2023 Farmer Returns Projected at $25 Per Acre, 80% Lower than 2022
Be ready for a big profit swing for 2023 — to the downside. The first round of 2023 Illinois Crop Budgets released by the University of Illinois show a clear trend of higher costs and lower returns.
The 2023 crop budgets are based on projected input cost levels, trendline corn and soybean yields and per-bushel prices of $5.30 for corn and $12.75 for soybeans. The budgets are for four regions of Illinois (northern Illinois, central Illinois with high-productivity farmland, central Illinois with low-productivity farmland and southern Illinois).
Farmers Face Cost Increases
The models point to substantial cost increases in 2023, says Gary Schnitkey, University of Illinois Extension ag economist.
“The factors that are causing those cost increases are inflation, including wages and labor, fuel and just general supply disruptions further exasperated by the Ukrainian Russian war,” he says.
Non-land costs are projected to be higher in 2023 than in 2022, as is illustrated for corn grown in northern Illinois in Figure 1. Non-land costs are projected to be $860 in 2023, up from $758 in 2022. Overall, costs have increased dramatically since 2020, from $577 to $860, an increase of $283 per acre, or a 49% increase.
In northern Illinois, cash rents are projected to increase from $296 per acre up to $301 per acre.
In 2023, total costs are projected at $1,161 per acre, up from the $1,054 level in 2022, Schnitkey says. Since 2020, total costs have increased from $833 per acre to $1,161, an increase of $328 per acre, or 39%.
Table 2 shows actual results for northern Illinois for 2021, along with projections for 2022 and 2023.
Given higher costs, break-even levels for northern Illinois for corn are $5.34 per bushel on cash rented land. The break-even soybean price is $12.54. Those break-even prices are above average prices received from 2014 to 2019 ($3.66 per bushel for corn and $9.69 for soybeans).
“For central Illinois high-productivity farmland, we are projecting an average return of $25 per acre for a corn-soybean rotation,” Schnitkey says. “That is much lower than the return in 2021 when we had a record $413 per acre, and it is also above 2022 projections for returns of $156 per acre.”
The 2023 farmer return is projected to be close to the average from 2013 to 2019 when the return averaged $29 per acre.
“This typically happens in agriculture after a period of higher returns, we return to those lower returns,” he says. “We're still protecting positive returns for 2023 but there are risks. The biggest is that corn and soybean prices decline, and costs do not-- an event that could happen.”
Watch this video with Gary Schnitkey, University of Illinois ag economist:
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