“Iowa farmers have a lot on their minds as they hook tractors onto planters this year: Skyrocketing interest rates are helping drive a 20% hike in the cost to plant the crop, along with higher seed, fertilizer, chemical and land costs, said Chad Hart, an Iowa State University agricultural economist. Link
“At the same time, prices for corn and soybeans, the dominant crops in Iowa, are lower than a year ago: Iowa corn for delivery this fall is trading around $5 a bushel (a 20% drop), while soybeans are hovering around $12
Can you imagine any other industry (restaurants, manufacturing, construction) that could survive if costs rose 20% while at the same time customers started paying 20% less for your product?
Farming is an industry where all of the inputs are purchased at retail prices and all of the production is sold at wholesale prices.
Farming locks-in many of its costs 12 month before the first kernel of corn is harvested. "Hedging" can help dampen out wild price swings but does little to smooth long-term trends.
Much farm land is rented. It is not unusual for a land-owner to raise rates based on the previous years' gross-receipts, that is, yield-per-acre times price-per-bushel. Prices of other inputs also float based on what the suppliers believe the farmers can afford to pay. That gives farmers a financial wedgie when a poor year follows a couple of profitable years.
The practice that bankrupted some of my cotton farmer buddies in west Texas was taking out a loan for the years expenses. Then paying it back with the proceeds. Crop insurance was a thing. I remember my first understand of the problem was when I found out the price of cotton was the same that year as it had been in 1929. Then we had a bad fall. Nothing more forlorn than seeing cotton in the boll stringing into the mud from all the heavy rain at harvest. Next years was hail when the plants were about 4 inches tall. A few of my buddies lost it all. I saw the Carter Malaise up close and personal.
ReplyDeleteThen I met a real peanut farmer from south Oklahoma. He started farming after he saved up enough money to buy some old second hand equipment. He built as he could afford to, and was always years behind the other guys. Never had a cab on his tractor. Never went into debt to finance his farming. Built his house a room at a time. He was a frugal, intelligent and peaceful man. A man to admired.
"Farming is an industry where all of the inputs are purchased at retail prices and all of the production is sold at wholesale prices."
ReplyDeleteThis is a load of crap. Go price out what one bag of seed corn costs compared to one pallet or tote. Price out your spray chemicals at your local hardware store vs the bulk containers the famers and co-ops get.
There are absolutely difficulties that farmers face, but the retail/wholesale thing is line of crap.
BC said what I was going to say.
DeleteThe retail price per pound of a 50 lb bag of corn is more than the retail price of a garden package of corn just like the retail price of a 50 lb bag of oatmeal is less than a single lb of oatmeal just like a liter of whiskey is less per ounce than a single shot at the bar, and a case of beer is less than buying it one bottle at a time. Retail is what the end user pays. And that is the farmer. ERJ is correct---ken.
DeleteOOps, --1st sentence should read... a 50 lb bag of corn is Less than the retail price of a garden package...---ken
DeleteWe aren't comparing 1 beer to a dozen, or a shot vs bottle of whiskey. Your single bag of seed corn will plant you a little under 3 acres. An Iowa farmer who is farming for a living isn't buying 12 bags of corn instead of 1 bag, he is buying thousands, or buying pallets of it.
DeleteYour comparison would be more accurate if you compared your 1 beer vs stocking the bar for a weekend.
I promise you will get a different price going to the store to buy retail seed vs the farmer calling FBN and having a bunch of pallets delivered.
I agree, but the farmer is still the end user. He goes to the Bulk Store instead of the usual store. He is a retail purchaser and his cost has exploded due in large part to availability .--ken
DeleteNo the farmer isn't the end user. If he was then he would never sell anything he grew. Farmers buy seed to grow and then harvest and sell the product. You would be just as incorrect saying a machine shop is the end user because they buy steel bars but don't sell steel bars, they sell finished products.
DeleteAnd the availability of fertilizer is questionable...
ReplyDeleteThe system (run by reptilians, metaphoricly) is stacked against small farmers.
ReplyDeleteWeaponized weather is real. If you (the royal "you") don't understand that, you need to expand your Overton Window.
There are no co-inkydinks, they're not mistakes, it's not incompetence (though incompetent's are purposely hired for plausible deniability), they aren't accidents, it's treasonous, planned take down of the US as a world power. We're to be spit up into 7-10 regions as resources for the "Elite", Satan's kingdom's.
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