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| floyd posted the video : https://www.youtube.com/watch?v=tMI2nPWOu7s&feature=youtu.be
It's about what looks like a successful, magazine worthy operation shutting down. It certainly looks like the guy had a plan and certainly had knowledge of his finances. I would love to farm that way (I have a drone but have not taken time to master it). I'm sure I do not understand all the factors in this guy's decision or any other farmers in similar situations. We can guess that coming into farming in the best 10 years ever and perhaps expectations of the "younger generation" had some influence, but IDK.
I do think we all forget that we grow a commodity and though it's work, we are not adding value. That happens once someone makes the commodity into something else. It's a low margin business by it's nature.
To be a commodity there are rules: (doesn't matter if it's oil, cotton, corn or coal)
1. It must be cheap and plentiful or it will not get used to make other things
2. It generally takes relatively little time/effort/(even skill) to produce a large quantity.
3. It will seek the cost of production always - abundance means there is no reason to pay more and if it's below the cost of production, producers eventually stop producing (if there isn't outside influence).
There are more, but these basics control how our business works. When there are outside influences that allow us to get much more than our cost of production, production increases (gee they do make more land). Once production has met demand (all too quickly usually for commodities), prices are pressured back. Keep in mind this happens with no concern over the actual cost of production. COP should be pressured lower by producers buying less or cheaper inputs, but it's not always a quick process and we producers don't always back off.
Also consider that high priced commodities pressure demand to seek alternatives and that demand may not return to the original commodity once processes have changed. We will likely never again feed pigs straight corn and soybean meal - it will always have DDGS, bakers byproducts, various animal feeds, etc. If the outside influence (gov't regulation, disaster somewhere, etc) doesn't subside, demand for the commodity could go away. $4 gasoline did much more to promote alternative fuels and curb usage than any "go green" effort.
For a long time anyone producing commodities had to either add value or be diversified into enterprises that worked with commodity production (ie. you can feed the commodity, make food or sell farm related products but not be a full time astronaut on the moon). To me the recent ability to just grain farm and make a good living is unusual. In the past grain only guys who didn't want to go into other ventures, hunkered down and didn't spend anything. It was completely normal for younger guys to complain that dad was too tight and wouldn't buy anything. They didn't recognize it was a method of staying in business.
Forgetting all this and thinking corn will always be $4 is not a good long term strategy. Really it's nothing new. Back in the later 70's lots of guys wondered why their accountant started telling them they couldn't spend the winter in florida any longer.
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