Well, a couple of thoughts"
1. Cash rent, since the US was colonized, for the tenant to be profitable, can not
be more than $1.00 per bushel. Some would say $1.10, depends on how you
define "profitable", but if you ever get far from that number you are going down, just
ask Stamp Farms in Michigan 🙂
For you, Land Rent is $63 avg/60 bu corn yields - thus $1.05 - perfectly sustainable.
Point being you are far better off than most of IA/MN/IL/IN where the average rents are
over $1.20/bushel for many.
2. Land value, $800. This is 800/63rent = 12.7x the rent. This is extremely cheap by
mdoern farming standards. The average value/rent in Indiana is around 33 for example.
$9000/$275= 32.7 for example. So, your land is vastly cheaper than your competitors.
Point being that your land is not too expensive, nor is your rent.
3. Inputs, the inputs to grow 60 bushel corn are vastly less than those required to
grow 200 bu corn year after year. So, I'll assume you have less than $125 per acre
in inputs. It certainly should be possible to do it for that or less.
So, your rough cost is:
Rent - $1.05/bu
Inputs - $2.00/bu
Total direct cost of $3.05, you can sell for $3.50 right now.
No, you don't get to own new equipment, but the 9770's we run cost us very little
per bushel last year (since their resale value actually increased) much like the 8320
we plant corn with actually increased in value.
Ultimately, to prosper in ag, you have to breakeven in times like these. It seems
like you could breakeven with your cost structure, and as I thougth, your costs
are much more competitive than most of the BTO's in North Eastern Iowa.
Beans would be even better as your yields are much better than corn on a
relative basis, plus you have less bushels to haul 200 miles to a user. 🙂
Anyway, free markets are funny in that they normally work. Your land values
and cost make you very competitive producers of cheap commodities.
That said, if you can get $65 for CRP, it is clearly the best alternative, especially
since you could start growing CRP crops to rebuild the soil. fwiw.
Thanks for sharing the numbers.
Oh, yes there is nothing in the above thoughts for labor. Honestly, it really
doesn't take much labor to grow 65 bu corn. Lots of time to drive trucks,
be a fireman, or teacher maybe since KA loves liberal teachers according to
you guys. Rebuild irrigators? Probably not bury tile like some out east do.
But, there most be something to do in the off season that can cover most
of the living costs. Ag never has paid much for farm labor, never will is my
guess.
