Can you quantify that statement, or is that mere hyperbole”

I suspect a big part of the newspapers’ problems come from eyeball competition, however, I wonder if part of the problem isn’t that the illiterate no longer feel it necessary to subscribe to daily in an effort to appear literate. If your neighbors aren’t pretending they can read by subscribing to a daily, you can quit pretending you can read.

I mean using a real definition of literacy, like being able to read a lengthy article or short story and understand it, versus being able to comprehend the meaning of a single sentence (which is what we officially use), we’d probably have a 40% to 50% literacy rate in this country. “20% of the world population was illiterate in 1998 by the United Nations definition – the inability to read and write a simple sentence in any language.[3]” (http://en.wikipedia.org/wiki/Literacy#World_literacy_rates) Using the “lengthy article” definition would place us somewhere on par with Bangladesh in literacy.

Add this to the fact that newspapers have largely lost their credibility with those that can read, and the newspaper business goes under. C’est la vie.

Here’s corn farming 101:

There are many types of seed corn that you can use. Prices range from as little as $45/bag to over $300/bag. The huge difference in price is in how the corn has been genetically altered. The more expensive the seed, the more things it is immune too, as well as being resistant to many various types of herbicides.

The corn seed priced at $115 a bag is the best from a cost standpoint.

Each bag will plant about three acres of land, assuming 38″ rows.

Here’s what you have to do:

In March, you disk the ground smooth — assuming you didn’t do it in the fall, which is actually a good thing to do, allowing the snow and moisture to break down the soil and the water to seep into the soil.

You then spread fertilizer, a good mixture is 18-46-60 (N-P-K). This will cost around $44/acre and that’s last years price….prices are lower this year

Next, you spread anhydrous over the land at a rate of about 120 lb/acre. This runs around $0.41/acre for the anhydrous and $0.01/acre rent for the tool bar, for a grand total of $0.42/lb which works out to be $50.40/acre.

Then, when the soil temperature exceeds 50 F, you will plant the corn. When you’ve planted your corn, you now need to spray. You’ll do a run of Atrozine spray mixed with cutworm spray. This will cost around $14/acre.

Here is where speculation really begins. If you plant too early, you’re taking a chance on having your corn come up and then getting hit with a late frost, possibly killing it. So maybe it’s better to wait to plant. But there are problems with that too. If you wait, then the spring rains come and you can’t plant because the fields are too wet, and by the time they dry, it’s possibly so late that your corn will be doing its main growing during the dry season and won’t get enough rain during its crucial “tassling” stage — when the corn is tassling, it is absolutely crucial that it gets water.

Of course, these spring rains hold problems for the farmer who got his crop in early and didn’t get hit with the frost. In the spring, rain has a tendency to come in large amounts and all at once. It is not uncommon to see rainfall levels of 5+ inches in a week, sometimes in only a few days. Just as not enough rain can cause problems, too much rain causes problems.

In the bottoms, where the land is the most fertile, moisture gathers. The creeks fill up and sometimes spill over the banks. The higher ground drains all its moisture onto the bottoms, too. This causes water to accumulate in the bottoms. And in these areas of accumulation (large puddles or overly wet muddy areas) the crops won’t grow.

So you not only have to beat the frost, you have to beat the rains, and then the dry season.

But let’s assume that you got your crop in successfully. What you have to do now is check on your fields every day to make sure that everything is going well.

Mid-season, the farmer will have to spray again, this time with Post to control broadleafs, which runs around $6.50/acre. But if there’s a outbreak of fescue, the farmer will have spray Round-up, which will cost another $25/acre.

So if you add all this up, and figure in all the different things that could happen, here’s what you come up with.

$38/acre for seed (figuring in a few different “extra things”)
$94/acre for N-P-K and Anhydrous
$20/acre for spray

For a grand total of $152/acre just to put a crop in. The farmer in question has 133 acres of good land. So it will cost him just over $20,000 just to put the crop in.

The fuel costs to put in and take out the crop on a 133 acre farm should run $3500 and are declining.

Now, keep in mind that it also costs you around $25/acre to spread lime on the ground — but you have to do that only every 3 – 4 years on average. But I think I’ve got enough “fat” built into the expenses above to safely assume that the cost of lime will fit in with these numbers.

What about bad things happening? You need crop insurance, too. Sure you can go solo and hope for the best — but, losses hurt you more than gains help you! This is especially true of farming. You’re better off insuring your crop and giving up some profit so that you can ensure that you don’t get wiped out. Frost, hail, disease and pests can wipe you out. It’s always best to give away a portion of your profit to ensure that you don’t get wiped out.

Further, you have to take into consideration the cost of equipment and the cost of repairs on that equipment. Farm equipment is really expensive and you simply can’t believe how things break on a farm. Farming is really, really hard on equipment.

Now, on top of all of this, the speculating farmer has to further speculate with grain prices in the futures market.
So let’s say for the sake of discussion that paying help, insurance and repairs is going to run a farmer an additional $5,000/year. A grand total of $28,500 to plant 133 acres in corn, or just over $214/acre.

Now, lets look on the profit side of things.

First, to just break even, assuming that he gets $3.10/bushel, he’ll need to bring to market just over 69 bushels/acre. Believe it or not, that’s not to hard to do.

Realistically, a farmer expects to get around 125 bushels/acre on average if he has good land. Now, note the phrase “on average”. Some years, he’ll get far less than that, some years, far more .So it’s fair to say that a farmer will end up with an average annual range of 80 – 150 bushels/acre.

At 125 bushels/acre, and assuming the farmer will get $3.10/bushel (of course, I have no idea what grain prices are gonna be in the future), he’ll gross around $51,537, which will net him out a profit of ~$23,000 for 133 acres. Not too bad!

But looking at the ranges of 80 – 150 bushels/acre, the range in profit is $14,400- $33,000. That may not seem too bad, except when you take into consideration that a farmer can easily get $100 – $150/acre rent for his land, thus guaranteeing a profit of $13,00 – $20,000/year.

Also, most farm land has some sort of government subsidy attached to it. The person who actually does the farming is the one who gets the subsidy. This amounts to around $10 – $25 acre (more or less depending on the land and circumstances).

And keep in mind that in order to get that guaranteed profit (by renting his land), the farmer has to do absolutely no work whatsoever. So, on the margin, his true profit (profit from work – profit from no work) is much less, since by renting out their land and taking the risk free profit, he can free himself up for other, potentially, more profitable endeavors.

Why would anyone want to rent the land? Farmers who rent a lot of land usually own a lot of big time equipment and farm a lot of land. Their profit margins are smaller, but they make up for it on volume.

I rent out my farm land, and enjoy the guaranteed profit.

Jeff

I know that the biggest players in Ag are private and that they’ve got things pretty well sewed up with vertical integration…but they still depend on farmers. What’s corn been selling (for the farmer) for lately? Isn’t it in the $3.70/bshl range? That’s below input cost…which should ease with declining crude prices. Unless the farmer is owned by one of the big companies, there comes a point where it isn’t worth pulling the tractor out of the barn to sow the commodity crops.

I’ve heard that propane shortages in the upper mid-west delayed a segment of the corn harvest. That’s something of a problem, but the larger problem is that with the corn in the field the farmers were unable to put down the winter fertilizer, which will significantly decrease yield for next season.

I should have been more clear. It isn’t the corporate side of Big Ag that may be in trouble in the not so distant future, but the consumer end. From a horticultural standpoint we’re on a thin wire, high up, with a short balancing pole.

And you forgot how heavily subsidized the grain companies are…

The biggest of the big ag companies like Cargill and Louis Dreyfus remain private, and the public ones like Bunge and Continental remain very closely held. Big ag will always be there, regardless of the food prices. Unless there’s a total, absolute crop failure, there will always be food available thanks to the futures markets. The big farmers, the ones who farm 20-50 sections of land at a time, operate on thin margins, yet remain profitable due to scale. Big ag is well suited to handling all kinds of markets, as they operated during a 25 year bear market in grains and remained profitable. The grain companies like Cargill should be a model of what all companies should be like with their use of thrift, vertical integration, sound business practices, innovation, cost consciousness, and sense of mission.

Jeff

OpenLeft link

(I’d attempt an html link, but with no preview buton, I’m not going to risk it!. Hope the cut and pasted url works).

The government?

Quarterly projections. The Profits of Doom. Swallower of planets. The Profits of Doom.

We bought the ticket, we’re in for one hell of a ride. (Wait till this shit starts happening in big Ag…)