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Veteran Advisor

Re: Kind of like farming.

No subsidies equals less acres to commodity crops and more grass and hay.

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Honored Advisor

Re: Kind of like farming.

Palouser is spreading his usual nonsense on crop insurance.  It is like everything else the government decides to subsidize.  If it costs $20 an acre to put fertilizer on your asparagus, and usda decided to pay half the cost of fertilizer to stimulate asparagus production, next year fertilizer for your asparagus would cost $40 an acre.  And some proud voice from the west coast will get out his 30' extension ladder, assend to his soap box and condemn the farmer for getting rich off the government.  It is an old tired out, of date position and far from reality.

 

Get assistance------------ I am sure you will qualify.  But the best deal is disability.  Government employees prefer it.

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Senior Advisor

Re: Kind of like farming.

I think the ag economic situation would be different - and the same with or without subsidies - and it depends on how you define 'subsidy'. Is the ethanol mandate a subsidy? It is a policy that made sense when we had cheap corn and feared the outcome of events in the Middle East and the threat to oil supplies. But there is no doubt that the ethanol mandate increased demand a bunch AND stimulated productivity which helped feed the new demand.

 

As for production and income. Look, Wall St doesn't try less when they earn more. Nobody does. It's not how humans are wired. When you have more you want more and money to invest makes this possible. The farmer invests in his product not knowing how much will be produced and what the price will be. He/she will produce as much as possible every year because either way it's the best strategy. All the acres get planted when prices are high or low. Corn has the advantage now. beans too. Wheat not as much.

 

US farmers have invested much of their income in more advanced machinery which aids in productivity. It's just what you do in business. Machinery isn't the only way to improve efficiency but it certainly makes a difference. Look at the leap in planting this last week for corn country.

 

And there is no denying the importance of the leap forward of mainly Asian countries' demand for food and feed. There is simply more need. This and ethanol demand for fuel have been the big drivers of the ag boom - around the world.

 

The direct gov payments and ethanol aren't a big factor for wheat directly (my main crop). I don't even think about them. There is no denying some influence from the market like feed use now that the corn/wheat ratio has changed dramatically. In my area there are now crops that are outcompeting wheat ands we can pump out 80-100 bu w/ no irrigation. Like Timothy grass for export in containers after being double compressed. And chickpeas.

 

I mostly disagree with sw regarding the idea that subsidies are a big factor in input prices. Grain prices are. But there is also more competition for inputs as other countries ramp up grain production.

 

The insurance subsidy is a much bigger factor than the direct payments now (at least for wheat). Especially the revenue type insurance based on booming grain prices of the previous year. There is a gaurantee that the first year of a 'bust' will be completely cushioned, meaning the farmer is more disconnected from the market.

 

Subsidies give American farmers advantages that some economic sectors don't have. Own it. You can't deny it. Don't try and rationalize it because it will make you look stupid.  Few countries don't have subsidies or protective policies for ag hoewever.

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Frequent Contributor

Re: Kind of like farming.

Interesting reading Palouser. I must say that I have been reading this forum for a a few years and have always enjoyed/found your posts informative.

 

Wheat is our main game and its a bloody tough business here in Australia. We just aren't seeing this "ag boom" that everyone keeps talking about. For instance, our top grade of wheat is fetching around 650c/bu at our local silo at the moment, its just not enough when urea is around $650/t.We have no crop insurance, so if we have a failure we start losing money in a big way. There is some serious talk over here at the moment of a lot of farmers not having enough money to put a crop in. During the recent years, even with last years drought in the US, it seems that a lot of you guys are doing very well over there. Its quite the opposite over here. Australia seems to be missing out on the ag boom. Maybe its because of our rediculously high dollar, i'm sure its having an impact. I have a funny feeling its to do with a lot more than that.........just not sure what.

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Veteran Advisor

Re: Kind of like farming.

Pal, yes, subsidies are huge in the US.  The grain farmer is getting direct payments,  subsidies to help with crop insurance premiums, and if that is not enough, the government hands out SURE payments for additional payments on poor yields.  TOTALLY insane.  No wonder the US is in debt up to it's eyeballs.

 

I guess you call it no risk farming for the grain farmer.  Can't help but believe it makes the big, bigger.  Keeps the new equipment sales humming.  Takes away any reason to plant forage crops. 

 

Nothing independent about the grain farmer.  You just need a good accountant/lawyer to get around payment limitations and you have a free ride to money. 

 

Of course, if we go back to 2 dollar corn, that might change the picture.    But, then the government will come up with some disaster program to keep the money rolling.    But that is the game we play.

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Senior Advisor

Re: Kind of like farming.

Sneeky, I'll guess Australia has had more changes in the economic structure for wheat production and marketing than anywhere on the globe. And you guys seem to be as at risk from weather and climate as anywhere. More like Kansas on a continental scale.

 

Even though my county in eastern Washington State (think Microsoft, Boeing, Amazon) in the Pacific Northwest produces more wheat than any other county in the US we have varying conditions, but never a winter wheat failure. Simply never. The west side of the county (Whitman - against the Idaho border) is summer fallow every other year and rainfall will be 15" or less, and on the east where I farm, it's higher elevation (2500+ ft) and 25" of rain annually. But the weather is consistent. It's the nature of this corner of the country.

 

I understand your situation and I am always paying attention to the progress of your crops in West, South and SE Aussieland. I believe you and those in western Kansas could certainly have a lot in common. I would love to see the grain operations in Australia some time. I'v been to South Asia and Brazil but I think there would be some real commonality between a Western farmer like me and wheat farming in Australia.

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