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BA Deere
Honored Advisor

Re: 2018 Farm Bill option that immediately provides Cash Flow!

I`m still not getting it, Alan.  Okay, if in the fall I store my corn and seal it for $3.50 with a interest rate that`s higher than what the government pays for T-Bills, but lower than what the bank charges me on a operating note.  At the end of 18 months corn is $3.50 cash at the elevator, I still have to pay the interest and when that 18 months is due, there`ll be a flood of physical corn hitting the market...and the "boys in Chicago" will be remindfull of that every day.   I agree about 11% or even 15% ethanol, however that crushed corn doesn`t completely disappear, the DDGs replace some of the feed corn use.  

 

IMO if we go down the road of a "farmbill solution" it has to involve an incentive to cut production and a punishment (tariff) for any foreign grain coming in to fill ant domestic gaps in supply.   Hell of it is, when corn was $7 remember all the whining about "food verses fuel!" and "movie popcorn prices goin` up because of fat cat farmers!".   

 

The reality is farmers went broke with $7 corn, because they couldn`t pay the $500/acre land rent that the $7 corn brought with it to the party.  And with $3 corn, some still pay what would appear too much rent because they have a gimmick of volume buying seed corn and other inputs for half price of what other farmers pay. 

 

As it is now, even though corn is what we all agree "too cheap" at least it`s moving at a orderly pace.   There will be farms that painfully decide to go back to pasture as it had been the 4 1/2 billion years prior to 2008 and the market will thin the herd.   Seems to me though, if GM isn`t selling the Chey Cruze, they close the plant and lay off workers, but the American farmer tiles, buys Channel seed and ups the rate of fertilizer the cheaper that the price of corn gets. 

roebke603591
Contributor

Re: 2018 Farm Bill option that immediately provides Cash Flow!

I`m still not getting it, Alan.  BA/Readers, The Roebke Plan is a no cost overlay of the 2018 Farm Bill and doesn't change the ARC or PLC system for subsidies.  Remember with higher loans rates the trigger point for these subsidies will not come into play!  For when Farmers elect to take the higher loan rates, the market is suddenly not able to get below cost of production supplies without paying more than $3.50 for corn and $8.50 for soybeans at every buying point in Farm Country, ND to Ohio.  For when you Farmers can get meaningful cash flow from your CCC higher loan rates you will.  Yet if you want to supply the market below cost of production you can, i don't care, be fools!

 

BA/Readers, your not going to sit on these loans for 18 months, because they come due in 9 months as CCC loans have done for decades. So Farmers will always be thinking about supply and demand as always and likely have a target price in mind to sell his crop and payoff the loan. 

 

BA/Readers,  The Farmer can only extend 25% of their historic production for another 9 months but will still be thinking what price should i sell my 25% reserve at still under a CCC loan and if crops are big subject to paying off the difference if prices crash.   

 

BA/Readers,  Look at both old crop and new crop bids in southern MN for corn and soybeans at CRC Coop.   Old crop corn is $3.19 and beans at $7.98 today, with new crop at $3.31 and $8.32/bu..  So smart Farmers would suddenly take a loan on all old crop in storage and watch the snow melt and suddenly grain merchants hands are empty unless they bid up prices!

 

Plus suddenly they can tell their Banker i have 85% coverage on crop insurance and the minute my 2019 harvest is complete I'll be in to payoff my operating loan with $3.50 corn and $8.50 beans under the Roebke Plan.  Which the Bankers will say that sounds great sign here!   

 

BA/Readers:  Now it's time to call your Brain Dead Farmer Group and Farmer Broadcasters and Say we want the option to take the Roebke Plan.  Plus get Trump/Congress to move to E-11 immediately and the 2018 Farm Bill will suddenly work for both Farmers and Taxpayers for the next Five Years!!!!  Thanks BA.....Alan

  

Okay, if in the fall I store my corn and seal it for $3.50 with a interest rate that`s higher than what the government pays for T-Bills, but lower than what the bank charges me on a operating note. At the end of 18 months corn is $3.50 cash at the elevator, I still have to pay the interest and when that 18 months is due, there`ll be a flood of physical corn hitting the market...and the "boys in Chicago" will be remindfull of that every day. I agree about 11% or even 15% ethanol, however that crushed corn doesn`t completely disappear, the DDGs replace some of the feed corn use. IMO if we go down the road of a "farmbill solution" it has to involve an incentive to cut production and a punishment (tariff) for any foreign grain coming in to fill ant domestic gaps in supply.

BA Deere
Honored Advisor

Re: 2018 Farm Bill option that immediately provides Cash Flow!

At the being (in the fall) of the loan, the higher loan rate would encourage farmers to "weld the bin doors shut" but as the dog days of summer wear on and "80% good to excellent" crop ratings and the trade knows that 10-20% of corn probably has to hit the market, the traders won`t do us any favors with profitable bids when those loans come due.  With my luck I`d seal it for $3.50 and the elevator would offer "$3.65" in a stormy February and muddy March, but later in the summer the elevator would offer $2.75 and I`d have to scramble to pay the difference plus interest   Smiley Happy

 

But farmers store grain now, even without sealing it, they store it for July delivery to the ethanol plant.   A higher loan rate would put more short term cash in the pockets of some farmers for doing what they would do anyway.    JMO 

gurly3801539
Advisor

Re: 2018 Farm Bill option that immediately provides Cash Flow!

All those government loan reports will make it even easier for the trade to know how much grain is out there. The market doesn't care about my profitability. I know this is over simplified, but how long will I be sustainable paying off loans with loans.

roebke603591
Contributor

Re: 2018 Farm Bill option that immediately provides Cash Flow!

BA/Gurly/Readers.............All you have to do Guys, is call that Congressmen and your two Senators and tell them it's time for a no cost Farm Bill option that's totally elective

 

And tell them you need it for cash Flow, for the next five years!  Plus the new cash flow will save Congress $20 billion over the next five years of the 2018 Farm Bill.

 

For it will make the market place start working for you the Farmer as well as the poor Taxpayer, immediately.  You Guys continue to worry about things you don't understand and foolish enough to trust institutions and so called Expert that have screwed you and the Taxpayer for decades.

 

Watch the Roebke Plan deliver..........it's in your hands.....Thanks Alan