New Farm Bill, new safety net

The 2014 Farm Bill introduced several changes to the commodity programs available through the Farm Service Administration (FSA) and created a new insurance program to complement one commodity program through the Risk Management Agency (RMA).This article provides an overview of the new safety net available to Iowa crop farmers from 2014 to 2018, explains the timing of the decisions involved in selecting a farm program, and highlights the factors that affect program election through three numerical examples

What are financially strong farm operations doing differently?

This article distills the major findings from two studies of recent anonymous farm-level financial information from the Iowa Farm Business Association (IFBA). The first study gauges the extent of financial deterioration among Iowa farms between January 1, 2015 and January 1, 2016 (Plastina, 2016a). The second study identifies the factors associated with the capacity of farms to produce free cash flows to pay for family living expenses, cover depreciation, and re-invest in the farm business (Plastina 2016b)

Declining Liquidity in Iowa Farms: 2014–2017

The goal of the present study is to describe the evolution of financial liquidity in Iowa farms for 2014–2017, using a unique panel of 220 mid-scale commercial farms. Farms with vulnerable liquidity ratings increased from 33.2 percent in December 2014 to 45.0 percent in December 2017. On average, farms lost $244 of working capital per acre over that period, but farms with vulnerable liquidity ratings in December 2017 lost almost 60 percent more than that, or$388. Average farm size, machinery investment per acre, farm net worth per acre, debt-to-asset ratio, and age of operator were not significantly different across liquidity-rating categories

Past and Future of Farm Bill Payments

In the summer of 2015, producers were allowed to elect their farms into one of the two new commodity programs introduced by the 2014 Farm Bill: Price Loss Coverage (PLC) or Agricultural Risk Coverage (ARC). The coverage of the latter program is offered at the county level (ARC-CO), and at the individual farm level (ARC-IC). Less than one percent of all US base acres are enrolled in ARC-IC

Financial stress in Iowa farms: 2014–2016

Iowa farm financial conditions have deteriorated since 2012, but average indicators of liquidity and solvency remain close to their long-term levels. However, average financial measures mask the variability across farms. This article tracks the evolution of financial stress in Iowa farms using a panel of financial statements for 273 farms collected by the Iowa Farm Business Association (IFBA). The share of financially stressed farms (vulnerable liquidity or solvency ratings) increased from 38 percent in December 2014 to 47 percent in December 2016. On average, farms lost $180 per acre of working capital over that period, but farms with vulnerable liquidity ratings lost almost twice that amount. Iowa State University Extension and Outreach makes available a number of resources free of charge to help farmers with their farm financial planning

Do Cover Crops Pay? Net Returns to Corn/Soybean Farmers in Iowa

COVER CROPS, which are planted on approximately 700,000 of Iowa’s 30 million acres of farmland, have been found to have varying net returns based on several factors— cover c rop species, planting technique, termination method, tillage practices, following cash crop, and the farmer’s years of experience with cover crops