Re: The Question.
Yes, Smokey what`s the name of that book? I`ve often thought (tongue in cheek)that "rich kids" were taken aside in school for special instructions, while us commoners had the talk about "birds and bees" . In later years it seemed that if a farm come up for sale and the heirs would "ask the banker to take care of it for them" certain big farmers would get first crack at it, always at a bargain price (word to the wise, if you sell without it advertised, you will get screwed). But yes, businesses seem to operate on "averages" ..if I own 600 acres that annual cost is $30 taxes, if I rent some for $120 from a dummy and some for $150 from someone disinterested and some for $250 from someone on the ball and some for $350 from someone that`s kinda greedy and some for $500 at auction just to keep it out of the competitor`s hands. I might have a average of $200 and if $400 is the point where i lose money, I can go forever on that average model and if there`s a unexpected bump up in the market, I`ll have to haul money to the bank with auger wagon.
Re: The Question.
The complete title is; "Comptetitve Strategy: Techniques for analyzing industries and competitors" by Michael E. Porter. It's first printing was in 1980 with the last printing that I know of done in 1998.
Re: The Question.
insurance payout has less impact on rental rates than the direct payment. It never pays out 100%. Maximum payout is dependant on the level of buy-up coverage option. I wouldn't suppose you would pay more than a fair price for a car after your old one was totaled, would you? If so, that's your right, but that's not a given "fact".
Re: The Question.
What you call conservative I call common sense. Has anyone really stopped to think what potential problems some of these things will eventually cause? For example: accelerated depreciation. People use accelerated depreciation for one thing and one thing only, to avoid paying taxes. It would be one thing if they were buying the equipment with cash, but after reading an article stating how loan volumes are up by a third from last year to this year it's quite apparent people aren't paying cash. Tax avoidance today using accelerated depreciation could very well spell bankruptcy in a couple of years much like it did back in the 80's.
Subsidized crop insurance is a joke and will continue to be a joke. The subsidy was supposed to take the place of disaster payments, but guess what it did not. There has been a disaster payment somewhere in the U.S. each and every year insurance has been subsidized. It's a complete sham consumers are paying a larger portion of our insurance cost than we are.
The only gov't payment I can even remotely support is ldp's. I wouldn't even be able to support these if the gov't would stop using our food products we produce as weapons against countries via sanctions. At some point in time, we all have to realize just what we've been given. The gov't has mandated ethanol. It would be interesting for a group like ewg to try and peg how much of a subsidy all of us corn growers have received just from this.
The debts of this country have occurred by giving too much. In order to dig ourselves out of this hole that's been created over decades, we have to have higher taxes and lower gov't spending. Doing one without the other will change very little.
You forget one very important item....
You forget one very important item when you advocate removing crop insurance subsidies; Crop insurance is not actuarily sound. The risk of crop failure(payout by ins.) is greater than the potential returns, based on the higher probability of adverse weather over time. In short, the risk premium is so high, no insurance company would offer an insurance product that the farmer could not afford to pay. Thus the insurance would not be offered at any price, period.
Re: You forget one very important item....
I'm not sure I'd say that. Locally, our main peril is hail. I'm with a new company this year that has a 30% deductible hail product which would put it in line with a 70% federal crop level. I could buy roughly 1200 bucks coverage for roughly 70 bucks an acre. There's a company out there writing weather insurance which I believe is called weatherbill that covers weather related losses from drought, freeze, excess moisture, etc. There's already insurance out there that isn't covered via federal crop insurance that must be actuarily sound or the companies couldn't afford to offer it.
I'm sure there are areas out there in high risk. With those, I guess there's always the option of handling it much like they do homes built in a flood plain.
Another Internet Rumor
This is about the third time I have heard this story with slightly altered facts. So, who were these "15 big shot farmers"? Where did this conversation take place? Who was the guy who was there that heard this...or was it his brother-in-law...or his neighbor.
I am so amused at some of the postings that go on this site. It's worse than show and tell in grade school. Everyone loves to make up stories about the successful farmers. In reality, there are very few producers who would be caught dead talking about their business models...the only one I know is Top Producer's darling Rosentreter.
No producer goes into a deal knowing he is going to lose money. Talk is cheap, but when you are writing checks, reality sits in.
BA needs to get a real job. Time wasted on this site could be better spent planning your business and not worrying about what your competitors are doing...or in this case...not doing!
Re: Another Internet Rumor
I'm dubious about the specific event but the sentiment does seem somewhat authentic. A lot of capacity and big war chests built in the last few years. Like 0 deductible health insurance and lawyers on retainer, unlikely to go unused.
I wonder if the public at large really understands that this time is "different" insofar as there is no broad public interest served by backstopping that risk.