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| 190xt, your posts about the profitability of fringe acres is perplexing to me, not because one person (you) is saying it, but because many are saying it on NAT and have been for some time.
Perhaps it is indicative of a less than realistic view of how land develops it's value.
The value of land is mostly determined by it's ability to generate revenue.
Perhaps in your area a guy can average 170 bushel corn on dryland ground and with $8 corn that gives you a gross income of $1360. With $3.50 corn it gives you a gross income of $595. If a guy is cash renting ground that makes 170 bushels on average he looks at how many dollars per acre it will cost him to grow those 170 bushels, then he subtracted that from the gross. Then he determines how much he needs to live on per acre and subtracts that from the gross as well. What is left over is what he is willing to pay for cash rent (unless he is willing to go backwards in order to prevent losing the land to his neighbor).
Pretty basic stuff right? Well the thing is, that same thing happens here in the land of 80 bushel corn. Rents have been established the same way so believe it or not, our cost to produce a bushel of corn is likely very similar to yours. Actually it may very well be less because the average farm size out this way is larger so we likely are willing to work for less margin per acre on average.
Anyway, it's easy to see that there is too much corn in the world and it's easy to say that the guys who are not as competitive at producing corn should quit producing it, but the fact remains that if I grow corn, that is the way that I will either make the most amount of money or lose the least amount of money, just like it may be with you. I have no other crop that will make me more money so I'm going to grow corn and so will you for the same reason.
Farmers will keep producing the most profitable crop or the least loss crop until prices are so low that they will lose less money if they don't plant anything. It is in my opinion unlikely that prices ever get that low primarily because expenses will keep going down as more and more people realize how much money they are losing. Cash rents will drop, fertilizer prices will drop, farmers will quit spending on machinery unless it is totally necessary. This process will take time, but it will happen and all of the remaining farmers will be quite resilient. Those who are left will capitalize on the next big upswing because they will have low costs and high income again. This will happen in my area and it will happen in yours and once again our cost to produce a bushel of corn will be similar.
Anyway, I hope you and others give up the silly notion that "the other guy" should quit growing the crop you want to grow. You will be much better served to closely evaluate your own operation and determine how you are going to cut costs and survive. | |
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Can the boat lean any farther?
