Department of Economics The Future of Farming in Iowa The Third Degree Ames, Iowa February 3, 2010...

Department of Economics

The Future of Farming in Iowa

The Third Degree

Ames, IowaFebruary 3, 2010

Chad HartAssistant Professor/Grain Markets Specialist

[email protected]


Iowa’s Agricultural Rankings

Source: USDA-NASS

1st: Corn ProductionSoybean ProductionField Crop ValueEgg ProductionHog InventoryHog Value on FarmCommercial Hog SlaughterCrop Harvested Area

2nd: Pig CropRed Meat ProductionTotal Crop Value

3rd: Number of Farms

4th: Net Farm IncomeAlfalfa Hay ProductionSteers – 500 Lbs. & Over

5th: Oat ProductionCattle & Calves on Feed

6th: Heifers – 500 Lbs. & Over

7th: All Cattle & Calves

8th: All Hay ProductionAll Sheep & Lambs

10th: Land in FarmsCalf CropTurkeys Raised


Iowa Farms and Farmland

Source: USDA-Census of Ag.

90

95

100

105

110

115

120

125

1978 1982 1987 1992 1997 2002 2007

1,0

00 f

arm

s

30

30.5

31

31.5

32

32.5

33

33.5

Mil

lio

n a

cre

s

Farms Acres


Age and Farm Values


45

47

49

51

53

55

57

1978 1982 1987 1992 1997 2002 2007

Ye

ars

200

400

600

800

1000

1200

1400

$1,0

00

Age Farm Value

Department of EconomicsSource: Duffy


Handing Off to the Next Generation

• We have a situation– Decreasing number of farms– Increasing average age and age distribution – Increasing age of land owners– Changing structure of agriculture– Technology that increases continually tightens

profit margins

• All of this makes it difficult for the beginning farmer

Source: Duffy


Iowa Cattle Operations


20

30

40

50

60

70

80

1978 1982 1987 1992 1997 2002 2007

1,0

00 f

arm

s

1

2

3

4

5

6

7

Mil

lio

n h

ead

Farms w/ Cattle Number of Cattle


Iowa Hog Operations


0

10

20

30

40

50

60

70

1978 1982 1987 1992 1997 2002 2007

1,0

00

farm

s

7

9

11

13

15

17

19

21

Mil

lio

n h

ea

d

Farms w/ Hogs Number of Hogs

Department of EconomicsSource: USDA-NASS

0

5000

10000

15000

20000

25000

30000

1,0

00

acr

es

Corn Soybeans Hay OatsWheat Barley Potatoes RyeFlaxseed Sorghum Sugarbeets Sweet Potatoes

Crop Shifts


U.S. Corn Supply and Use

Source: USDA

2007 2008 2009

Area Planted (mil. acres) 93.5 86.0 86.5

Yield (bu./acre) 150.7 153.9 165.2

Production (mil. bu.) 13,038 12,092 13,151

Beg. Stocks (mil. bu.) 1,304 1,624 1,673

Imports (mil. bu.) 20 14 10

Total Supply (mil. bu.) 14,362 13,729 14,834

Feed & Residual (mil. bu.) 5,913 5,246 5,550

Ethanol (mil. bu.) 3,049 3,677 4,200

Food, Seed, & Other (mil. bu.) 1,338 1,276 1,270

Exports (mil. bu.) 2,437 1,858 2,050

Total Use (mil. bu.) 12,737 12,056 13,070

Ending Stocks (mil. bu.) 1,624 1,673 1,764

Season-Average Price ($/bu.) 4.20 4.06 3.70

FeedFuel

Food


Population2008 2020 2050

(billion) (billion) (billion)World 6.678 World 7.601 World 9.393

China 1.330

China 1.431

India 1.808

India 1.148

India 1.362

China 1.424

U.S. 0.304 U.S. 0.336 U.S. 0.420Indonesia 0.238

Indonesia 0.268

Nigeria 0.357

Brazil 0.192

Brazil 0.212

Indonesia 0.313

Pakistan 0.168

Pakistan 0.204

Bangladesh 0.280

Bangladesh 0.154

Bangladesh 0.190

Pakistan 0.278

Russia 0.141

Nigeria 0.184

Brazil 0.228

Nigeria 0.138

Russia 0.132 Congo 0.189

Japan 0.127

Mexico 0.125

Mexico 0.148

Source: U.S. Bureau of the Census,International Data Base


Liquid Fuel Usage2006 2010 2015 2020 2025 2030

(Million Barrels Oil Equivalent per

Day) (Percent of 2006 Value)

United States 20.7 95% 98% 98% 100% 105%

Canada 2.3 100% 100% 100% 104% 109%

Mexico 2.1 71% 81% 90% 95% 100%

Europe 15.7 92% 92% 95% 96% 96%

Japan 5.2 88% 92% 96% 92% 90%

China 7.2 118% 139% 168% 192% 213%

India 2.7 89% 115% 144% 159% 174%

Africa 3.0 117% 120% 123% 127% 130%

Central and South America 5.7 116% 116% 119% 125% 133%

World 85.0 102% 107% 113% 119% 125%

Source: Energy Information Administration


BiomassWind

Solar

Alternative Sources


0

5

10

15

20

25

30

35

40

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

202

1

202

2

Bill

ion G

allo

ns

Conventional Biofuels Cellulosic Biofuels

Biodiesel Additional Advanced Biofuels

Renewable Fuels Standard (RFS)


Countries Pursuing BiofuelsUSBrazilArgentinaColombiaParaguayCanadaUruguayMexico

ThailandNew ZealandSouth AfricaSouth KoreaPhilippinesIndonesiaPakistanChina

IndiaMalaysiaAustraliaJapanEURussia

Not a complete list


Spectrum of Biofuels

Source: NREL, 2006

Grain/Sugar EthanolBiodieselGreen Gasoline/DieselCellulosic EthanolButanolPyrolysis LiquidsSyngas Liquids

Most Mature

Least Mature

Department of EconomicsSource: Liebman


Bio-based Market Opportunities

Source: Informa Economics, Biobased Multi-Client Study, March 2006


Biobased Pathways

Source: USDA, 2008, U.S. Biobased Products: Market Potential and Projections Through 2025


U.S. Crop Planted Area, 1998-2018

Source: FAPRI 2009 Outlook


U.S. Crop Prices, 1998-2018



U.S. Livestock Production, 1998-2018



U.S. Livestock Prices, 1998-2018



U.S. Farm Income, 1998-2018



World Corn Trade, 2000-2018



World Soybean Trade, 2000-2018



0

20

40

60

80

100

120

140

Jan-8

6

Jan-8

8

Jan-9

0

Jan-9

2

Jan-9

4

Jan-9

6

Jan-9

8

Jan-0

0

Jan-0

2

Jan-0

4

Jan-0

6

Jan-0

8

Jan-1

0

Jan-1

2

Jan-1

4

Jan-1

6

Jan-1

8

$ p

er

barr

el

Crude Oil Prices

Sources: EIA, NYMEX


2007/082008/09May

June

July

AugSept Oct

JanNov Dec

1.50

2.00

2.50

3.00

3.50

4.00

4.50

0% 5% 10% 15% 20% 25% 30%

Stocks-to-use ratio

Pric

e ($

per

bus

hel)

Corn

Department of EconomicsSource: ISU Extension

Department of EconomicsSource: Cassman, U. of Neb.

Department of EconomicsSource: ISU Extension

Drying of DDG can be 30% of the energy costs of ethanol production

Fertilizer is ½ of the energy used in corn production.


Thank you for your time!

Any questions?

My web site:http://www.econ.iastate.edu/faculty/hart/

Iowa Farm Outlook:http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/

Ag Decision Maker:http://www.extension.iastate.edu/agdm/

Department of Economics The Future of Farming in Iowa The Third Degree Ames, Iowa February 3, 2010...

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