Posted 6/28/2020 16:15 (#8341668 - in reply to #8340779) Subject: RE: Long term corn outlook.
This brings up a great point for discussion. We all know that in today’s ag environment if we are working in the “commercial production” space volume and scale are need to make the numbers work on investments. Slatted floor economics are a shining example. The total $/hd (P&I, labor, maintenance, maintenance, etc.) cost on the schedule looks far better than other “confined building” models. The problem is realizing the most cost effective scenario typically means building a barn of +1000 hd. This means a LARGE allocation to the Interest portion. If you have cash on hand, it makes for a solid return. If borrowing, its a big chunk sent of to the bank. Most importantly is the length of schedule. Most of the equipment and infrastructure has a useful life exceeding 20 years. Many of the loan schedules are in excess of 10 years, many more 15-30. Problem is we are making a HUGE BET that the model of farming we know today will be similar in +20 years based on these investments.