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Iowa Farmer today article on fertilizer prices
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Pat H
Posted 2/18/2017 08:55 (#5847562 - in reply to #5846436)
Subject: RE: They have no reason to take a loss


If they drop prices voluntarily it's just a marketing move. If they are selling about the same amount of product, there is no reason to lower their price. If fundamentals take over grain prices, high priced inputs will be unaffordable. Note that fact, in and of itself, still doesn't pressure input pricing. It's when Rural king brand corn at $90 to $159/bag (that's rib) becomes enough of a sales leader to eat into major companys' sales volume. Then stuff happens. With fertilizer, you can always cut back some especially if it takes a record year to pay for itself.

The current marketing line is "you can't save your way to profitability". I think their reasoning is cutting any costs/products will result in disastrously low yields. This works well for guys who are recent entries into farming because it's all they know. However, you can farm at all sorts of different productivity levels and make money. Retailers do not like this business management stuff.

Rents are another issue, but I think that's going to take care of itself. The high cash renters that blew everyone out of the water are getting blown out of the water themselves. It's not like it's a surprise. Keep in mind this has nothing to do with farm size unless your size was made possible with high rents. It will take some time and more high profile crashes in farming and in land acquisition before land owners and managers get things figured out. Since a lot of land has passed to the next generation with few ties to farming (or even memory of farming), an end to the big rent party might lead to lots of sales. A lot of this generation thinks because they want something, means that they should get it. That could work out to be a good thing if you are on the right side of the market.

There is reason for optimism in every market situation.
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