Journal 2021

2021 Journal of the ASFMRA

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Factors Influencing Increased Usage of Cash Rent Leases in Illinois

By Jacob Styan, Maria A. Boerngen, and Michael J. Barrowclough

In recent years, cash rent leases have become increasingly popular among farm landowners in Illinois. Since 1995, acres operated under cash rent leases have increased 44%, 105%, and 117% in northern, southern, and central Illinois, respectively, for farms enrolled in the Illinois Farm Business Farm Management (FBFM) Association. Using data collected from the United States Department of Agriculture (USDA) National Agricultural Statistics Service (NASS), Illinois FBFM Association, University of Illinois farmdoc, and Environmental Working Group (EWG), we examined the impact of multiple factors on farmland leasing choices. Results indicate that commodity prices, soybean revenue, government crop insurance expenditures, and commodity payments have influenced the increasing use of cash rent leases.


Irrigated Acreage Change and Groundwater Status in Eastern Arkansas

By Tej K. Gautam and K. Bradley Watkins

Arkansas rice, soybeans, cotton, and corn, which are mostly irrigated and predominantly produced in eastern Arkansas, are crucially important to the state’s economy. However, increased production cost, lower commodity prices, and unsustainable groundwater withdrawals impose threats to sustainable farming. This study provides a comparative status of eastern Arkansas major crops acreage and groundwater over the past Census of Agriculture periods. Results indicate that rice acreage remained almost stable, but soybeans and corn gained more irrigated acres in 2017 than in preceding census years. Groundwater level decline seemed to be more severe during 2007 than in 2012 and 2017.


Farm Management Instructors Expect More Farm Transitions in Coming Years

By Megan L. Roberts

This study quantified farm business transition within the Minnesota State Farm Business Management (FBM) education program. FBM instructors (n = 50) responded to a census survey regarding the number of FBM enrolled farms (n = 2,324) in active transition or expected to transition within the next five years. Actively transitioning farms totaled 17.7% of farms (413), whereas farms expected to transition within the next five years totaled 26% of farms (604). Although generalizability of this survey was limited, this study nonetheless suggests the need for farm business management and appraisal professionals to prepare for transitions to be an increasing aspect of their workload.


Evaluating the New Agriculture Risk Coverage and Price Loss Coverage Elections for the 2021 Crop Year

By Bart L. Fischer, J. Marc Raulston, Henry L. Bryant, and Joe L. Outlaw

The 2018 Farm Bill reauthorized the Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) programs while providing producers with the opportunity to make an annual election between ARC and PLC beginning with the 2021 crop year. In this article, we analyze the enrollment decision on several representative farms across the United States and provide farm managers with a better understanding of the tradeoffs between the two programs. Given the current price outlook, the results indicate that some producers will want to take advantage of this new flexibility offered in the 2018 Farm Bill.


Cost Cutting Strategies for Midwestern Row Crop Producers

By Sarah C. Sellars, Laura F. Gentry, Krista J. Swanson, Nicholas D. Paulson, and Gary D. Schnitkey

From 2013 to 2020, lower commodity prices resulted in a prolonged period of low returns for row crop producers in the Midwest. Reductions in land costs are often suggested as a strategy during periods of low returns but can be difficult to implement. This article uses farm- and field-level data from Illinois to examine other areas to reduce costs and improve returns. The data suggests that the majority of Midwest farm operations could implement cost reducing strategies including but not limited to reducing nutrient application rates, reducing tillage passes or modifying practices, examining harvest equipment choices, or refinancing to lower interest costs.


Machinery Replacement Strategies

By Gregory Ibendahl and Terry W. Griffin

Farm machinery is typically the second largest asset category on a farm (after land). Farmers often appear to manage their machinery purchases in order to minimize cash flow variability, which usually leads to lower overall taxes. To test this hypothesis, farm income in the current year is compared to the previous two years to determine if farms had a “good” year. Results of a correlation analysis show that there is a strong correlation between having a relatively “good” year and machinery purchases.


Transferring Farm Assets to a Younger Generation

By Michael Langemeier

This paper explores options pertaining to the transfer of farm assets from an older generation to a younger generation. After discussing key tax issues, such as the basis of assets and the disposition of assets used in farming, the paper uses a case farm example to discuss various methods that can be used to transfer assets. For the case farm illustrated in this paper, leasing the land was found to be an attractive option for farmland; leasing with an option to buy and gradual sale of items were found to be attractive options for machinery and equipment.


Examining Differences in Risk Adjusted Returns Among Farms

By Michael Langemeier and Elizabeth Yeager

This study examines differences in risk adjusted returns among Kansas farms using data from 1996 to 2018. Risk adjusted returns were measured using variability and downside risk as measures of risk. The two measures of risk were significantly correlated. Risk adjusted return measures were also significantly correlated with farm size as measured using the value of farm production. Risk adjusted return measures computed in this article can be used to benchmark long-run financial performance.


Converting Texas Land from Agricultural to Wildlife Use Tax Valuation

By Justin R. Benavidez, Tiffany Dowell-Lashmet, David P. Anderson, and Kasey Ullrich

In the 25 years since the wildlife management valuation option was established in Texas, agriculture organizations have expressed concern about land conversion and its effect on production. This paper examines trends in land valuation categorization and its potential impact on agricultural production. Included is an examination of the development of open space valuation in Texas, data on land in agriculture and wildlife management and the associated trends over time, and potential implications for livestock production in the state.


Downy Mildew Impacts and Control Measures on Cucurbits in the United States

By Ramu Govindasamy, Surendran Arumugam, Qun Gao, Mary Hausbeck, C. Andrew Wyenandt, and James E. Simon

This study describes the impact of downy mildew (Pseudoperonospora cubensis) in high-value cucurbit crops grown in the United States. In 2017, a detailed survey was administered to cucurbits farmers. Results showed that all cucurbit crops were affected by cucurbit downy mildew (CDM) to varying degrees. For instance, pickling and slicing cucumber had the greatest damage followed by squash, watermelon, cantaloupe, and pumpkin. The total dollar loss per crop cycle due to CDM ranged from $50 to $1,425 per acre. The actual economic losses reported by growers caused by CDM are significant relative to growers’ profitability and can be used in designing and implementing effective integrated pest management strategies for CDM mitigation.