plan with solid record keeping, IPM to make sure I am not spending monies unnecessarily. Crop Insurance cannot be eliminated because banks require it to cover their loans. If the price of fertilizer has declined you may have a good opportunity to keep current or above levels for the operation. Fuel prices have dropped so that will help some. If you are paying an excessive amount for rent you may want to look hard to see if that will work with your budget. Equipment purchase also see what works in your budget if you can delay purchasing equipment you may be better off if the maintenance cost is using up you cash. You may want to look at a lease option and not a direct purchase. A producer may not have control of declining commodity prices but does have a control of their budget it may be all you can do in the tuff times.