Economics have farmers making soybean switch

23.04.2018

In 1924, just 115,000 acres of soybeans were planted in Illinois, compared with 8 million acres of corn.

Nearly a century later, Illinois is the top soybean-producing state in the country, with 10.6 million acres expected to be planted this year, nearly as many as the number of corn acres, according to the U.S. Department of Agriculture.

And for the first time nationwide, more soybean acres are expected to be planted than corn acres.

Farmers are shifting to soybeans for a simple reason: They make more money.

"I think a lot of it has to do with just plain economics," said Lynn Rohrscheib, chairwoman of the Illinois Soybean Association and a farmer in rural Fairmount. "We can make more money growing soybeans than corn right now, and as times have gotten a little harder the last few years, we're really looking for ways we can get the most bang for our buck."

On her family farm, she estimated, they grow about 60 percent soybeans, growing non-genetically modified soybeans that they're able to sell for a higher price.

"We've had really good luck with them and haven't had any yield drag," Rohrscheib said. "As long as we're able to grow them for a premium, then we'll stick with them."

She said Illinois has been the top soybean-producing state for four of the last five years, with it usually in a tight race with Iowa.

"It's a competition between Illinois or Iowa," she said.

She said Illinois is able to "double crop" more soybean acres than Iowa and that Iowa had more weather problems this past year.

With double cropping, farmers are able to grow a wheat crop in the spring that they'll harvest in June before planting soybeans.

Rohrscheib said that's more common in southern Illinois up to around Effingham, but it isn't very common in Iowa.

Illinois doesn't win a prize when it's the top soybean-producing state, but Rohrscheib said it gives the Illinois Soybean Association some clout as it advocates for soybean farmers.

"Illinois in general is looked at as a leader in the soybean industry," she said. "To be able to say that we're the No. 1 soybean-producing state is just a huge plus in all the different things we do as an association to help soybean farmers out."

That's important now as soybean farmers worry about China imposing a 25 percent tariff on soybean exports from the U.S. to China.

Paul Berbaum, who farms west of Champaign, said he grows about 50 percent corn, 50 percent soybeans.

"I basically have kept 50 percent for years," he said. "I think it's best to stick with both. Less risk."

But he said some people are switching to more soybeans.

"They're much more profitable, but who knows, if they put tariffs on," he said.

He still remembers the embargo President Jimmy Carter placed on grain exports to the Soviet Union.

"It was terrible. For years, it wrecked the farming community," he said. "It will be the same thing if this trade war keeps escalating."

In an article last week, the University of Illinois farmdoc team looked at how Chinese soybean tariffs could affect an average farmer in central Illinois growing 1,700 acres of corn and soybeans.

Team members projected that with a 25 percent Chinese tariff in 2018, soybean prices would drop to $8.85 per bushel, nearly a dollar less than the $9.70 they would be otherwise.

And while costs would also decrease, they expect net farm income over the next four years would decrease to $24,124 for the average farmer, less than half the $50,677 that would be expected without the tariffs.

While they cautioned that "the financial and wealth situation of farms in 2021 will depend upon many events," the farmdoc team projected that with expected lower land prices, the average farm's net worth would decline from $3.78 million in 2017 to $3.20 million in 2021.

Rohrscheib said the tariffs would "definitely impact our farm."

"Sixty percent of soybeans grown in the state of Illinois are exported overseas, and China is our No. 1 purchaser of soybeans," she said.

Despite the fears, she's optimistic.

"I hope that some sort of an agreement can be reached," she said. "I also understand that Mr. Trump has certain things he has to do as president, and that I have to respect whatever decision he's going to make. I hope he listens to some of his advisers."

 
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