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Veteran Advisor
Posts: 905
Registered: ‎05-13-2010
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Re: globalized......no we are not

true story......late summer of 1994, which was a great year for corn and bean production......small elevator who normally sold 2-5,000 at a whack calls and sells 24,000 bushels.......

 

I ask "whats up with that".......said it was corn that had been in their elevator for seven years..........yikes

 

don't end up being "that guy"!!!

Advisor
Posts: 617
Registered: ‎05-13-2010
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Re: globalized......no we are not

Weeding out high cost producers does no good as long as there is someone else ready to step in and lose their ...equity.  what will it take to get these plowed up pastures back to grass???  Increase CRP?  Is tightening conservation compliance what it will take?  How much impact does crop insurance have on acreage?  with or without subsidies?  I've got lots of questions, but not so much on the answers?  What if we'd shift our beef production model from grain fed to grass fed?  Would increased grass acreage take enough acres out of grain production to offset lower feed needs?And IF that is the goal, can we get there without gov. regulation?  like I said, lot's of questions 

Contributor
Posts: 19
Registered: ‎06-04-2016
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Re: globalized......no we are not

I think Clayton is on to it.  Government programs are SUPPOSED to be counter-cyclical, but it takes them so long to react they usually end up reinforcing the swings. Take some or all of the crop insurance subsidy and put it into CRP.  Takes some land out of production, and makes us sharpen our pencils a little more before we put $300/bag seed into less than stellar ground.  Also, what about E15, E20, E30? I haul all my corn to an ethanol plant about 90 miles away.  Long trip, but I get $.45 - $.50/bushel more than local.

Honored Advisor
Posts: 5,329
Registered: ‎01-10-2012
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Re: globalized......no we are not

Clayton, you hit on probably the biggest thing keeping fringe acres planted and somewhat profitable, crop insurance in its current form.

Citidiots profess to want "organic" and " natural" 65% can't afford it.

Grass Fed/fattened is fine, I want mine corn Fed for at least 90 at the end.

 

Right now we are at almost the same place we as grain producers were before crop insurance changed and the Ethanol boom happened.  

 

In the last tenish year's demand/usage has doubled and production has also doubled, still are producing strait to the "poor house".

 

CRP is a scam on the taxpayers. Totally  a corrupted program.

 

 

 

 

 

 

Veteran Advisor
Posts: 1,040
Registered: ‎10-18-2016
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Re: globalized......no we are not

Supply and demand seems to rule in the end no matter how many government shenanigans we play.  Granted, some foreign governments are part of the supply and demand problem even worse than ours.  

 

Much of agriculture is a commodity.  That makes things pretty brutal at times.

Veteran Advisor
Posts: 2,995
Registered: ‎02-11-2013
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Re: globalized......no we are not

I'm sorry Jim don't agree with you on fundamentals
Ruling the markets....perhaps I should say the "new" fundamentals.....perhaps that's my problem, I'm
Basing everything off old, but should be new.
Veteran Advisor
Posts: 1,040
Registered: ‎10-18-2016
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Re: globalized......no we are not

When I talk about fundamentals I'm talking about long term fundamentals, not short term stuff.  Convergence.

Highlighted
Senior Advisor
Posts: 1,069
Registered: ‎05-20-2010

Re: globalized......no we are not

Most forget that in a commodity business, as long as every user can source what he needs comfortably, one extra bushel is sold at what the user is willing to pay to speculate on holding excess inventory. Always easily quantified by the carry in the market. In wheat is about a 25% return per year. Never pretty for the farmer, just ask your great grandfather about 1932 when the users could not buy that extra bushel, price went to about zero locally. Hogs in 1998 are a more recent example.

 

Another thing that is interesting, given the dire times we are discussing, free cash flow from farmland's production is still twice what is was in 2006, before the spec led, and government mandated, boom. The return for land is easily mantaining its new plateau, the farmer paying rent is not, but that farmer never has on average. (excepting about 4 years every 30= 2008-2011 in this case.

Honored Advisor
Posts: 7,659
Registered: ‎07-18-2011
0

Re: globalized......no we are not

The sw region is still dominated by crop share leases so the overpaying rent is not as obvious as in cash country.  And yes most second generation land owners will raise rent in good years until they can't find a renter........ Every generation of owners has to learn that lesson and every generation of renters has to learn to say no,,,,,,,,,,,, and pick and choose which owners to stay with long term......  Some are relationships and some are "just business".

 

The lessons learned in these stretches of famine is that downsizing is as much a part of the cycle as growth.  If the farmer is going to be proactive on one he better be pro active on both.

 

Time the problem with maintaining that "plateau" is that return on land ownership is also government induced and economically expensive.

 

Ray it is situational .... holding grain from the 80's into the 90's might have been similar to holding from the 30's into the 40's.  A long hold of inventory is not always a bad move when it is worthless and storage is cheap. Rotated for quality purposes but still there and accumulating.  Easier in a dry climate.  Eastern Colorado wheat comes to mind, and Sw milo...  And at one time was usda policy.

 

Clayton is asking good questions that we are all considering.  ...... Future should be determined by those who live it, not a ruling from usda created by lobbyist with agendas or university activists or the self appointed genious with the most money.  Good agriculture leadership is not going to come from the 2%ers on the farm through government.  That addiction is slow death.

 

We have been living on government answers since the 1930's , but there is new wind in Washington and a protest against old government ways, so I don't expect new government answers to producer problems.  It has never been insurance or free trade or more oversight, or cuter technology etc.  

IMO for once we are in an absolute need to respond to the market instead of blaming it.  2017 was a great example of a time to leave corn and move to beans and survival may have depended on it.   $10 beans were available and may still be soon when corn struggled in a sure loss position (considering its higher cost of production) most of the year.  Across central Ks I saw it yesterday From Kinsley to Newton on hwy 50, the bread basket, wheat/milo country was 70% beans.... many of those looked like double crop and most are not good yield beans, but even at 30 bpa there is a potential for profit and cost control.  The dry land corn was harvested and looked poor, what was left.  half the irrigated fields were already harvested--- another clue to a disappointing corn crop.  It is september, and when a late crop gets harvested early, it is not a big yielder.

 

Veteran Advisor
Posts: 1,040
Registered: ‎10-18-2016
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Re: globalized......no we are not

SW when you store grain long term you are giving up interest or not paying down interest or debt.  One has to figure that in as it's a real cost.