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  #41  
Old 05/19/10, 02:09 PM
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One more factor to add to Rambler's excellent response: whether the farmer owns the land free and clear, is still making payments on the land, or is renting the land will greatly effect their profit. Any of these situations would change the amount of expenses, and therefore, would change the amount of profit or loss.

All other factors being equal, a farmer who owns his or her land (either through inheritance or having finished paying for it) will make more net income than someone who still has the expense of the land (either through rent or loan payments).
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  #42  
Old 05/19/10, 02:57 PM
 
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I'll try it another way even.

We still have mom & pop grociery stores - got one in the town of 15,000 here. Used to be 7, now one, but still there is one.

We also have 2 big grociery stores, and a Walmart, and Target added an isle of grocieries.

All of them are grociery stores, but they have very different costs, and very different 'profit'. The Walmart store probably grosses far more in a day than the mom & pop one does in a whole year.

The mom & pop outfit has been owned by the family a long time, and probably 'makes' $25-50,000 a year after expenses? That is a pretty good income per square foot of the tiny store.

The Target store probably actually loses a few cents per square foot on the grociery section of their store; but the increased traffic through the doors helps make sales in other departments, so their 'profit' from the grociery isle is increased sales store-wide - not actual cash.

The Walmart store looks to be doing well on merchandise, but the folks in town hate the grocery dept of it & go to the 2 large older grocery stores. So the average profit in the WM grocery store has to be a pretty big negative....

The 2 grocery stores have been in town 50 or so years, and seem to be doing well.

Likewise, farmers set up a business plan (it doesn't have to be fancy, can be in their head or on a napkin....) of what they need to make, and how to get there.

The small sole operator farmer might only have 300 acres, but keeps expenses low, and makes $50-75 an acre over the average year.

The big outfit with 7000 acres might end up only making $10 an acre average.

Each of those operations is successful, but there is no way to compare their profits, or come up with an 'average' income per acre that is useful.

I wonder if you are trying to compare one farmer in Texas to another farmer in Illinois with this 'average' number, and say well the fella with 10,000 acres is making so much more than the fella with 87 acres......

You just couldn't really make such a comparison work.

It's all different, like the different stores.

--->Paul
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  #43  
Old 05/19/10, 03:13 PM
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Something else that makes a big difference is quality of land.

My husband used to run cows for a mega-corn farmer. His non-irrigated farms in Illinois were averaging nearly 200 bushels per acre.
His pivot-irrigated farm in the sand of eastern CO/western NE, on the other hand, was lucky to hit 100.
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  #44  
Old 05/21/10, 07:08 AM
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Are you a farmer?

It seems to me that this thread is just a lot of rambling on about people who are not farmers. My wife and I farm just 28 acres. We own 63 but only the 28 are tillable. Last year we harvested over 200 bushel to the acre corn. We recieved substities of about $550 on that much land. Our seed corn cost $500 since we found some leftovers from a guy on craigslist.(It would have cost us about $2,000 normally) We own our disk and tractor and hire a neighbor to plant and combine. That cost us about $1,000 for his work. Spraying was $775. We took our corn straight out of the field and sold it at the local elevator for an average of $3.78 a bushel. We grossed about $19,500.

19,500-
2,000- For Seed Corn Cost Normally
1,000- For Planting and Combining
$775- Spraying
$550+Substities
__=16,275 or $581 per acre profit.
Our land is not paid for but will be within 5 years(Hopefully!) We have only lived hear for 3. I figure when we have 200 acres paid for I'm retiring. 28 years old now-40 is my goal to retire with 200 acres paid for. I know all years aren't that good, but it just goes to show what a little person can do.Our last 2 years we farmed it for soybeans and ended up with just over $9,000 profit. Thats still $320 a acre profit. Now go and figure what a farmer with 1,000 acres paid for makes!
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  #45  
Old 05/21/10, 08:05 AM
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As Paul says there is no average. I know my neighbor quite well, he farms over 2000 acres and makes quite a bit more than $28k. He bought a new NH backhoe.... because he wanted it. They drive trucks under 10 years old (just practical) and yeah he has the millions of dollars of equipment to till plant harvet dry and store grain and transport, corn wheat and beans. Just storing corn makes him more than $28,000 net. Just custom harvesting and planting nets more. Heck just his bean crop usually does that. If he's cash poor its because he went and bought another 250 acres. I don't know his personal income.... but over 80k. Poor compensation for managing a multi million dollar company and skinning your knuckles on a broken bearing holder.
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  #46  
Old 05/21/10, 12:01 PM
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Similar to a conversation I've had with my SIL's husband many times...he has an advanced degree in Ag Economics, sits on a couple of national farm boards and occasionally is seen wandering down the halls on capitol hill giving advice on farm policy.

From what he sees in farming today, a sucessful small row crop farmer generally farms less than 600 acres. He does almost all of his work himself, using family if possible, hiring out only what he has to. He has his crop custom cut. His wife will most often have a job that supplies the family with access to healthcare. He is extremely frugal and makes purchases only when necessary.

And he still has bad years, occasionally.

Successful small farmers are smart, tough, economically-savvy people.
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  #47  
Old 05/21/10, 12:45 PM
 
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Location: MN
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Quote:
Originally Posted by redrider_00 View Post
It seems to me that this thread is just a lot of rambling on about people who are not farmers. My wife and I farm just 28 acres. We own 63 but only the 28 are tillable. Last year we harvested over 200 bushel to the acre corn. We recieved substities of about $550 on that much land. Our seed corn cost $500 since we found some leftovers from a guy on craigslist.(It would have cost us about $2,000 normally) We own our disk and tractor and hire a neighbor to plant and combine. That cost us about $1,000 for his work. Spraying was $775. We took our corn straight out of the field and sold it at the local elevator for an average of $3.78 a bushel. We grossed about $19,500.

19,500-
2,000- For Seed Corn Cost Normally
1,000- For Planting and Combining
$775- Spraying
$550+Substities
__=16,275 or $581 per acre profit.
Our land is not paid for but will be within 5 years(Hopefully!) We have only lived hear for 3. I figure when we have 200 acres paid for I'm retiring. 28 years old now-40 is my goal to retire with 200 acres paid for. I know all years aren't that good, but it just goes to show what a little person can do.Our last 2 years we farmed it for soybeans and ended up with just over $9,000 profit. Thats still $320 a acre profit. Now go and figure what a farmer with 1,000 acres paid for makes!
I farm a bit more than you do, but not the big acres you hear of 'real' farmers.

I understand your numbers, but, I think you left a few things out.

Fertilizer? You will not get 200 bu corn for very long without fertilizer - about $50 an acre.

Land cost - you say it's almost paid for, but - you need to asign eithere 1/40 of what you paid for it (figure a person runs it for about 40 years) or the morgage payment for it, or the intrest you woulda gotten on the money you used to buy it plus the real estate costs.... You _have_ land costs. You could rent good 200bu farm land out in Iowa for $200-$300 an acre, so you probably need to deduct that from your 'profit'.

The last 3-4 years we have had some really good grain prices. Typical grain prices are closer to $2.50 per bu corn in the upper midwest here. Either we need a lot of inflation to bring the cost of all our expenses up; or we will see grain prices drop a whole lot in the next 2 years. The current situation will not work ecconomically..... Many, many farmers have gone bust on the cycles of ag income. We lose money 3 years, break even 4 years, make a killing one year, and do all right the other 2 years. You are living in a 'make a killing' period here, this is _not_ normal. You will be rudely awakened in the other 7 years of the typical ag market cycle......

One in 10 years of farming has a problem - too dry, too wet, hail, insects, just bad weather. You will only get a 1/2 a harvest one year out of ten, so you need to reduce your gross income by 5% oto account for that. Or you need to pay for crop insurance, which is spendy - %50 an acre for the good stuff.

Your numbers just don't add up to reality of the situation. You are leaving a lot out. You have picked a perfect year to make about as much money as anyone ever could in farming grains.

Not trying to pick a fight, just saying, I think the math works out a lot different for you than you show?

--->Paul
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  #48  
Old 05/21/10, 03:30 PM
 
Join Date: Aug 2005
Posts: 16,328
Farmerchick, Your one heckuva guy

U say u plant 50 acres of corn a year, 25 to sell, 25 to feed, and u pick it all by hand.
Man O Man. Thats a whale of alot of corn to pick by hand, and have it all picked before winter sets in. Thats a whole bunch for a one row picker, and u have to pick down 2 rows here and there so as to make way for the tractor to get in with it. Thats even a big bunch for a 2 row picker. If u pick it all by hand, my husking hook is off to ya lol
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  #49  
Old 05/21/10, 04:28 PM
 
Join Date: Jan 2008
Posts: 1,022
The guys I help have 4,000 acres corn ...1,000 acres first crop beans,, and 1300 acres wheat that will go into 2nd crop beans when the wheat is combined...No way to answer your initial question...
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  #50  
Old 05/21/10, 07:59 PM
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Location: East-Central Ontario
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Quote:
Originally Posted by rambler View Post
I farm a bit more than you do, but not the big acres you hear of 'real' farmers.

I understand your numbers, but, I think you left a few things out.

Fertilizer? You will not get 200 bu corn for very long without fertilizer - about $50 an acre.

Land cost - you say it's almost paid for, but - you need to asign eithere 1/40 of what you paid for it (figure a person runs it for about 40 years) or the morgage payment for it, or the intrest you woulda gotten on the money you used to buy it plus the real estate costs.... You _have_ land costs. You could rent good 200bu farm land out in Iowa for $200-$300 an acre, so you probably need to deduct that from your 'profit'.

The last 3-4 years we have had some really good grain prices. Typical grain prices are closer to $2.50 per bu corn in the upper midwest here. Either we need a lot of inflation to bring the cost of all our expenses up; or we will see grain prices drop a whole lot in the next 2 years. The current situation will not work ecconomically..... Many, many farmers have gone bust on the cycles of ag income. We lose money 3 years, break even 4 years, make a killing one year, and do all right the other 2 years. You are living in a 'make a killing' period here, this is _not_ normal. You will be rudely awakened in the other 7 years of the typical ag market cycle......

One in 10 years of farming has a problem - too dry, too wet, hail, insects, just bad weather. You will only get a 1/2 a harvest one year out of ten, so you need to reduce your gross income by 5% oto account for that. Or you need to pay for crop insurance, which is spendy - %50 an acre for the good stuff.

Your numbers just don't add up to reality of the situation. You are leaving a lot out. You have picked a perfect year to make about as much money as anyone ever could in farming grains.

Not trying to pick a fight, just saying, I think the math works out a lot different for you than you show?

--->Paul
Not to mention... you don't own and operate your own tractor and disk for free (says the guy who spent $6000 in repairs on two tractors in the last 3 days). Nothing there for the cost of hauling the corn to the elevator. Plus if I could find somebody that would plant AND combine corn for under $40/acre I could sit and watch. Custom combining corn here is $40, planting $18-20.
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  #51  
Old 05/21/10, 10:26 PM
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Quote:
Originally Posted by DaleK View Post
Not to mention... you don't own and operate your own tractor and disk for free (says the guy who spent $6000 in repairs on two tractors in the last 3 days). Nothing there for the cost of hauling the corn to the elevator. Plus if I could find somebody that would plant AND combine corn for under $40/acre I could sit and watch. Custom combining corn here is $40, planting $18-20.

If you look around here you can find people in the paper to combine for $20-25 an acre. $12-14 to plant. We're real good friends with the neighbor and I guess he cuts us a deal.
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