Lower grain prices will depress income for US crop farmers to levels less than 15% of those received at the 2012 peak – and growers may have to get used to far lower profitability.
University of Illinois researchers warned of a potential end to the farming boom, caused by higher crop prices, which took average net income for a typical Illinois grain farm above $300,000 in 2012.
Already incomes have fallen steeply from this top, coming in at $145,000 per farm last year, a decline reflecting largely lower grain prices – estimated at an average of $4.65 per bushel for the 2013 corn harvest compared with $6.93 per bushel in 2012.
"Crop insurance payments were much lower" too last year, after the huge claims in drought-hit 2012, when claims accounted for about one-third of farm revenues, said Gary Schnitkey, professor at the university's department of agricultural economics.
And net incomes will fall further this year, to $45,000 per farm a figure which, besides being down two-thirds year on year would be "considerably below any average income level since 2006", Professor Schnitkey said.
It would also fall short of the average that growers received in the decade to 2005, before higher crop prices began to send profits soaring.
However, it is also the kind of result that farmers may have to get used to.
Profits of $45,000-134,000 per farm represent "the likely range of average grain farm incomes over the next several years, with lower incomes possible if low commodity prices occur".
The forecast assumes a corn price of $4.20 a bushel - the centre of the $3.85-4.55-a-bushel range forecast by the US Department of Agriculture for US farmgate values – and an increase of 10 bushels per acre in the corn yield this year, plus a 3-bushels-per-acre improvement in the soybean yield.
"The scenario… is for 2014 to be an above-average [production] year, with higher yields leading to more supply and lower grain prices," Professor Schnitkey said.
Illinois farmers achieved an average yield of 178.0 bushels per acre for corn last year, and 49.0 bushels per acre for soybeans.
The model also assumes lower input costs, a reflection of the drop in fertilizer prices.
The forecast paints a far bleaker picture than that offered by some other commentators, such as agricultural machinery giant Deere & Co, which foresees total US net farm cash income falling by 13.3% to $114.7bn this year.
That figure, which includes the livestock farmers whose margins are being improved by lower grain prices, would represent a decline of less than 15% from 2012.
However, the university's figures chime with talk in other countries of lower prices, which have reportedly fallen below production costs in some parts of Europe.
"Farmer selling right across the European Union and Black Sea has virtually ground to a halt," traders at a major European commodities house said.
"Most growers, across [continental Europe] and beyond, are staring at harvest prices well below the cost of production and are refusing to sell wheat - even though a large slug of it in southern Europe and the Black Sea will have to move before the corn harvest starts."
In the UK, analysts at Andersons estimated earlier this month that many farms took a reduction of "over 25% in profit" last year thanks to setbacks from poor 2012 autumn sowing conditions and a late spring.
And it cautioned that "the 2014 harvest year has all the hallmarks of being a low margin year of adequate supply, and cost challenges".
Some farms can expect a 10.6% fall in their farm income surplus, according to lender HSBC, although higher yields would see others enjoy a 35% increase.