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Iowa | And this is the issue with the current ag sector. We have totally different cost of production because of generational differences. There is nothing wrong with it - this has always been the case, but with todays numbers vs the previous generation numbers, the spread is much larger. But the reality is that there are operations that are profitable at 1.50 corn -- cause that's what that business model was built on. ( not taliking return to equity, just cash flowing positive) If you bought and paid for farms with a 1970-2000 ish business model those farms still work - that cash flow can supplement growth or cost of living for the current time. If youre a young guy who's trying to take his first swing or two at buying ground nothing works, same for the guys who's business model is to own 400 acres and rent 2000. There really is no right or wrong answer, here's the kicker -- the guys that are making money are gonna have to hold up the "system" until other people start to cashflow. If $10000 land starts really softening we're all SOL, and it'll be 1980's all over again. If theres enough "old money" (guys that have a bunch paid for, or outside investors) to at least prevent a correction that rocks balance sheets, we may be able to hold this together as an industry. Problem is the acres that are cash flowing positive are a fairly small percentage of total farmed -- due to farm size, and age of operator. | |
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6 years ago.. beans were worth twice as much.
