West of Mpls MN about 50 miles on Hwy 12 | Bacon has the best reply to this thread yet IMHO. The era we are in now is exactly like the early 80's, only things will happen much quicker this time if nothing changes because it takes sooooo many $$$$ to farm the same acre.
The only thing that matters is having enough gross income, to cover gross expense. If grain prices stay where they are, and the companies and individuals that are making a living farming the farmers do not want to suffer the same fate many companies did in the 80's, they will need to adjust pricing accordingly. If not, there will be less customers for them to farm. And those fewer customers won't require as many companies to buy from.
If it cost $1 to buy something during the 80's, and it now cost's $10.00 to buy the same thing and you borrow money to buy these things, what's the difference if you're paying 10% interest on $1.00 or 1% interest on $10.00? Your out of pocket interest cost/acre is the same to do the same thing, you gained nothing with cheaper interest rates, you just assume more risk.
It is different this time if interest rates go up, or if our cost of doing business doesn't come down. The equity fire will burn bright, it will not burn very long.
I have lost 300 rented acres since 2012 because of my desire to make a profit. I haven't missed the gross income one bit. My net income did improve slightly. And I have a little more time on my hands to enjoy that slightly better net income.
After myself, my mother is my next greediest landlord. If she doesn't get a clue soon the neighbor kid can try his luck at farming her fringe acres. All my other current landlords have been great to deal with this year. :)
FWIW, I bought my first 80 in 1983, bought a little more land several years later for way less. Some how managed to hang on to it all. I've always had some source(sometimes several)of a little off farm income of some kind, even when times were good, still do. Never threw the off farm income at the farm. That way I can always buy groceries...just in case my competition, and the companies farming me got greedy...again. :)
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Talked to a banker.....
