BBBean wrote in regards to a perceived 2% decline in grain harvests:
> I believe you've been sold a bill of goods!
I promised not to spout off any more, honest I did. BBBean, if
anybody should know, it's you. Please tell us how that 2% decline
has been affecting your business?
I know that around here in New France, we're swimming in corn and
beans. There are record sized covered piles that have yet to be
touched. The agribusinessmen around here are happy to see the
increased demand from biodeisel and ethanol because corn/bean prices
have been stuck at record low prices forever. You can't afford to
farm at $1.80 a bushel.
People use the nationwide average per-acre (or sometimes if they are
more honest, the stateside numbers) to determine whether or not the
world will starve because of ethanol. This per-acre average is so
misleading because it takes into account losses due to flood,
drought, hail, wind, sometimes setback, and of course total
farm-mismanagement. When the average farm in my area is clearing
240+ per acre (and some close to 300 with an occasional farm another
100 higher), I can't understand how the nationwide average of 140 is
acceptable. That means that for every farm getting 240, somebody is
getting only 40. Huh? What that tells me is that those farmers
either have the intelligence of a mushroom or there is some
numberbending going on. For example, if I plant corn but chop it all
up for sileage, is my yield properly reported in the average numbers?
Frankly, our farmers can and do match whatever demand is out there.
If the prices of corn and beans went up high enough, we can easily
raise that 140 per acre average to 200 without breaking a sweat. In
some places it would only mean fertilizing, changing hybrids, buying
a new planter, putting in draintiles, contours, irrigating or
spraying for critters. At $1.80 per bushel there is little incentive
for extensive land improvements. It is estimated that a new planter
can increase yields by up to 100 bushel per acre. Great, terrific,
let's do it. Right? At $100,000 for that planter it's hard to
justify it as the purchase would eat up 500 acres of profit gain.
Raise that per bushel average by $1.00 and the ROI drops down to 360
acres. A $2.00 increase gives a break-even of 260 acres.
Nobody will starve unless prices remain artificially low. At $1.80
per acre you can't even afford the diesel. It's far more profitable
to turn that top-grade acreage into a subdivision.
AG
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