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coup
Posted 1/12/2019 08:25 (#7239292 - in reply to #7239221)
Subject: RE: 200 acre profit


USA
KevinM - 1/12/2019 06:47

coup - 1/12/2019 07:19

paul the original - 1/11/2019 23:00

I enjoy coups posts, they make me think.

I too am a little lost on the $300 rent plus the $100 income per acre, where is the $300 going the 200 acres is either rented out or custom farmed, I don’t understand both?

Paul

$300 rent would be for ground that somebody else owns.

$100 acre profit from 500 acre acres that is rented plus profit from 1500 acres that person who is custom farming has =$250 acre when figured against the 500 rent acres.

Here in lies the problem with this deal for the person relying on rented ground to farm. More ground comes up for rent. $300 rent + $250 profit = $550 acre break even.for rent. Pretty clear who has the advantage in this situation to control more rented land.


You're going to need to explain that last paragraph? I'm a little slow this morning.


If person that is paying $300 acre rent for 500 acres and profits $50 acre off of person custom farming the 500. From selling fert, chem,seed and crop ins, plus margin from buying grain from the 1500 acres.= $75,000 .On 500 acres of rented ground adds another $150 acre in addition to $100 acre made from renting 500 acres. $150 acre+ $300 rent paid = $550 acre that could be paid to rent ground @ break even. Ground comes up for cash rent bids, who more than likely could pay the most to rent it. Party that rents the 500 and sells inputs and handles grain or the guy custom farming it?

Which brings up another point if the input supplier- grain handler is eliminated from the equation on the 1500 acres @ $50 acre = $75,000 year x 5 years = $375,000 . Better to invest the $375,000 in ones own operation than somebody else's pocket that may end up competing for acres down the road and getting squeezed out of farming by doing so.

Edited by coup 1/12/2019 08:27
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