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Of economics, profits, and science
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farmerbk
Posted 11/29/2016 20:28 (#5665493)
Subject: Of economics, profits, and science


Seymour, IL
There have been several conversations in the last couple of days regarding covers, no covers; tillage, no tillage and other assorted variables. What has not been discussed is what is the effect on costs, revenues, the effect of time and lease rates; comparative vs. competitive advantage.

All of us try to improve our situation. All of us are greedy capitalists, looking to make life better for ourselves and our families (and there is absolutely nothing wrong in that) What is missed in conversation is that there are a lot of ways to get there. There is no one best method. Tillage is best in some situations, No-Till in others, Strip Till may fit in......Not to mention all of the changes that can come into play if we incorporate cover crops, change our crop rotation, or make a significant change in our operation.

For example, some who no-till believe they have lower operational costs, putting them at a competitive advantage. However, they may not enjoy the same advantage if a landowner puts a premium on being the earliest planted fields as the no-till is typically slower to warm and dry in the spring. In this case, the more intensive tillage may have a comparative advantage. Does this then become a point of competitive advantage if this producer attracts more land? Is the reverse also true? If we are land renters, do we respond to the wants and needs of the landowner, or do we follow what we believe to be the best solution? Do we base those decisions on empirical or anecdotal evidence?

These comparisons also apply to timeliness, crop insurance coverage and indemnification, risk and aversion to risk, and any number of other variables. Where are the premiums, what are the norms for the area, how do we respond to risk? How do these variables change based upon where we are at? Are changes the same in in Auburn, Al. as Mandan, ND?

It is really hard to say one method is better than the other. Not all variables are the same in all locations. It may make a difference if the land is owned or rented. I live in Illinois, where leases tend to be annual, and lease rates are high; Leases are not long term--where 80% of the land is rented, and long term may be viewed as getting to rent the farm for more than 2 years….

Follow the money. If you want to keep more of it, you need to understand why to spend it, and where. You will need to decide if you can make decisions based on long term research or a local plot or two. You will need to decide if you are OK with being different than others like you in the neighborhood. Only then can you decide what works best for you (and may not work best for your neighbor)

just some thoughts from where I stand.
bryon
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