Ohio State University ag economist Matt Roberts told a packed crowd, held at rapt attention, during the 2014 American Farm Bureau Federation convention, that agricultural incomes and lifestyles will change dramatically in next three to five years.
"The last six years have been extraordinary if you've been a row crop producer. It's been the best in history," Roberts said. "It's been six years in which any idiot could've made money – and a lot of them did."
Roberts credited an extra 50 million acres' worth of demand for corn and soybeans over the past 10 years for the high commodity prices in recent agricultural history. In terms of acreage, that demand has equaled the production of "two Illinoises."
In response, idled land – including hundreds of thousands of acres in the Ukraine – have come into production. "We had a big demand response and now we've got a supply response," Roberts said.
Ethanol and China are two primary demand sources. "Which is still growing?" Roberts asked. "It's not ethanol. Best case scenario is flat going forward. Demand growth is gone. Ethanol plants aren't going away but we won't see annual growth that we've seen in the past. But I'm a bull on China." He points to a rebound in feed usage, as feeders go back to using corn in their rations. Corn exports are available and have doubled from last year to this year.
Roberts does, however, believe it's going to take a few years to figure this out all out, and he predicts and era of significantly lower prices than production agriculture has seen the last six years.
"I've been saying we're one good year's yield away from $4 corn. I'm not sure I'd call 2013 a good year but here we are," Roberts said. "Ask yourself: what would our yield have been if April and May had been normal?
"Normal years do happen, with reasonable frequency. Normal years happen, that's why we call them normal."