Economic and Marketing Information
FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana
September 30,  1971
1972 Outlook
Net income to Indiana agriculture is
likely to be up 15 to 20 per cent for the
year beginning October 1, 1971, compared to the past 12 months. The expected 3 to 4 per cent increase in prices
however, will likely mean an increase in
Indiana farm purchasing power of about
12 to 16 percent compared to the past
year.
Some farmers will feel this increased
net income much more than others, depending particularly upon the type of
farm they operate. Earnings are expected
o be substantially higher for hog producers, soybean growers and beef herd
owners. Earnings from most other major
enterprises are expected to be near to
somewhat higher than last year's earnings.
The sharply lower corn prices will
likely be slightly more than offset by the
much larger Indiana production, leaving
net income from corn up slightly.
General Business
A gradual pickup in the pace of economic activity is expected in the year
ahead. Real output is expected to grow
by 4 to 6 percent. Prices will probably
advance 3 to 4 per cent.
Consumer spending is expected to pick
up. Residential housing construction will
continue strong.
Total government spending will likely
rise at about the rate of the total economy.
Total employment will likely rise only
about fast enough to absorb new entrants
into the labor force—leaving unemployment rates near summer of 1971 levels.
Foreign demand for U.S. products will
likely be stimulated by realignment of
currency exchange rates.
A gradual pickup in the general economy and the new economic policies laid
down by the President will reflect themselves to farmers in their dual roles as
producers and consumers in the following
ways:
1. Domestic demand for farm products will likely increase more rapidly
than during the past year in response to
increasing consumer expenditures and
population growth. Foreign demand for
Indiana-produced farm products will be
strong but might not exceed last year's
exports when European demand for feed
grains and soybeans was stimulated by
reduced feed output and expanding livestock production.
2. The expected slowing in the rate
of inflation should mean a slowing in the
rate of price increase for purchased items
used in farm production. The composite
cost of production items used in farming
will likely edge only slightly higher during the year. However, for individual
items such as feed grain, seed corn, and
interest rates prices will be substantially
lower, while feeder pigs, feeder cattle and
taxes will be substantially higher. Most
manufactured items—fertilizer, chemicals,
machinery and building materials are expected to be up 2 to 4 percent.
3. Even though unemployment rates
are expected to remain near current levels, good hired labor will continue scarce.
Opportunities for farm people to find
off-farm employment might improve a
bit. But considerable variation will exist
among areas of the State and among
workers with different skills and occupations.
4. It will be important for farmers to
keep informed as to government regulations and new legislation on things such
as "Job Development Credit'' (investment credit) which could have important
implications on management decisions.
Corn
Corn prices (No. 2 basis) will likely
drop to the $.90 to $1.00 level during
harvest. Prices are expected to recover
quickly after harvest and rise to or
slightly above the local loan rates by next
spring and summer.
Storage is expected to pay good returns
in deficit areas and modest returns in
surplus areas.
Livestock producers needing additional
corn will likely find it advantageous to
purchase it during the harvest glut.
With the sharply lower feed grain
prices, farmers may want to feed grain
more liberally than during the pasi yeai
Moisture discounts impose particularly
burdensome penalties when corn prices
are low; thus consider drying instead of
taking moisture discounts.
Premium markets may add substantially to profits when prices are low;
hence this opportunity should not be
overlooked.
The wide fluctuations in corn prices
during the past year points out the importance of keeping abreast of the market
and in giving marketing decisions as high
or higher level of importance as production decisions.
Soybeans
Soybean prices will likely average
about $2.90 during harvest. Odds seem
to favor at least a normal seasonal rise in
soybean prices. Thus, storing would appear justified. The tight supply situation
will likely result in erratic prices and
could result in substantial price increases
during the year.
Soybean meal prices will likely work
up after harvest time. Thus, for livestock
feeders needing large quantities of protein supplement, contracting tins fall for
at least part of spring and summer supply would seem justified Soybean meal
prices will be relatively high in relation
to corn prices in the year ahead. It
might be advisable to appraise your livestock rations in view of the changed cost
relationships.
The big question facing farmers for
1972 is the proportion of their crop land
they should plant to corn and how much
should go to soybeans. The market is
telling us that it wants more beans. Early
planted, high yielding corn will likclv
offer a good profit potential in 1972.
However,   for   mid   and   especially   late
CooperativeTxtension Work in  Agriculture and  Home  Economics, State of  Indiana. Purdue  University and  U. S *P°£
Agriculture Cooperating. H. G. Diesslin, Director, Lafayette, Ind.   Issued in furtherance of the Act, of May 8 ond June 30, 1914.