East Central South Dakota | 1. in 2011 I saw an opportunity for a shuttle loader for my community, started project and sold to ADM. The phrase at the time was a need for "speed and space" to handle ever increasing production in the northern plains to export to China and the world. All the majors wanted a piece of the grain origination pie. Today, shiny new 50,000 bushel bins every direction you look (farmers built their own space) and domestic crush capacity moving into the state along with CAFO production and ethanol----at the same time China buying from Brazil. Speaking of China, the once feared powerhouse, steady population decline of working age demographic, an economy based upon real estate and they over built terribly causing market crashes, with buildings now sitting empty and now a Covid induced economic coma---so much for the theory "China will buy all we produce". As we shift to a dominate domestic driven market---are shuttle loaders becoming a stranded asset? ?
2. United Nations and European woke/liberal Governmental policies continue to bleed into Governmental Policy all across the Globe---which is negatively affecting production capabilities and the cost of food. Production restrictive policies combined with the quest for renewable energy is taking a noticeable amount of land out of the production game. Huge solar fields on some of God's best dirt. People want above ground energy creation, and they are willing to pave over farm ground to get it. Food is cheap and available, right?
3. Sustainable aviation fuel (SAF) is an example of a biofuel that has the potential to deliver the performance of petroleum-based jet fuel but with a fraction of its carbon footprint, giving airlines solid footing for decoupling greenhouse gas emissions from flight. Totally driven by subsidies from Governmental Policy. Is it here to stay---how many times have you seen Government shrink away or get eliminated once big money benefits and gets addicted to the pork policy? See defense spending. Thinking to myself, soybeans are going to get stored more, exported less and domestic demand is greatly dampening the loss of exports. The meal will be a by-product of the oil and will be priced to take dried distillers' grain out of the ration, replaced with bean meal. Ethanol plants will sell more wet distillers cheaper (cattle guys smiling) and at the same time, ethanol will be lowering their carbon footprint because they are no longer drying distillers' grain.
4. Land costs are getting to the point of insanity. Access to affordable land at a scale to be a full-time farmer is going to thin the herd drastically. Why farm 300 acres of family land and work a job in town when you can sell the land for $20,000/acre and buy a 6% CD and generate $1200/acre income a year. We are at the point where gross revenue will not even cover opportunity interest much less borrowed interest. The pride of ownership is getting ludicrously expensive. Land cost is the one big dark cloud I see in Agriculture. People are way too comfortable with marrying themselves to poverty for a lifetime, just so they can work harder for less. Do not fragment your land base if you want a family farm to continue.
5. At last, finally. The honest fragility of exports and how close the world is to the edge of grain deficits that will change most of the world's access to food choices, how we eat and how much we spend. The 5 biggest corn exporters (United States of America, Brazil, Argentina, Ukraine and France) generated over three-quarters (77.3%) of overall sales for corn in 2022. Really only the United States and Brazil have meaningful quantities of corn to export. In 2022, the top 5 soya bean exporters are Brazil, United States of America, Argentina, Canada and Uruguay. Really only the United States and Brazil have meaningful quantities of soybeans to export. See the big picture. The world is dependent on only two countries for exports of any quantity. If the world goes to war and a country is pissed at China, a handful of drones could take out all of the export terminals in Brazil in a day. Or, maybe just let the corruption and social unrest of a socialist country leaning to Marxism slowly destroy itself (see neighbors Venezuela (oil industry ruined) and to some degree Argentina). The inequities in Brazil from lack of education breeds social unrest that can/will create land reforms and redistribution. See most all of Africa and now bleeding to Europe. Crop failure in both countries the same calendar year would also create an interesting market dynamic.
My THESIS OF HOPE --------today's markets are just victim of managed money and money flow---watch what basis does for the next 5 months. World fundamentals of land use and Governmental policy is the economic engine for the long haul. If you have access to affordable land, farming and the farm is going to be a fantastic place to work and raise your family.
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agriculture is an industry of dynamic change......
