What is in this article?:
Uncertainties abound for corn and soybean production in 2013. Potential drought, crop insurance payouts, and commodity prices are just a few major unknowns. To help growers prepare for the next year, Farm Industry News put together a buyer’s forecast of interest rates and the costs of production inputs and land. Featured here is an overview of common farmland myths.
The rest of the input forecasts may be found here:
Big acreage, productivity hikes
Over the past six years, 130 million acres of new cropland have begun to be farmed worldwide, just 3% of which is in the U.S. Much of new farmland is in Brazil and Argentina, the Ukraine, Russia, the Balkan countries of southeastern Europe, and parts of Asia and Africa, Boehlje says.
“It is quite likely there will be close to 30 million acres added again next year,” he adds. The big land development boom will continue until supply and demand reach equilibrium and prices and profit margins fall enough to discourage new investment.
Although the new land generally isn’t up to Midwest productivity standards, that will improve with time, assuming crop prices are high enough to provide the incentive, Boehlje says. The new ground will be in production for the long haul and is likely to hold down commodity prices over time.
“The important point is when you bring land into production, because agriculture is a high fixed-cost industry, that land will stay in production even though prices might decline,” he says. “Supply response is very lethargic to lower prices. It will not go out of production nearly as rapidly as it came into production.”