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Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.
I have read several articles recently regarding the trend in yields for corn and beans over the last 20-30 years. During the 1980's and early 1990's, the average increase in corn yields was about 1.5%. During the last 15 years or so, the yield increase has been closer to 2%. How will corn yields look over the next 50 years assuming that they increase by either 1.5% or 2%. This table recaps those potential yields based upon using the 2009 average yield of 162.9:
Just a .5% difference in yield results in overall yield in year 50 being 438 bushels per acre instead of 343 or a difference of about 28%. These numbers do look very high, but think back 20 or 30 years. At that time, did you think that corn yields would go from less than 100 bushels per acre on average to an estimated 165 bushels for this year. I know that several of the seed companies are discussing 300 bushel corn as not being too far off for the average farmer in the corn belt.
For beans, the average increase has been lower on average per year at about 1.3%. Plugging these numbers into the same table basing it on the 43.3 2009 bean average results as follows:
These increases in yields probably account for some of the increase in land prices over the last 10 or more years. With yields going up by around 1.3% to 2% per year, the return per acre is going up by this amount (assuming prices stay steady). This would result in prices going up by at least this same amount to reflect the extra income.
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