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EC Nebraska | brad c - 8/26/2017 10:43 [snip]
You produce commodities, price will always flow to the cost of production, ALWAYS!
People on here act like farming is some noble holier than though occupation when in fact it isn't any different than any other business.
There is an ebb and flow in all businesses, this is just the ying to the yang. (The beginning of the ying IMO)
OK, enough one liners, no ill to you or anyone's operation just some facts that we all have to face.
Or the cost of production will flow to the price. That's what happened when prices went up, farmers bid the profit into land price and rents, machinery and other input costs. Now that there's no profit at these prices, the average cost of production will adjust back down to match the prices. Not low enough so that very many people are making big bucks, just low enough so that the average farmer can just barely make ends meet.
But that can't happen until enough farmers have burned through enough equity that the landowners can't make 5 phone calls and have it rented at the old price. That's what's meant by "not enough pain yet." Too many farmers are still able to farm at a loss. Someday the bankers will cut them off, and the real pain can begin.
So, yeah, this is the yin, or the hangover after the party, or whatever you want to call it. Land prices will eventually adjust to whatever the land's production can support. But there hasn't been enough blood on the streets yet for that to happen, that's all. And the subsidized insurance and the crop subsidies are just prolonging it.
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Land cost
