AgTalk Home
AgTalk Home
Search Forums | Classifieds (9) | Skins | Language
You are logged in as a guest. ( logon | register )

2019 acrerage ?
View previous thread :: View next thread
   Forums List -> Market TalkMessage format
 
Conan the Farmer
Posted 2/15/2019 22:07 (#7323513 - in reply to #7323398)
Subject: RE: Wait another week and ...



South Central Iowa
I didn't see your chocolate post I guess. I've been on this doom train for a while though. Not because of China, but because our continual yield increases are destroying us. One of only a handful of professions where the reward for good work and productivity is poverty.

The damage from the cycle up in 2007-2013 is still with us though. Zenfarm posted the inflation adjusted prices a few weeks back, and I've mentioned them before too. Our inflation adjusted price of the average prices in the 1973-2006 period are $2.70 and $7.00 on the board. We will try to return to that as a low area and somewhere that will cut back our unneeded acres.






EXTENDED DOOM:

Big question is who can't take that real price when basis is included. The fringe areas will be out at those prices. It costs them 50-80c a bushel just to get it anywhere useful; so $2.70 becomes $1.70 on 140 bushel corn for $238 an acre revenue. Beans could be 40 bpa at $5.50 cash for $220. There are 15-30 million acres of the plains that will go fallow.

For my area, cash $2.20 and $6.20..... That's really ugly too. 170 bpa and 50 bpa would gross us $374 and $310. Non-land break-even's for the "typical" producer in my area with equipment and labor are around $410 and $300. I've got my non-land with equipment and labor whittled down to roughly $330 and $230, but if that future comes, I'd have to drop off the $50 in macros and start mining again; to the detriment of yield after a time. If everyone in my area dropped off macronutrients, we could afford $70-$100 for land. Taxes are $20-$25 a crop acre. Current rents are $160-$250+ depending on quality. My area would be real borderline and difficult.

The prime areas can handle it. There will be no fallow acres where you are. 220 bpa and 60 bpa at $2.50 and $6.75 would still gross $550 and $405. I would venture you guys would see non-land inputs drop your in ground cost to roughly $350 and $250 if you cut macros as well; so still $150-$200 rent in the prime land areas. Nothing will go idle but it would be an adjustment for sure as well. You guys at least have base acres for PLC. Not everything in areas like mine that are crop have corresponding base acres.

We will go follow because there will not be anything to pay us to stop and a liquidity crisis will occur in ag lending at those prices. The government will not do a set aside, soil bank, payment in kind, LDP, or any of these past programs. They are not coming to save us, one party actively hates us in fact. The gridlock in 2020-2021 will be enormous. There will be nothing to help us except the CCC, Crop Insurance, and PLC. That sounds like a lot, but it isn't. CCC is $2.20 and $6.20, so that's about where the fallowing is. Crop Insurance will help somewhat for one year, not two. Then there is PLC/ARC... I'll use PLC since we'll all switch to it.... I think PLC pays the lesser of 85% of some average that was $8.40 this past year or some marketing year average, but only on the base yield (reference yield) or whatever it was called that was used back in the day for DCP; around here it would be like 28 bpa... That program is as random as the Wizard of Oz; like someone behind a curtain pulling a bunch of levers on a steam contraption to arrive at some payment that will probably buy you a tank of gas and a pizza. Webster has ARC/PLC as a synonym for convoluted.

BONUS DOOM OVER.
Top of the page Bottom of the page


Jump to forum :
Search this forum
Printer friendly version
E-mail a link to this thread

(Delete cookies)