Before deciding on new farm programs to sign up for, sharpen some pencils and get ready to crunch numbers. While the farm bill provides expanded options for producers it also means there is much more to suss out.

That was the underlying message from economist Abner Womack at the Southern Cotton Ginners Association (SCGA) summer meeting on July 22.

In approaching his work, Womack, professor emeritus with the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri, “generally looks for momentum and what I’ve seen in the last two outlooks is a momentum change. What’s occurring with all these uncertainties on the supply side -- which you’re familiar with -- is that world stocks have built up faster than we imagined.”

Part of that is the demand for ethanol topping out. “The crop supply side is simply overrunning the demand side. That’s led to a level of prices we’ve not seen in quite a while.”

Womack cautioned that the baseline projections he provided were seasoned with a wide range of uncertainties. The projections were based on market conditions in January of 2014. “It’s very important that we tie down what’s going on with the farm bill. … There will be differences in our interpretation and the final rules and regulations.”

For representative feed grain farms the net return from 2010 to 2013 averaged $171 per acre. Expectations for those same farms from 2014 to 2017 show a significant drop with a net return of $26.

“That’s not quite so bad if you’ve got most of your debt paid off. But in averaging these farms, half own land with debt on it. … You can imagine, with such pressure in front of us, it will put pressure on rent and leases and land prices.”

Expected per acre numbers for representative cotton farms also showed a drop: an $86 net return from 2010 to 2013 moves to $16 from 2014 to 2017. “That’s certainly sobering and means there will be pressure. But it doesn’t mean that you’ll only get $16 an acre back with what’s in the farm bill and the momentum of price movements.”

With the drop in grain prices, livestock producers will benefit. Womack and colleagues expect cattle farms’ net return per cow to jump from $118 (2010 to 2013) to $200 (2014 through 2017).