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Frequent Contributor

Growers VS, Producers

 I have been reading with interest some of the comment especially those towards marketeye.  It seems that the fairytale of the crowers er I mean growers is over. The time of planting the seeds and going to waterloo to watch your tractor be built are over.  And it looks to me like the screaming has only begun. I remeber when I was complaining about the price of milk how many on here attacked me for all the times I had to take advantage of the then farmers now growers who I made to be on goverment programs just so they could eeck through another year.  

 

OH the hurtful things that were said and when I spoke of the holy grail of Ethanol the true venom would spew out from the computer screen detesting my thoughts and questioning even my ability to farm and my right to comment on this forum. There was genuine hate. I felt like Brett Farve looked at the Epsy's! standing there wondering why am I cheering for something that is a hoax? 

 

Doesn't anybody see that this corn market won't reproduce prosperity for generations to come? 

 

Doesn't anybody see that this isn't about supply and demand? That the USDA is only a cover for the FED, Treasury department, and the fools in congress who would rather print and punt then pinch pennies?

 

Yep we have a long list of phonies this year Brian williams on down to Donald Trump.  Addto the phonies list the last few years of the Corn,Wheat and Bean markets.  These markets have been based on the fact the our dollar would devalue till we had taken the American farmer to the dream of a new R series in every machine shed, and a 20 dollar steak on each supper plate.

 

Yep this rise in farmer er I mean grower income has come wholly at the expense of the American dollar. 

 

United States Dollar 1967-2015 | Data | Chart | Calendar | Forecast

The US Dollar Index, which tracks a basket of currencies, was valued at 97.20 points on Friday July 31, according to the New York Board of Trade. The United States Dollar averaged 97.31 from 1967 until 2015, reaching an all time high of 164.72 in February of 1985 and a record low of 71.32 in April of 2008.

 

Look at those two dates. What do those years remind you of in the corn market?  Highs and lows baby!

 

The realty of it is folks You have believed the lie.  You have believed the headlines of Drought and Flood, of short crops and bumper yields. GMO crop rejections and other quality issues.

 

And the other group is the producers yep Livestock guys We were inversly impacted by the dollar the things that sent your profits soaring became the giant sucking sound to my profits.

 

Not only mine but the american consumer suffers under a low dollar and american busioness's that are not export oriented suffer as well.

 

Heres an article from my favorite dairy magazine The Hoards dairyman

 

Feed costs are up 108 percent since 2000

Date: 
Fri, 07/10/2015

Last year was a blast from the past for dairies: feed costs dropped below 50 percent of income.

by Dennis Halladay, Hoard’s Dairyman Western Editor

 

 

feeding cost

 

Once upon a time – way back in 2000 – the cost of feeding a dairy herd was slightly over $5 per hundredweight on a total revenue basis.

Those were the good old days, weren’t they?

Things have changed dramatically since. While prices do zig and zag each year, the overall trend is decidedly up, according to client income and production cost summaries from Genske, Mulder & Co., the nation’s largest dairy accounting firm.

(There are several important disclaimers to consider before reading any further: No two dairies are alike. The firm’s summaries represent only several hundred farms. Most are located in the West, and their average herd size is approximately 10 times the U.S. average. Even so, the firm’s data is likely the largest collection of dairy income and expenses that exists.)

Total feed costs (hay, silage, grain and farming) were already moving up fast before the housing market collapse and global recession arrived in 2008 to 2009, as seen in the summary averages below (data not available from all years):

2000 – $5.27 per cwt.
2006 – $6.21 per cwt.
2009 – $8.27 per cwt.
2010 – $7.38 per cwt.
2012 – $11.25 per cwt.
2013 – $11.69 per cwt.
2014 – $10.97 per cwt.

Keep in mind that 2009 was a financial disaster for dairies, as Class III prices averaged a paltry $11.36 for the year. Milk gained $3 in 2010 and made for an okay year, but margins were squeezed again badly in 2012 to 2013 even though Class III was over $17 both years.

Feed prices eased in 2014 and Class III set a record high of $22.34, giving producers a huge income-over-feed margin and a much-needed opportunity to put a dent in debt they took on during the recession.

The combination also pushed feed costs below 50 percent of total income – a ratio that had long been a “comfort zone” for the dairy industry – for what we believe was the first time since 1999.

Dennis blog footer

The author has served large Western dairy readers for the past 38 years and manages Hoard’s WEST, a publication written specifically for Western herds. He is a graduate of Cal Poly-San Luis Obispo, majored in journalism and is known as a Western dairying specialist.

 

 

 

 

 

 

 

 

 

Here's the reality The growers need that low dollar to get back to the Black. WE producers need the strong dollar to get back to the black.

 

Growers and producers are now on two different sides of this policy issue like never before in my life. Bankers are now thinking to diversify we need both in our portfolio.  Maybe to be succseful into the future You'll need to be a producer and a grower.  Then you can reap the benfits of both sides of this policy.

 

So guys quit with the attacks on the messengers and start attacking our policies which lead to the wild rollercoaster of the dollar markets.

 

Just my thoughts today. I am going to be busy the rest of the day loading up heads and moving them south to Missouri.  You all have a great day.  Drink another glass of milk and eat some cheese today.

 

8 Replies
Honored Advisor

Re: Growers VS, Producers

Hey Jr, the thing is corn and bean prices being down 40% wouldn`t be so bad...if seedcorn went down from $250 to $150, 28% went down $300/t to $180 and the rest of inputs also down 40%.  but we have as much in this crop growing as we would if corn was $7.  The only reason some of us are spending less is we cut fertilizer figuring we could "mine" for a year and perhaps bought cheaper less traited seed.

 

I think what we`re seeing is "high prices cured high prices", tile was put in, golf courses plowed up ...and that wasn`t just "here" either.  Around the rest of the world they saw $13 beans too and they like money so they produced all they could.  Endusers, got more efficient and refined a more "just in time" inventory and now basically we have to wait until the enduser gets fat dumb and happy again to bid up.  

 

I think the dollar is "strong" because the measuring stick of other currencies are just that weak.."The one eyed man is king in the land of the blind".  The fed would maybe like a weak dollar so they could raise interest rates from the 6 years of near zero rate.

 

But with milking...well and hogs, you either have to have a niche market where you sell to those "crazies" that are "irrationally" afraid of pesticides, gmos and antibiotics.  Or you have to enter the "cage" with the big boys with 50,000 milk cows and 500,000 sows, just be a very small fish in a very big pond.   Hate to sound like a luddite, but that is just the fact of the matter.  if milk went to $30 cwt and lean hogs to $150 in a year the market would be flooded with milk and pork.

Honored Advisor

Re: Growers VS, Producers

Farmers, whether they be growers or producers,  in general have been looked down upon for many, many years by the general public.   Struggling farmers were told by the so-called elite folks to diversify and find other uses for your products.  Then, along comes ethanol.   You can call me a farmer, a producer, a grower, or just plain nuts.  But I will refuse every time to apologize for making a few dollars, providing a better life for my family, and securing my family's farming heritage.  

 

Success happens when preparation meets opportunity.

Veteran Contributor

Re: Growers VS, Producers

Before you all start looking to the gov't to solve all your problems

Consider what our farm has to work with

Long ago, we did some pencil pushing, and found out, that over a 10 yr. time frame

Crop insurance that we have in our country does not pay

One reason, we have to average all farm yields in one basket

No such thing as individual farm coverage. Gov't says too much temptation to cheat on reporting yields. Probably correct thinking

My son had 1/3 of his crop suffer a 60% loss, 1st yr. he paid his own bills, but when all crop was added together, he would not have collected enough insurance money to pay that yrs premium. I advised him to not pay crop insurance premium.

Having said that, we never have a comlete crop failure, which we can be thankfull. Also, still do not carry crop insurance

We grow corn, beans and wheat in S.W. Ontario, which sort of gives us a crop of some kind, every yr.

So: Try to farm withot a farm saftey net, and you will soon find out who can survive and who can't

I often am a bit envious of your crop insurance program, but nobody twisted my arm to become a farmer

In fact, both my parents were dead set against me being a farmer

They thought it was a road to poverty, which was true, in a lot of my yrs of farming

So: I was prolly very close to the last, of the young farmers that got into the biz with out family help

Land did not pencil then and never has in all my yrs of farming

Thus I worked off farm, and so did my wife to make it happen

That was 1967. Land was worth 500/acre. Yield on this farm in 1967 was 125 bu. corn, the 1st crop I harvested

Today, on paper we are worth a considerable amount, but it is just paper, unless we sell, which won't happen, any time soon, with a 3rd generation wanting to farm, in our family. [15 yrs old] And the 2nd generation needed our financial help, but he also had talents that I did not have, thus it worked for everybody.

Be thankful for what you have. It is your job to make it work

There is always some body who has it worse. No sense in being jealous of those that have it better. It is what it is

Our biggest complaint, n this farm,is a lack of decent crop insurance, but we don't bid it all back into land rent, either, although 200-275 seems a bit much, for 170-180 corn yields. I woud not say that is the average, just the top bids for some that always want more

Land around here is worth approx 12,00-15,000. We have more buyers than sellers.

Some places are worth upward to 20,000. Those folks are crazy, but the competition for land is intense, and not so much of it, in our small part of the planet

I have worked with our local elected and not elected politicians and ask them some pointed AG questions,

Since I help to get them elected, I suppose they have to at least pretend to listen to me

Trust me, the folks in the city are worth much more than a few farmer votes, in most parts of our country. When you get to the natn't level of politics, then the farmer is lost in the shuffle. In our country, with so few people and so much grain produced, the math does not work, for so few to support the western grain producers in Canada, thus we are all left with very little of the dollars spent by gov't

I hope I read your post correctly, and I hope to add some additional thoughts to think about

 if I am out of line, then my apologies and please excuse my rambling rant

Honored Advisor

Re: Growers VS, Producers

Consider this possibility.........

The dollar value is not the problem.  The price of corn is not the problem---- probably never has been......

Those are not the source of complaint....

 

If grain production had the same cost factors as milk production there is little complaining happening.... As Jr said when grain prices came down, as we expected, his costs dropped because the dairy costs of production are tied to a market that is flexable...

Wow that would be wonderful.

 

CornPricevsCostofProduction1990-2011.jpg

that cost line is still going up in a year when corn prices are cut by 40%

 

 

1412_767-chart.jpg

 

It is the inflexability in the cost factors in grain production that is the real problem..... now...  Wish grains had an expense that was that flexable and was tied to the price of a commodity....  But then milk has a market that is tied to a support system that is somewhat inflexible....

But back when grains were high and milk was taking a hit, did dairy complain about their inflexable price support system?  No it was all about commodity prices.....  go figure.

Highlighted
Frequent Contributor

Re: Growers VS, Producers

Good points SW I always appreciate your thoughts. I am a little swamped But I will respond here this weekend. Have a great Day!

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Frequent Contributor

Re: Growers VS, Producers

Morning SW! Hope your day has started out well.  I haven't had much time but I thought I would take a couple minutes and respond to you here.

 

First to the inflexibility of the cost to price ratio in grains.  

 

You are right as of now there isn't much flexibility The costs are not aligning with total revenues expected at all. However I felt the same way in 2009. Your right we did complain about the feed costs I did as loud as anybody.

Why couldn't these prices come down I can't make anymoney yada yada yada...... Yea it sucks. Some willl go under some will survive for the next day. But eventually costs will realign with a time tested standard. And just like with all things costs won't go back to lets say....2005 prices, they will none the less go back to a more "normal" equality. It doesn't happen at the same time the correlation is not 1 to 1. Land prices will retreat in fact already have.  Up to 30% around here. 

 

So just because the cost of production doesn't go up and down as fast as the Board of Computers does doesn't mean that it isn't flexible.

 

To the Dairy price program. I did complain in fact I fought against any and all price supports. They actually make our costs less flexible. Look who always wants to interject into the value of a farm program. Our endusers!

 

Why?

 

Cause they are margin producers.  They know that Support systems are always a floor.  They are not called suspension systems which gets you closer to a cieling they are support systems which get you closer to a floor!

 

Many on here told me my costs would certainly come down. They were right.  Guess what yours will to.  Just not to 2005 levels.

 

But I gaurantee you the dollar is and always has been the problem since 1972!

Honored Advisor

Re: Growers VS, Producers

What will we do competing with China's manipulated currency???  Manipulate ours more....

 

Currency wars !!

 

 

Sure missed ya....... How's the JDtech.....  ?

 

 

 

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Frequent Contributor

Re: Growers VS, Producers

The JDtech is doing well. The sponsoring dealership he was at had to downsize so he ended up going to work for an agco dealer!  Half his class weren't rehired by the sponsoring dealerships due to lack of work or poor prospects for continued employment.

 

Just glas he found a job.

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