Combines Your thoughts on 2006

[AGCOfan]

I don't see it getting any better. Even if prices improve, income still won't be as good as it should with seed, fuel and fertilizer too high. Way too high. lots of auctions up here in S.W. Ontario and I don't see it stopping. lotta old timers getting out and young guys can't afford to buy it so they rent the land for $200+ ac. Take care, Nathan

 

[IowaDan]

At $200 plus per acre, they are buying the land but not getting the deed.

 

[Silver_Bullet]

...."buying the land but not getting the deed", I agree, doesn't make sense. Paying high rents then wondering why farming doesn't pay and quitting. I'm seeing quite a bit of it here. We need to quit beating each other up. I cash rent rent some ground but I don't get into a bidding war to have it. It's either got to work for me with a reasonable crop expectation or I'm not interested. Back to the original question. This year will be tough. Some signals on the horizon a year or so away that fertilizer cost will be down some from todays prices. Hopefully fuel prices will stabilize but I think we have to be prepared for spikes in prices due to problems with supply once in awhile. And, grain prices go in cycles, they won't stay this low forever.

 

[nsixer]

Its not just the cost of rent, the cost of machinery is also out of line for what we can make. A $350,000 machine and accessories for one operation (combine)is hard to justify just by itself. (But - we buy it cause our neighbor did). I was just in to my banker on last Friday. He said the common operating loan is for $350,000 with the farmer only showing $400,000 gross in the financial plan. (But, we still make the loan cause we can't lose face and quit). He said many of his large operators are leveraged to the max and are just riding the snowball acting like hot shots until they fall off. Of course, filing bankruptcy has worked for some of those farmers and they come back bigger and better.(Cause they know the system) The banks have so much sunk into them that they can't afford to fold them so they write off a couple million. These guys are the ones causing our high cash rent and land prices. Our mid-sized area farmers are hurting from 10 years of wet weather -but we still get a crop. (So we still farm) If we ever get a drought or the wet weather continues - some of our insurance yields are getting so low enough that they provide minimal protection and we lose prevented planting acres. (they have become wetlands) Every year we have to hope (pray and expect)a disaster payment follows. Meanwhile, we just need interest rates to go up too. ( Make everyone happy)We are our own worst enemies. We buy all the fertilizer and fancy high yielding varieties and they continue to produce more each year lessening our chance for ever gaining a better price. (Because we have to)Of course, farmers would never stand together and boycott one growing season - and this one would be a good one to do it. (However, importing grain may be cheaper or we can pass on the cost to consumers)Some farmers would lose less money just paying the cash rents than farming it. But-someone would always try to take care of themselves. Now I whine, my dad whined, and my grandpa whined, - but we never do anything about our situation.

 

[tooleman]

I agree. I've said for years that if we all parked our equipment just one year it would make a big difference. And if the bank wanted to foreclose on my junky equipment, I'll be happy to deliever to his front parking lot. If others would join, I believe this would have a greater impact than the tractorcades of the '70s. Especially, when the bank employees and customers had no where to park.

 

[tooleman]

Our rent prices are not that high, but my dad has always said we could take northern land and use it as fertilizer. What is hurting us in Northwest Florida (Jackson County) is the migration of South and Central Florida. I've heard those guys (cattle and citrus farmers) are selling their land for $50,000 to $100,000 per acre and buying ours for up to $10,000_acre. It helps property appraisals, but locals can't even think about buying land.

 

[AGCOfan]

Basically ya. They've even rented and still rent ground for $275_ac and grow corn, soys and wheat. Try to pencil that out. They signed a 3 year rent agreement with a guy for 1000ac, can't remember what they pay an acre but they havn't payed the last 2 years. Way I figure it all that land will be available in a few years anyways. Take care, Nathan

 

[R_O_M]

A view from down under! I am quite astonished at the prices American farmers pay for leased land. In south eastern Australia we are paying around the $45aud to around $80aud [ $35us to $60us ] per acre of dryland grain growing country. Even with these prices we, like you, are not making much money out of leased land. Our problems are compounded by a 10 year run of semi drought and full on drought conditions in this area. We have not reached our average yearly rainfall totals for the last 10 years. Having been across most of the northern Great Plains of the USA, I saw the richness of the country and can understand the enormous grain production potential of the USA. like you, we, in Australia are asking, is there any future for usIJ Nobody wants to pay for food! In fact we are our own worst enemies! We, as farmers are so good at what we do that we actually grow enough food to feed 10 billion people, providing they were all vegetarian, or half again as many people as the planet's current population. We are also our own worst enemies! Every time there is an improvement in farm prices we try to out bid our neighbours for any land that may be available or we buy the latest fanciest machinery. There is hope on the horizion. There are a number of factors such as energy supplies, the world wide depletion of the world's major aquifiers used for irrigation water and a very strong possibility of significant breakdowns in the very vulnerable "just in time" supply chains that all of the worlds local and international food distribution systems now rely on. I do not have room to elaborate on other potential prtoblems here, but by the middle of the next decade there could be some very serious factors arising that may and I believe will, lead to world food supply problems and rapidly rising demand and prices for farmers. Another indicator is a study done in 1947 which indicated that over the last few hundred years there is an approximate cycle of 54 years in the prices of commodities. The study was done on wheat prices. It forecast that the bottom prices for wheat of this cycle would be around 2006 with a sustained rise in prices until around 2033. As one of our Canadian friends posted on this site a few days ago, we all live in "Next years" country. Cheers.

 

[ksfarmer1]

The thing I can't figure out is what ever happened to 1_3- 2_3 rent. This is the only way we will do it on our farm. I believe that those in my area that started the whole cash rent thing have really hurt the rest of us. But, we did pick up 320 acres in the last few months doing things the old fashioned way. Not sure how anyone can pay $200_acre plus 100% fertilizer and spray bills and make any money, but guess it must be working for some.

 

[Illinois_Gleaner]

AMEN !!!!!!! I farm 1700 acres all on shares.And I cant make money on that. Illinois Gleaner