Wheat profitability from 2006-2012
In this post, returns are compared on southern Illinois farms that grew and did not grow wheat. Specific comparisons are for farms growing and not growing wheat, farms having double-crop soybeans following wheat, and farms having different percent of their acres in wheat. These comparisons are made for years from 2006 through 2012, corresponding to the period of higher commodity prices. Overall, comparisons suggest that farms growing wheat had comparable profitability to those farms that did not grow wheat.
Farms Included in the Study
Data from farms enrolled in Illinois Farm Business Farm Management (FBFM) were summarized for this post. To be included in this study, a farm had to meet certain criteria:
- The farm had to be located in southern Illinois.
- The farm had to receive the majority of its income from grain farm operations.
- The farm had to have records that were certified usable by FBFM field staff.
Data were summarized for the years from 2006 through 2012. The year 2006 was chosen to begin the analysis, as that was the year commodity price began to rise and reach higher levels. Each year, the above screens were applied and farms meeting the screens are summarized below. Farm numbers differed across years. In 2012, there were 307 farms summarized below. Other years had roughly the same number of farms summarized.
Operator and farmland returns were used to make comparisons. Operator and land returns equal gross revenue minus non-land costs. Not included are non-land costs such as property taxes and mortgage interest payments on owned farmland, cash rent on cash rented farmland, and share rent distributions on share rented farmland. Farms differ in ownership and renting structure; hence, land costs will vary across farms. Not including land costs causes ownership and tenure differences to not be reflected in the data.
Operator and farmland returns are summarized below for the following divisions of farms:
- Farms that raised wheat and those farms that did not raise wheat,
- For farms who did raise wheat, returns were calculated for farms that did and did not double-crop soybeans on wheat acres, and
- For farms with wheat acres, farms were divided into categories based on the percent of acres in wheat: a) less than 10% of acres in wheat, b) 10 to 25% acres in wheat, and c) over 25% acres in wheat.
Table 1 shows operator and farmland returns for the above divisions. Averages for each year are reported from 2006 to 2012. Also reported are the averages for the all years. Most focus will be given to the overall average from 2006 to 2012.