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Senior Contributor

Re: just ran some cost of prod numbers

there was 700 acres pretty close to me rent for $350/ac this fall.   thats the most I have ever heard for cash rent.  our average yield is around 115-150, depending on rain, heat,   This is insane,  I have no idea what the heck they are thinking, 

or a better question

 

WHAT ARE THE BANKS THINKING????  

 

had some similar ground sell for $8500/ac, this fall also 

 

Course one of the guys that had paid $325/ac for rent didn't put any fertilizer on this fall he just hauled a bunch of old manure on the soybean stubble.    

 

 

This is going to sound harsh but I won't feel sorry for anyone if they get sold out.   Everyone has the capacity to calculate their cost, 

If they can't take care of their own house,  its no fault but their own.   

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Senior Contributor

Re: just ran some cost of prod numbers

Maybe you are tongue in cheek, but if you are really sub average at 160 you are far from fringe acres.  With that kind of yield consistently I don;t understand your rent though.

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Senior Contributor

Re: just ran some cost of prod numbers

The 40 I pay on 250 acres rent is far from corn belt. Shenandoah valley of northern va. Home of ole George Washington. It's fertile ground, but has limestone rock outcroppings on it here and there.
I'm slowly gaining more rented ground as the apple trees get old and are pushed out. It's free rent on the 1st year I get it but I have to level the ground and gather up roots from the trees. Usually, old orchard ground is low in phosphorous and poultry litter is high in P. so it's a good fit.
100 is the highest rent I've heard of around here. 50 is avg. but neighbor sold some ground across the creek from me about 5 years ago. Dollar a square foot!! It now has 700k dollar houses on it... Go figure.
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Veteran Advisor

Re: just ran some cost of prod numbers

425Cat,

 

I just wanted to say that this thread is one of THE most interesting one that I have seen for awhile. We have a lot of interesting discussions, regarding marketing, but this one is really interesting to sit down and go through. Thanks for everyone's frank thoughts and contributions to this relevant-packed thread.

 

Thanks,

 

Mike

 

 

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Advisor

Re: just ran some cost of prod numbers

Thanks Marketeye. Many are coming to grips with the new reality. Doubt we can insure ourselves a profit like in the past. The polictical climate is changing and I suspect there are a couple of black swans out there yet.

 

As producers/farmers/ busines people we can't afford to be sloppy in our management. We must do our due diligence. Past couple years I've noticed suppliers have been very reluctant to negoitiate. Heres the price if you dont pay it someone else will. Thats about to change.

 

Been here before operating on little to no margins. Only difference this time guys should have operating cash set aside unless they spent it on the 80 next door or some new paint.

 

One question I ve been musing last couple of days. How does one pay 1.000.000 for 100 acres and assume the tax liabilty that comes with it to gernerate the income to pay for it. Some think a lot of this land was paid for with cash , I doubt it. Regardless thats a lot of income tax liabilty paid at some point.

 

Well anyway Happy New Year!!

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Senior Contributor

Re: just ran some cost of prod numbers

Hi Cat, I would really like to be able to pay myself too, and at $4 I think I still can. It all depends on yield. I was just wondering what your plan is if you can't pay yourself. I can go awhile and lose some money. I've done it before. But I was a lot younger and had time to crawl back out of a hole. It's a different ballgame now. I have low debt, ( another year of $7 dollars would have taken care of the rest of it ), and am not really excited about adding anymore just to get by. But ,like most on here, I'm in it for the long term and will plant hoping for better prices.

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Senior Contributor

Re: just ran some cost of prod numbers

Our local Co-Op does a spreadsheet every now and again, that does a profit/loss analysis for both corn and soybeans, using current prices for inputs, as well as grain sold, county average yields, average irrigation expense, etc.

They project that excluding land costs, soybeans will return about $250 per acre, and corn about $180.

From there, subtract average rent of $200-$250 per acre (last few years had a lot of places bouncing in between there) and you can see the pickle many willl be in.

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Advisor

Dark Clouds are Looming.....

Our County yield averages here are around 120 corn and 28-30 beans.   In a nutshell, a_holes are puckering.  There are a myriad of 180-225/acre rents here.  

 

My normal rotation is 60/40 corn beans.   2014 will be 100% non-gmo beans contracted with $ 2.75/bu premium.  Fertility levels on our farms are excellent.   We will be applying nothing in 2014 save some micro nutrients and pelletized lime on a couple of fields.

No cash rent, no equipment or land debt.....and even mine is puckering.

 

A whole bunch of  Millionaires on Paper are about to meet Mr. Market.    Don't be looking for one of those sweetheart Wall Street Bankster deals that takes your debt and dumps it on the taxpayer....and then hands you a boatload of cash to gamble with, risk free and then manipulate the Stock Market to new highs as an added bonus.

Oh...and one other thing.   My suppliers can suck it up until they get in line with sub $ 4.00 corn.  Input costs are the reason these price levels aren't profitable.  Think about that when you put that $ 100,000 seed corn advertising jacket and cap on.  

 

Happy New Year.

 

Oh...BTW.   We're screwed....and have only ourselves to blame.

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Advisor

Re: just ran some cost of prod numbers

Too close , got some cash tucked away to buy essentials but hate to have to give it up. Wife is a teacher so we can buy groceries. Got a little machinery debt that's about it.

Gonna try and farm smarter
I farm some sub 150 bu ground so have to be vigilant
What is your plan???
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Senior Advisor

Re: just ran some cost of prod numbers

Cat, they are using the return on investment from the 400 acres they already have paid for to buy and pay for the new farm. Most mpeople want to save money each and every year. What better place to put it than to increase you own business. AND when that 100 acres is paid for they will have 500 acres to pay for the next one.

 

The farm need not cash flow. The buyer does need to cash flow. It's as simple as that.