Economists Warn: Farmers More Likely to Lose Money in 2014


A new farm bill ushers in the crop insurance era.

"The world has changed," Cory Walters, UNL grain market specialist said.

And the change comes as commodity markets continue to slide. So economists say, the reality is many farmers may lose money in 2014.

Walters said, "It appears the probability of losing money is a lot higher, with that it appears crop insurance can help, but will only stop the bleeding after the bleeding has started, because you first have to incur the deductible loss."

Direct payments are gone. Farmers have known for years Congress was going to axe that politically unpopular program.

Dr. Brad Lubben said, "In 2013 we had about $300 million plus in payments, flowing to Nebraska producers and landowners. We had 150-200 million estimated commodity program payments."

The new crop insurance system doesn't fully take effect until 2015, so it's a guessing game to see exactly what will happen, now that direct payments are done.

Lubben, a UNL ag economics professor said, "We don't have that guaranteed money coming, what we have is a choice between two safety nets that both provide different kinds of support, but we don't exactly know what kind of support until we see year to year what happens."

There's no doubt farmers are wondering too, as a packed house turned out in Hastings for the Cornhusker Economics Outlook. Brad Lubben said the new model is all about managing risk.

"By design, farm programs and crop insurance look like they've been merged together, add in marketing decisions, it's a portfolio producers have to manage, not three separate decisions," he said.

Experts say there will still be opportunities, but it will be important to manage expenses and manage risk.

"Make it through this year to get into next year," Walters said.

The workshop also covered livestock markets -- where beef prices have risen. Some producers in the audience were concerned that prices have gone up too much, to the point consumers may stop eating beef. Livestock market experts say demand continues to be strong, but they are watching the situation.