Boone Co. Iowa | Red Paint - 10/18/2017 07:32
It's the time of year where people on here start to wonder how yields out in the hinterland are doing, and that makes a good time to discuss their effect on grain. A couple threads below about the RFS and farm profitability got me thinking about this.
The "fringe acres" that many on here blame for low prices will never go away.
Some claim they are only profitable at high prices. On the contrary, I will make the claim that they are MORE profitable than the corn belt, even in our normal price environment of today.
I have travelled a lot through the mid-South, and over the last 5-10 years, a lot of acreage has went into grain. Regional crops, pasture, and hay ground have all been busted to make way for soybeans and corn. When a regional crop dies out or becomes too difficult to sell, the best option is always grain. There are no limits on it, no dealing with production contracts, no grading or quality problems. You can haul as much as you want right into the elevator. Easy.
With that said, when land that can grow 50-60 bushel beans can be rented for $80 per acre, the profitability is certainly there. Now, these fields aren't the big, flat, square fields of the corn belt, and they're typically pretty small, so the efficiency isn't quite on par. But I would say the improved margin makes up for that.
It's very simple. Until the corn belt folks can acknowledge that they need to support alternative, regional crops, the grain acres will continue to grow. Grain is the lowest common denominator crop. It can be grow be essentially anybody, in almost any place thanks to modern hybrids. It also has the lowest margin of most anything because of this. But, when there are no other options, out comes the bean head.
In this little corner of the world, we've seen the dairies close, tobacco leave, orchards be pushed out, vegetable producers retire, and lots of small beef/hay operations call it quits. And grain has taken every one of their places.
The CRP program just announced last week that they are kind of in a holding pattern, as they have bumped up against the 24 million acre limit established by Congress. I would say that one or two generations ago there were a lot of farms that had a variety of livestock. Size and scale has replaced diversity in most farming operations. New local neighbors (hispanic) have chickens and goats and large gardens. Lots of us, myself included, like to hit the "EASY" button of growing by getting bigger. Much more difficult to grow by diversification. And, you have to wonder why all of the "diversified" businesses have retirements, closings, people who decided to quit, etc. I personally question the reward that seems to have arrived with modern hybrids. My question that I keep asking myself is this: Is EASY necessarily better? Thanks for posting. |
The "fringe acres" aren't going anywhere.
