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Falling profits alarm farm group

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ST. LOUIS - Increasing costs and lagging grain prices have prompted Illinois Farm Bureau members to list future profitability their No. 1 concern for the coming year.

As a result, the stateís largest farmer organization will form a special task force by monthís end to find some solutions. The task force will make a preliminary report to the IFB board in June and a final report to the delegates at next yearís annual meeting.

"Anhydrous ammonia (fertilizer) costs have gone up 70 percent and fuel costs are up 50 percent. But we havenít seen commodity prices go up," said Phil Nelson, IFB president.

IFB members concluded their 91st annual meeting in St. Louis on Tuesday.

"I did some cost projections for next year based on a yield range of 150 to 175 bushels of corn per acre. I would need $2.30 to $2.70 per bushel to break even. We are nowhere near that (existing prices under $2). Government payments are about all we have left to make up the difference," said Paul Schuler, McLean County Farm Bureau president.

Herman Schwantz of Lincoln noted farmers have little control over prices they receive other than try to create increased usage of products.

"Low prices are a major challenge, but we should also be looking at higher returns," said Fred Baker of Streator. Baker suggested farmers may need to build a conservation base for every farm to curb production and trim the existing U.S. grain surplus.

A farmer with 320 acres, for example, would put 20 acres of cropland into filter strips or other conservation practices, he said. Nelson said University of Illinois economists have estimated 2005 farm income will average $41,837 versus $90,000 last year in which bumper crops were produced.

In areas most affected by drought, including Nelsonís farm in LaSalle County, income projections range from $16,000 to $24,000. "That income would be negative without government farm payments. I think we could get to March at loan renewal time and see some balance sheets that reflect this issue," said Nelson, who testified in Congress last month about soaring energy costs.

While Nelson noted the task force will produce numerous ideas, he suggested some answers may lie in questioning the energy futures market. Nelson said fuel and natural gas prices are more in line with each other on the East and West coasts than in the Midwest, which boasts some of the highest energy prices.

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