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Wait just a minute Mr. Illff
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Flyover Country
Posted 4/15/2009 14:06 (#681329 - in reply to #680101)
Subject: Re: Wait just a minute Mr. Illff


CIL

Beh, this isn't a response to you...it just seemed like the best place to post this reply.

I did speculate on ILLFF's possible variance in cash rent.  I have not the foggiest clue what his actual rents may be.  But, I do know for a fact that all ground is not fungible.  In Illinois, there exists some of the most productive soil on the plant, regularly churning out 220-230 BPA, un-irrigated.  There are other soil types that might struggle to reach 170 BPA or even 150 BPA.  There's Ferrari ground, Cadillac ground, Chevy ground and Yugo ground.  Is it immoral for me to pay a lower sticker price for a Ford Escort than for a 'Vette?

Like any business, decisions are not made in a vacuum.  However, trade mags and internet commentary focuses relentlessly on the outliers, both good and bad.  If someone heard that ILLFF paid $600/acre cash rent, then obviously the board will light up about it.  It becomes a legitimate topic for debate.  Inevitably, some people run for the proverbial hills, proclaiming that the world has ended for "small farmers" because some "BTO" is throwing their weight around.  I'm rather hesitant to assume the worst of people, and I believe that the evil "BTO" might actually know what they're doing.  In this case, it stands to reason that the high-rent ground is consistently hyper-productive, or maybe makes sense logistically for growing a super-premium product.  But not all ground is like that.  I doubt that ILLFF has $400+ rents on every acre, because every acre is not the same, even in the same section.  I'm not talking down to anyone here, but good Lord, people obsess about the outliers, whether it's a particular business practice or operation.

In short, I assume that Mr. Rosentreter is an outstanding businessman, because he is generating outstanding results.  Therefore, I assume that he is smart enough to mitigate his high rents with equalized lower rents on less-productive dirt (thus, the acres deserve lower rent in a cash market), averaging a much more manageable rent bill across the farm.  Smaller farmers cannot necessarily compete on those single outlier rents, but that doesn't mean that they cannot compete against the bigger operation in toto.  Until and unless I see otherwise, I will assume that most farmers are in business today because they have certain quantifiable skillsets and expertise.  We are long past the point where government is giving homestead land and cash to any breathing man who might be able to pull a crop out of the ground.  If people are still in business as farmers (and don't be mistaken, it is a business), then it's probably the best approach to assume that they have found some niche, some strategy, some organizational structure that allows them to compete in their market area.

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