USA | KevinM - 1/13/2019 06:36
The part about making $35/A on the inputs and crop ins sales I won't argue with too much but if someone has their own sprayer they probably aren't paying full retail to begin with so might be harder to find those folks that will allow that much margin.
On the grain handling. Using your example of 50-50 corn and beans you would have over $900,000 tied up using $3.80 corn and $9.00 beans yielding 200 and 50. That would be 187,500 total bushels. At 5% interest would amount to 2 cents/bu/month. Now if you're going to require the custom farmer to sell at harvest you could probably make your 20 cents but if you're going to act like an elevator and let them forward price that might be a little harder to do. Of course you could make it up in your "basis". I guess I just think handling the grain is a whole nother animal. Lots of money tied up and really requires a skill set that most won't have. I can say this with a fair amount of confidence as my son worked in the business for several years before coming back to the farm. I'm not saying it can't be done but there are a lot of costs to doing it right. We've looked into it and we may get into it at some point but it takes major capital. Either going to have to have it on the hip or an understanding banker. Just remember, if it was easy everyone would do it.
Would agree would be better off to leave the grain side out of the equation. More money can be made with smaller investment on input side vs grain side. There are businesses that have the facilities in place that continue to lose business. That @ some point are going to have to decide how to remain viable.
Reality is would be better to invest in one's own operation now to able to compete later vs lining the pockets of those who could be competing for land down the road.
$60 acre x 1500 acres x 5 years = $450,000 that could be added to 1500 acre farmer operation vs providing no future benefit to the operation by putting those $ in others bank account.
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coup-more high rent?
