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10-01-2018 08:34 AM
Pardon me but "ray" made the point repeatedly on prior posts in this thread that the chart presented did not show compensation to the owner for his labor.
I agree with the rest of what you wrote, and I think it adds more credence to the idea that some type of price stabilization program is needed to ensure farmers make a profit from their work lest they fold up and cause a food shortage when prices take the deep six dive in the next recession.
10-01-2018 08:51 AM
Every time we have had a "floor" with gov't set a side's, supports etc. It has worked out to be an effective ceiling.
You said it all in one off your ramblings, saying it would ensure cheap food for the masses.
The other thing you have missed is the 800 # gorilla in the back of the room. The better part of a short half of the crop is raised on what should be considered marginal or fringe acres. Land that can be highly productive several times every 10 years and a 50% of aph just as many, you just have to guess which one is it gonna be next year.
10-01-2018 08:58 AM
you are making erroneous assumptions on several levels.
If there is a food shortage it'll be an "act of God event" .
Drought is the most obvious culprit, some new plant disease , etc.
Even in the eighties the land all got farmed .
10-01-2018 09:23 AM
Everyone's true breakeven price is different, with the highest variance due to actual yield, which is known only after harvest. If my target yield is 20% higher than my average yield, then depending on costs and prognostications, I might fertilize for my average, or my target, or even shoot for more. If my crop is burning up in the field, I might skip a 2nd herbicide application, skip an insecticide, skip the fungicide. Costs vary, some are necessary, some are choices. And, land cost varies greatly -- within 10 miles, similar ground, I know of cash rents of $100/acre, and $200+ per acre. Plus, when it comes down to it, there is a huge difference between having land that is owned and paid for, versus land carried a debt of 60% to value, and making payments, or land rented for $200+ per acre. Having a little chart made by some professor at some university is a decent average guideline, especially for those who know little about the details, but beyond that, it's just a pretty chart printed out on white paper.
10-01-2018 09:34 AM
More than "price stabilization", we need "market stabilization", free/fair trade, quit dickering with ag tariffs and end-running the ethanol/biofuel mandates, new uses and markets.
10-01-2018 01:40 PM
10-01-2018 10:33 PM - edited 10-01-2018 11:14 PM
Even I understand that $3.03 and $7.75 is a waste of effort that should enrage producers who have watched congress drive up the cost of every part of that cash flow over the last 30 years serving the environmental ego gods.-------------while locking price supports down and decoupling ag assistance from actual yields. Squeezing payment limits down while driving inflation up and steering ag. budget spending into non agriculture pockets. All the while declaring "there is no inflation" ----- Everything they touch is driven to higher and higher costs to meet federal "standards" and regultations. Companies and individuals that do not toe the party line will face recalls, inspections and audits.... or pay up in a continual federal power grab.
The government worshipers will be quick to blame those high prices of corn and beans for driving inflation..........the political "blame the victim" game that diverts the attention while they shove another dose of "congress in the answer" drug up the publics nose.
But if it were high prices that made your truck unaffordable, four years of falling prices would have helped correct it ----- no chance....your locked in to all those laws that will take affect sometime in the future. The future is now and the same demons are still buying votes.
I been riding the "Cost of Production" horse for quite some time. Because "ironically" it is the one subject that producers will lie to themselves about like traders fabricate market movers. But I am telling you, knowing COP in detail makes for good planning, good decisions, and possibly survival. A university presentation this simple, drives the belief that producers need to be spoken "down to" to and "advised" to market.
10-02-2018 03:32 AM
Where it is the duty to worship the Sun, the laws of heat will be poorly understood.
I agree with you that the government has done much to make it more and more difficult to make a profit running a small family farm. The policies they should be enacting, such as a Federal cooperative project to buy farm land and lease it at cost of purchase levels to producers is one good step in lower the expenses farmers have to contend with. A dynamic price stabilization program intended to help offset the downward pressures on prices and revenue when such occurs also would go a long way towards stabilizing the business of farming. These types of policies would actually help farmers rather than what's been done in the past that mostly worked to hurt the bottom line of farming.
But at the same time, the farm industry cannot be held blameless for the deterioration of crop prices, especially now when the US economy is growing at levels not seen for a decade. Since 2012, the trend in corn prices has been down, yet during the past three years corn production has been at historically high levels. As prices fall, businesses are supposed to reduce production to keep prices falling more, but the opposite has been happening in corn. Is it any wonder the downtrend has not been broken ?
Additionally, there are tools of financial engineering that farmers can use to help maximize their revenue, and advisers from the financial community who can help farmers implement these programs. Yet you can see here that whenever I suggest that approach to marketing, I am met by less than enthusiastic responses. If you want different outcomes, hope is not a strategy. Different outcomes are the result of adaptation to new methods, and with the long term trend in corn prices being what it has been, its time to adapt instead of criticize those who can help in that process of change.
I doubt that anyone is deliberately "speaking down" to the farm industry when they seek to help them implement new ways to secure higher prices for their products, anymore than your doctor speaks down to you in discussing the results of your annual physical or your accountant speaks down to you in discussing your tax returns with you. The way your doctor reads you x-rays is analogous to the way a good market adviser reads the charts of corn prices or analyses the data regarding aggregate supply and demand for your products. Both professionals are trying to help you live a better life, so why be defensive about it and think you are being talked down to ? Reading x-rays or understanding price charts and market data is their specialty just like farming is yours. They don't doubt your work because they don't know how to farm, and you should not doubt their work because you don't understand what they do.
The best business people, in farming or anywhere else, all seem to have a common denominator : they know how to orchestrate all of the instruments of their business to help their businesses succeed. The conductor of the orchestra does not know how to play every instrument expertly, but s/he has the good sense to know that all of those musicians are necessary to make the best performance.
10-02-2018 06:58 AM
A big government caused or encouraged problem that started in the late 70`s, early 80`s was the government guaranteed "$3.03 a bushel" to seal corn then in about 1979 all these machine sheds sprung up to get farmers in the "grain merchandizing business". Then the high rollers were going broke, so in about 1986 the bankers along with the taxpayers bailed out certain "golden boys", wrote off $100 of thousands in debt, one neighbor over $900,000 written off....Merry freaking Christmas! Good land was selling for $1,000/acre at the time so do the math.
Well many of those high rollers are Bigshots today, there was no consequences for their greed, I suppose always figuring in the back of their mind that "the government`ll bail me out again, I`m a golden boy". Well they passed that philosophy on to the new generation and they really went nuts the last few years. Just insane spending running rents to $400,$500 and ruining it for everyone.....well anyone to whom the laws of physics still apply.
10-02-2018 08:35 AM - edited 10-02-2018 08:37 AM
rayfcom -- you basically lose me with "The policies they should be enacting, such as a Federal cooperative project to buy farm land and lease it at cost of purchase levels to producers". Understand what you say, just can't agree with it at a very basic level.