During the next few weeks, farm operators will be finalizing their crop insurance decisions for the 2025 crop year. March 15th is the deadline to purchase crop insurance for the 2025 crop year. The 2025 Spring price for corn should be similar to last year, while the soybean Spring price is likely to be reduced from the base price level in 2024. There still should be some favorable crop insurance guarantees again this year at reasonable premium costs. USDA has increased the premium subsidies for ECO and SCO insurance products, which may enhance crop insurance choices for farmers in 2025.

Producers have several crop insurance policy options to choose from, including yield-only (YP) and revenue protection (RP and RPE) policies, SCO and ECO policies, and other private insurance options. In recent years, most farm operators have chosen revenue protection (RP) insurance options, which provide a guaranteed gross revenue per acre (yield x price). This guarantee is based on yield history (APH) on a farm unit times the Spring (base) price, which is the average of the CBOT prices during the month of February for December corn futures and November soybean futures.

As of January 23, the 2025 crop insurance Spring price estimates in the Upper Midwest for YP, RP, and RPE policies were estimated near $4.60 per bushel for corn and $10.40 per bushel for soybeans. The 2025 Spring prices will be finalized on March 1. The current 2025 base price estimates compare to recent base prices $4.66/bu. for corn and $11.55/bu. for soybeans in 2024, $5.91/bu. for corn and $13.76/bu. for soybeans in 2023, and $5.90/bu. for corn and $14.33/bu. for soybeans in 2022. The final 2025 crop revenue will be the actual fam yield times the crop insurance harvest price, which is the average CBOT prices during October for December corn futures and November soybean futures.
Another insurance option that is a lower premium than a typical RP policy with harvest price protection is a RPE (harvest price exclusion) policy, which functions similarly to a standard RP policy except that the guarantees on RPE policies are fixed at the base price level and are not affected by harvest prices that exceed the base price. The revenue guarantee for standard RP policies is increased for final insurance calculations, if average CBOT prices during the month of October are higher than the February CBOT prices, which is what occurred for corn and soybeans in both 2020 and 2021, as well as for corn in 2022. The RPE option is not recommended to protect against losses due to large crop disasters, such as a drought or other disaster that affects a large portion of the Midwest, or other situations that could lead to price increases during the year.

An analysis for the past eighteen years (2007-2024) shows that the final crop insurance harvest price for corn has been lower than the Spring base price in twelve of the eighteen years, including a decrease of ($.50) per bushel in 2024. The corn harvest price was also lower from 2013-2019. That trend was reversed from 2020-2022, when the harvest price for corn rose above the Spring price by +$.11 per bushel in 2020 +$.79 in 2021, and by +$.96 in 2022. The only other years that saw an increase in the harvest price were 2010, 2011 and 2012.

An analysis of the past eighteen years for soybeans, shows that the harvest price has increased in seven years (2007, 2009, 2010, 2012, 2016, 2020 and 2021) and decreased in ten years (2008, 2011, 2014-2019, 2022, 2023 and 2024), while staying the same in 2013. The range has been from an increase of +$2.84 per bushel in 2012 to a decline of ($3.00) per bushel in 2008. In 2024, the harvest price was $10.03/bu., which was a decrease of ($1.52) per bushel from the Spring price of $11.55/bu. The range of price variation from Spring prices to harvest prices for corn and soybeans, both up and down, further solidifies the importance of having a solid crop insurance policy in place for the 2025 crop year.

SCO and ECO Insurance Coverage Improved for 2025
The Supplemental Coverage Option (SCO) coverage is only available to producers that choose the Price Loss Coverage (PLC) farm program option for the 2025 crop year. The farm program enrollment deadline is April 15 in 2025; however, the crop insurance enrollment deadline is March 15, 2025. This means that farm operators will need to consider both choices by March 15 if they want to utilize SCO insurance coverage. SCO allows producers to purchase additional county-level crop insurance coverage up to a maximum of 86 percent coverage. For example, a producer that purchases an 80% RP policy could purchase an additional 6% SCO coverage.

The Enhanced Coverage Option (ECO) provides area-based insurance coverage from 86 percent up to 95 percent coverage, with producers having a choice between 90 or 95 percent ECO coverage. Unlike SCO coverage, the purchase of ECO coverage is available with selection of either the PLC or ARC-CO farm program choice for 2025. Producers can utilize both ECO and SCO together, in addition to their underlying RP, RPE, or YP insurance policy. SCO and ECO are county revenue-based insurance products that utilize the same crop insurance base prices and harvest prices as RP insurance policies; however, the biggest difference is that SCO and ECO utilize county level average yields, rather than the farm-level APH yields. As a result, the SCO and ECO insurance policies may achieve different results than the underlying RP policy.

The federal government has increased the premium subsidies for both SCO and ECO coverage for 2025, which should make premiums more reasonable for crop insurance coverage that include these products. It is estimated that 2025 SCO premiums will decline by 3-5 percent compared to a year ago, while ECO premiums are likely to decline by 30-35 percent in 2025 compared to a year earlier. Many crop insurance companies have combined SCO and ECO coverage with other private insurance buy-up policies to offer some very attractive risk management insurance packages for the 2025 crop year. Interested producers should check with their crop insurance agent for details on 2025 SCO and ECO insurance coverage and premiums, along with private insurance buy-up options, to optimize their crop insurance coverage for 2025.
 
“Enterprise Units” and “Optional Units”
“Enterprise units” combine all acres of a crop in a given county into one crop insurance unit, while “optional units” allow producers to insure crops separately in each individual township section. “Enterprise units” usually have considerably lower premium costs (approx. $8.00-$10.00 per acre) compared to “optional units”, for comparable RP and RPE policies. Producers should be aware that “enterprise units” are based on larger coverage areas, and do not necessarily cover losses from isolated storms or crop damage that affect individual farm units, such as damage from hail, wind, or heavy rains that have occurred in recent years. It is important to understand the difference in insurance coverage and to analyze the yield risk on each individual farm unit, when determining if paying the extra premium for insurance coverage with “optional units” makes sense.

“Bottom-Line” on Crop Insurance Decisions
Producers have the option to purchase RP and RPE insurance coverage levels from 50% to 85%, and losses are paid if the final crop revenue falls below the revenue guarantee. Given the tighter margins for both corn and soybeans, there may be a tendency to reduce the level of crop insurance coverage for 2025. However, producers need to closely analyze their risk exposure for the 2025 crop year and adjust their crop insurance coverage accordingly. At the current estimated Spring prices, many producers should still be able to provide an adequate level of risk protection for corn and soybean production in 2025. Crop insurance remains one of the best risk management tools that is available for farm operators to protect their investment in crop production.
A reputable crop insurance agent is the best source of information to find out more details about the various crop insurance products that are offered, to get premium quotes, and to help finalize 2025 crop insurance decisions. Kent Thiesse, Farm Management Analyst, has prepared an information sheet titled: “2025 Crop Insurance Decisions”. To receive a copy of the information sheet please forward an e-mail to: [email protected]
For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Group
Phone - (507) 381-7960; E-mail - [email protected]  

Eligible farm operators have from January 21 until April 15 to enroll in the 2025 farm program, either online or at local USDA Farm Service Agency (FSA) offices. Late in 2024, the 2018 Farm Bill was extended for one year, extending the expiration of the current Farm Bill until September 30, 2025. This also meant that the provisions and parameters that existed for traditional farm programs will continue for the 2025 crop year for corn, soybeans, wheat, and other crops. The good news for farm operators is that the reference prices for corn, soybeans, and wheat will all increase for the 2025 crop year. The reference prices are used to calculate potential PLC payments for a given commodity. The benchmark prices that are used in determining potential “Ag Risk Coverage” (ARC) payments for corn, soybeans, and wheat are also increased for the 2025 farm program.

Eligible cops for farm program benefits include corn, soybeans, wheat, oats, barley, grain sorghum, long grain rice, medium/short grain rice, temperate japonica rice, seed cotton, dry peas, lentils, large and small chickpeas, peanuts, sunflower seed, canola, flaxseed, mustard seed, rapeseed, safflower, crambe, and sesame seed. Producers can choose between the price-only “Price Loss Coverage” (PLC) and revenue-based “Ag Risk Coverage” (ARC) program choices for the 2025 crop production year.  The ARC program choice includes both the county-yield based “ARC-CO” program choice, which is the most popular, and the “ARC-IC” program, which is based on farm-level yields. If no choice is made, the 2024 farm program choice will remain in place for 2025; however, producers still need to enroll in the 2025 farm program in order to be eligible for farm program benefits.

Crop base acres for 2025 will remain at the same levels as 2024 for all crops on most farms, unless there are adjustments in base acres for crop acres that were added via land purchases or rental agreements or acres that are no longer eligible for farm program payments. The farm program yields on individual farm units, which were last updated in 2020, will be continued to calculate potential PLC payments in 2025. The ARC-CO “benchmark yields” for 2025 are based on the “Olympic-average” Risk Management Agency (RMA) county average yields for the 2019 to 2023 crop years. The national “market year average” (MYA) price for each program crop for the years 2019-2023 was averaged to calculate the 2025 “benchmark price” for the ARC-CO and ARC-IC programs.
 
The calculation formulas, etc. for the 2025 PLC, ARC-CO and ARC-IC programs will remain the same as in previous years. PLC payments for 2025 will be made if the final MYA price for 2025 falls below the reference price for a given crop. ARC-CO payments for 2025 will be made if the final county revenue for the year (county yield x final 2025 MYA price) falls below the 2025 benchmark revenue (county benchmark yield x benchmark price) for a given crop. The calculations for the ARC-IC program are the same as for the ARC-CO program, except ARC-IC uses farm-level yield data and considers all crops on a farm unit together for calculation of potential payments in a given year. PLC and ARC-CO payments will be paid on 85 percent of crop base acres, while ARC-IC payments are paid on only 65 percent of base acres.

The 2015 Farm Bill established “statutory reference prices” for all crops that were used to calculate PLC payments. The 2018 Farm Bill set the fixed statutory prices as minimum reference prices and added the possibility for “effective reference prices”. This allows the reference price to increase by as much as 15 percent above the fixed reference price (fixed price x 115%). The final calculated reference price for a given year is the higher of the fixed statutory price or the 5-year “Olympic average” price for a commodity times 85 percent (.85). The “Olympic average” price is calculated by taking the market year average (MYA) price for the five previous years (not including the current marketing year), dropping the high and the low price, and then averaging the other prices for the other three years. For the 2025 crop year, the “Olympic average” price is based on the MYA prices for the years 2019 to 2023, which is then multiplied by 85% (.85) to determine the final reference price. The 2025 reference prices for both corn and soybeans will be at the maximum level (115% of the statutory price).
The final effective reference prices (ERP) for the 2019 to 2023 crop years were at the minimum statutory levels of $3.70 per bushel for corn, $8.40 per bushel for soybeans, and $5.50 per bushel for wheat, meaning that calculation for higher reference prices was not triggered for any of those three crops. MYA prices have been high enough in recent years to result in higher PLC reference prices for corn and soybeans in both 2024 and 2025, as well as for wheat in 2025. The 2025 reference prices are $4.26 for corn, $9.66 for soybeans, and $5.56 for wheat. The higher reference prices potentially increases the likelihood of PLC payments for the 2025 crop year, especially for corn and wheat, if average market prices decline during the 2024-25 marketing year. PLC payments are not as likely for soybeans at current market price trends. The higher PLC reference price for corn will likely make 2025 farm program decisions for corn a bit more challenging than in recent years.

Key points to remember about the 2025 Farm Program decision:
•    The 2025 reference prices for the PLC program are:      
Corn = $4.26 per bushel  ($4.01/Bu. in 2024 & $3.70/Bu. in 2023)
Soybeans = $9.66 per bushel  ($9.26/Bu. in 2024 & $8.40/Bu.in 2023)  
            Wheat = $5.56 per bushel  ($5.50/Bu. in 2024 & 2023)
 
•    The ARC-CO and ARC-IC benchmark prices for 2025 are:
Corn = $5.03 per bushel  ($4.85/Bu. in 2024 & $3.98/Bu. in 2023)
Soybeans = $12.17 per bushel  ($11.12/Bu. in 2024 & $9.57/Bu. in 2023)
Wheat = $6.72 per bushel  ($6.21/Bu. in 2024 & $5.50/Bu. in 2023)

•    Final 2025 MYA prices for corn and soybeans will be calculated from 9-01-25 to 8-31-26. As a result, the current trends in crop prices may not necessarily impact final 2025 farm program payments. Final 2025 MYA prices for wheat and other small grains will be calculated from 6-01-25 to 5-31-26.
 
•    Calculation formulas for the PLC and ARC-CO programs are as follows:
    PLC payment per crop base acre = (2025 Ref. Price – 2025 MYA price) x program yield x .85
(If the final 2025 MYA price is higher than the reference price, there is no PLC payment.)
    ARC-CO Benchmark (BM) revenue guarantee per acre = County BM yield x BM price x .86
Final 2025 ARC-CO revenue per acre = Final 2025 County yield x Final 2025 MYA price
ARC-CO payment per base acre = (BM Revenue Guarantee – 2025 Final Revenue) x .85
(If the final revenue is higher than the BM revenue, there is no 2025 ARC-CO payment.)

•    For official information on PLC and ARC-CO programs, and other farm program details, go to the FSA farm program website at: www.fsa.usda.gov/arc-plc
For a listing of 2025 county benchmark yields and revenues for all crops, refer to:
            https://www.fsa.usda.gov/programs-and-services/arcplc_program/arcplc-program-data/index

•    Following are some good Farm Program web-based decision tools to assist producers:
    University of Illinois FarmDoc website --- https://farmdoc.illinois.edu/
    North Dakota State University --- https://www.ag.ndsu.edu/farmmanagement/farm-bill
    Kansas State University --- http://www.agmanager.info/ag-policy/2018-farm-bill

•    Kent Thiesse, Farm Management Analyst with the Green Solutions Group, has prepared an information sheet listing key points regarding the 2025 farm decision for corn, soybeans and wheat for the 2025 crop year. To receive a copy of the “2025 Farm Program Decision “Cheat Sheet”, send an email to: [email protected]
For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Group
Phone - (507) 381-7960; E-mail - [email protected]

The January USDA World Supply and Demand Estimates (WASDE) report is often known as being a “market mover”, and the WASDE report released on January 10th did not disappoint. USDA made significant downward adjustments to final 2024 corn and soybean production numbers, based on lowering the final 2024 national average corn yield by 2.1 percent and the average soybean yield by 1.9 percent. The reductions in the corn and soybean supply, together with only minor adjustments in corn and soybean usage, resulted in a significant decline in projected ending stocks for both crops compared to a month earlier. The initial market reaction following this report was an increase in both corn and soybean prices on the Chicago Board of Trade (CBOT).
 
CORN
The updated National Ag Statistics Service (NASS) Crop Production Report for 2024 was also released on January 10th. The report estimated the final 2024 U.S. average corn yield at 179.3 bushels per acre, which was a decrease of 3.8 bushels per acre from November’s estimate. The 2024 corn yield estimate is still a new record average U.S. corn yield, surpassing the previous record U.S. yield of 177.3 bushels per acre in 2023, and compares to 173.4 bushels per acre in 2022. The corn yield estimates in the latest NASS report were lowered by 4.9 percent or more in Minnesota, Indiana, and Kansas, compared to the last yield estimate in November. Minnesota is estimated to have a final 2024 average corn yield of 174 bushels, while Iowa is projected to have a final corn yield of 211 bushels per acre. Other estimated average corn yields for 2024 included Illinois at 217 bushels per acre, Indiana at 198 bushels per acre, Ohio at 177 bushels per acre, Nebraska at 188 bushels per acre, Wisconsin at 174 bushels, South Dakota at 164 bushels per acre, and North Dakota at 149 bushels per acre.
 
The latest WASDE report listed the total 2024 U.S. corn production at 14.87 billion bushels, which was lowered from 15.14 billion bushels last month. The 2024 U.S. corn production was below the record level of 15.34 billion bushels in 2023; however, it is still about 1.2 billion bushels above the 2022 corn production level. The latest USDA report put the total demand for corn usage in 2024-25 at just over 15.1 billion bushels, which is a slight increase from 2023-24 corn usage figures. USDA is projecting corn export levels to increase by 158 million bushels in 2024-25, along with slight increases of 21 million bushels in corn used for feed and 22 million bushels in corn processed into ethanol. 
 
USDA is estimating 2024-2025 U.S. corn ending stocks at 1.54 billion bushels, which was a decrease of 198 million bushels from the December WASDE report. The estimated 2024-25 ending stocks are 12.6 percent lower than the final ending stocks of 1.76 billion bushels in 2023-24; however, the current projected carryover exceeds the 1.36 billion bushels in 2022-23. The corn stocks-to-use ratio is now estimated at 10.2 percent for 2023-24, which compares to ratios of 11.9 percent in 2023-24, 9.9 percent in 2022-23, and 9.2 percent in 2021-22. At this point, the projected 2024-25 ratio is still well below the relatively high stocks-to-use ratios of 13.7 percent in 2019-20 and 14.6 percent in 2018-19. The anticipated reduction in the available corn supply could offer some potential for short-term rallies in the cash corn market in the coming months.
 
USDA is currently estimating the U.S average on-farm cash corn price for 2024-25 at $4.25 per bushel, which is an increase of $.15 per bushel from the December estimate. The market year average (MYA) corn and soybean price estimates for 2024-25 are the expected average farm-level prices for the 2024 crop from September 1, 2024, through August 31, 2025; however, they do not represent estimated prices for either the 2024 or 2025 calendar year. The projected 2024-25 corn price of $4.25 per bushel compares to a final MYA price of $4.55 for 2023-24 and is a significant decline from the final MYA prices of $6.54 per bushel for 2022-23 and $6.00 per bushel in 2021-22. The current projected MYA price is also slightly lower than $4.53 per bushel in 2020-21; however, it far exceeds the national average corn prices of $3.57 per bushel for 2019-20, $3.61 per bushel for 2018-19, and $3.36 per bushel in 2017-18.
SOYBEANS
The latest NASS report projects the final 2024 U.S. average soybean yield at 50.7 bushels per acre, which was a decrease of one bushel per acre from the November yield estimate. The 2024 yield compares to recent final U.S. average yields of 50.6 bushels per acre in 2023, 49.6 bushels per acre in 2022 and 51.7 bushels per acre in 2021. Total U.S. soybean production for 2024 is estimated at 4.366 billion bushels, which is an increase of 204 million bushels from the final 2023 production level. The recent WASDE report estimates total soybean demand at 4.349 billion bushels for the 2024-25 marketing year, which is an increase of 244 million bushels from 2023-24 soybean demand levels. Soybean crush levels are expected to increase by 123 million bushels in the current marketing year, while soybean exports are expected to be 130 million bushels higher than 2023-24 levels. Soybean exports in 2024-25 would still be 155 million bushels below 2022-23 export levels. 
 
The latest WASDE report estimated U.S. soybean ending stocks for the 2024-25 marketing year at 380 million bushels, which was a decrease of 90 million bushels from the December report. The projected 2024-25 soybean ending stocks are an increase of 38 million bushels from the 2023-24 carryout level of 342 million bushels. The current projected ending stocks compare to recent year-end carryout levels of 264 million bushels in 2022-23, 274 million bushels in 2021-22, and 257 million bushels for 2020-21 Current levels are well below ending stocks of  525 million bushels in 2019-20, 913 million bushels in 2018-19, and 438 million bushels in 2017-18.   
 
The soybean stocks-to-use ratio for 2024-25 is now estimated at 8.7 percent, which is similar to the final ratio of 8.3 percent in 2023-24, but is higher than the ratios of 6.1 percent in both 2022-23 and 2021-22 and 5.7 percent in 2020-21. The projected 2024-25 ratio remains is still considerably lower than soybean stocks-to-use ratios of 23 percent for 2018-19 and 13.3 percent for 2019-20. The reduction in the 2024-25 estimated soybean supply may offer some opportunities for some short-term rallies in cash soybean prices in the coming months, especially if weather issues develop in South America or with the 2025 U.S. soybean crop.
 
USDA is projecting the U.S. average farm-level (MYA) soybean price for the 2024-2025 marketing year at $10.20 per bushel, which is unchanged from the December estimate. The estimated 2024-25 average soybean price would be a significant decline from the final soybean MYA prices of $12.40 per bushel in 2023-24, $14.20 per bushel in 2022-23 and $13.30 per bushel in 2021-22. The 2024-25 MYA price estimate would be comparable to the soybean MYA price of $10.80 per bushel for 2020-21; however it would still be considerably higher than the MYA prices of $8.57 per bushel for 2019-20 and $8.48 per bushel for 2018-19.  
 
Market Reaction to the WASDE Report
Both corn and soybean market prices showed a very positive market response following the release of the latest WASDE report on January 10th. Nearby cash corn futures on the Chicago Board of Trade (CBOT) increased by 14.5 cents per bushel following the report, closing at a price of $4.70 per bushel. This was the highest CBOT closing price for the 2024 corn crop since late June of 2024. By comparison, nearby corn futures were at $4.59 per bushel in 2024 and $6.70 per bushel in 2023 following the January WASDE report. The December CBOT corn futures price, which is used to determine price bids for the anticipated 2025 corn crop were up 3.25 cents per bushel at the market closing on January 10th, closing at $4.50 per bushel. The “new crop” CBOT corn futures prices were at $4.91 per bushel in 2024 and $6.07 per bushel in 2023 following the WASDE report in January.
 
CBOT cash soybean futures increased by 26.25 cents per bushel following the WASDE report, closing at a price of $10.25 per bushel. This was the highest CBOT closing price for the 2024 soybean crop since late October of 2024. The current nearby soybean futures price is well below the CBOT prices $12.40 per bushel in 2024 and $14.87 per bushel in 2023 following the January WASDE report. The November CBOT soybean futures price that is used to determine price bids for the anticipated 2025 soybean crop was up 17.25 cents per bushel following the WASDE report and closed at $10.31 per bushel. The “new crop” CBOT soybean futures prices were at $12.04 per bushel in 2024 and $13.97 per bushel in 2023 following the January WASDE report.

For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Group
Phone --- (507) 381-7960; E-mail --- [email protected] 

As we head into 2025, many farm operations are coming off a relatively poor profit year in 2024; with some farmers having very small profit levels last year, while others had extremely poor results in 2024. In all cases, all farm operators continue to face very tight profit margins for crop production in 2025, as compared to a few years ago. During these challenging farm financial times, it is good to plan ahead before meeting with an ag lender for renewal of a farm operating line of credit or for an annual re-view of the farm financial portfolio.
Following are some tips for farm operators to be more proactive, as they are preparing for an annual meeting with their ag lender ……
• Prepare an up-to-date 2024 year-end farm balance sheet (as of 12-31-24 or 1-01-25).
Preparation of an accurate and up-to-date year-end balance sheet is critical to the loan renewal process for any farm operation. Updating the previous year’s balance sheet with current year-end numbers can help expedite the process. If the farm operation is a sole proprietorship, most ag lenders will also want personal asset and liability data included. If it is a partnership or family corporation, most ag lenders will also require personal balance sheets from all partners.
A good year-end balance sheet will include:
• List of accounts receivable as of 12-31-24, which includes whom the money is due from, the dollar amount, and the date it will be received. This includes deferred payments for grain sold in 2024.
• List of accounts payable as of 12-31-24, listing who the money is owed to, the dollar amount, and when payment will be due. Be sure to include any items listed as cur-rent assets where payment is still due, as well as final 2024 land rental payments that were still due as 12-31-24.
• List of 2024 prepaid expenses for both crops and livestock as of 12-31-24, which details the input, amount of the input, and the amount that was prepaid. This is for items where payment has occurred.
• Grain and livestock inventory list as of 12-31-24. The grain inventory should include total bushels of each crop, bushels that are forward priced (date and price for each sale), and any sales plans for the remaining bushels. Livestock inventory should include the number, weight, and any sales information on market or feeder livestock. An updated list and estimated value of breeding livestock should be included as an intermediate asset rather than a current asset.
• CCC loans on 2024 grain that were taken prior to 1-01-25, listing the bushel amount, CCC loan rate, CCC interest rate, CCC loan maturity date, and sales plans for the CCC grain.
• Review the list of farm machinery and equipment, buildings and facilities, and other capital assets, removing any assets that have been sold or removed, and adding any assets that were purchased or acquired during 2024. Farm machinery values should be adjusted to represent current market values.
• Add any land or other long-term assets that were added in 2024 and adjust asset values as necessary (may want to review this with an ag lender).
• List of all other loans and creditors as of 12-31-24, listing the principal balance, interest rate, payment amount, and payment dates. Be sure to include short-term credi-tors for crop and livestock inputs, loans with family members, and CCC loans through FSA offices.
• Prepare a 2024 year-end income and expense statement as of 12-31-24.
The year-end income statement from the previous year should be based on actual sales of grain and livestock during 2024, which will likely include some 2023 inventory that existed at the beginning of the year, as well as any 2024 grain or livestock that was sold during the year. The 2024 expenses would include any accounts payable from the beginning of the year balance sheet that were paid in 2024 and any 2025 prepaid expenses that were paid in 2024, in addition to the other 2024 crop and livestock ex-penses. A preliminary 2024 federal tax return is a good resource to prepare an income statement.
• Prepare a budget-to-actual summary for the previous year (as of 12-31-24).
Once the 2024 income and expense statement has been finalized, and accrual adjustments are made based on the year-end balance sheet, it always good to review the actual year-end financial analysis compared to the budgeted cash flow analysis that was prepared at the beginning of the year. Pay attention to the big differences that exist in crop and livestock income and the various expense items, as well as determine explanations for those differences. Analyze for any potential adjustments that are need-ed for 2025.
• Prepare a preliminary 2025 budget and cash flow analysis.
Preparing an accurate and complete budget and cash flow analysis for 2025 is a very important part of the loan renewal process and can assist with grain marketing deci-sions for the 2025 crop year. A high-quality cash flow analysis will likely include:
•Planned crop and livestock production for the year, including acres of various crops, anticipated production levels, and any current or planned sales of the 2025 produc-tion.
• A grain and livestock marketing plan that includes a list of the amount sold, the contracted price, and the date to be delivered, as well as plans for remaining unpriced grain and livestock inventories.
• A list of planned crop and livestock inputs for 2025, the contracted or planned price of the inputs, and when the expense will be incurred.
• A detailed list of rented farmland for 2025, which includes the name of the farm owner, acres rented, amount of rent (including flexible lease details), and dates when rent payments are due.
• Include income received for accounts receivable on the year-end balance sheet and account for the expenses of any accounts payable at the beginning of the year.
• Include any other farm income (custom work, etc.) and non-farm expenses (family living, personal loans, etc.) that must be accounted for in the cash flow analysis for the farm.
• Provide details of planned 2025 crop insurance coverage, such as updated APH yields, percentage coverage, enterprise versus optional units, and the addition of hail or wind insurance. (Your ag lender may be a good resource for these decisions.)
• Provide a copy of FSA farm program information listing the crop base acres and FSA program yield for each farm unit. Discuss the 2025 farm program choice with your ag lender.
• Include any planned changes or adjustments in the farming operation for 2025 in the cash flow analysis, including farm machinery purchases or sales, adding or selling land or other assets, and any other changes to the farm business, as well as any changes in personal assets or liabilities.
• Once USDA announces details, potential payments for farm economic assistance and disaster assistance could be included. Possible 2024 ARC-CO payment estimates for corn and soybeans, based on final 2024 county yields and 2024 MYA price estimates, could also be included.
It is best to include all partners and family members that are part of the farm operation in the renewal process with an ag lender, so that all key players are “on the same page” with financial decisions affecting the farm business. It is very important to be trustworthy and honest in preparing and sharing financial information with an ag lender to help assure confidence in the accuracy of the financial data. View an ag lender as an informal partner in a farm business, as a good ag lender can be a valuable resource in making management decisions.
Farm operators should expect their ag lenders to be well prepared, trustworthy and honest in financial dealings. It is important to remember that most local ag lenders also face a lot of pressure in the process of renewing farm operating loans and that they need to do their “due diligence” to complete the necessary requirements in the loan renewal process. The documentation that is prepared will likely be reviewed by senior management at a financial institution, as well as be subject to review and au-dits by Federal and State bank examiners. Most ag lenders are part of the local community and want to see farmers have financial success, which is in the best interest of both the farm business and the ag lending institution.
Note - For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Phone - (507) 381-7960; E-mail - [email protected]