Land prices.

Part of the land inflation is the grain farmers can’t lose. With insurance and farm programs you will not see farms lost. Case in point, we here about input costs and you see 3.50 bushel corn, yet the large combines are being purchased. Don’t take this as me being not in favor of the farmer, because I am. With land prices that high they can’t afford to leave habitat, thus it’s fence row to fence row. Thanks Washington DC. The concept of we have to feed the world is a bill of goods we are being sold and all of us are paying it. Also very rare you see a farmer pay taxes…. If you want to hunt their land don’t bring these points up (LOL)
 
Well I can’t comment about land cost in the lower 48 I have just noticed something of interest. Traveling through northern Alberta where they grow a lot of wheat I see massive areas where they are clearing forests to make wheat fields. I mean the amount of effort, time and money being put in boggles my mind. There must be money in wheat farming to make that happen. I also remember seeing some place that north central South Dakota used to produce more wheat than anyplace else in the US. Crops are changing due to genetic modification and also climate change, but farmers are still making money. Maybe not every year but in the long run, so land will probably not ever get cheaper and CRP is a tough sell to farmers.
 
Drake1 said:
Also very rare you see a farmer pay taxes…. I
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Drake1 said:
Grain farmers can't lose
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Not sure where you get that information. We pay federal, state, local income taxes, property taxes, fuel, sales, county road taxes, plus dozens of taxes disguised as fees " Basically whatever the politicians can come up with to separate us from our money.

Far as grain farmers can't lose..... in my area in South Dakota there have been 3 forced sales. Yes, there are many programs that are designed to help farmers keep going, which in turn keep other businesses going. Equipment is purchased to upgrade/replace worn out pieces and to reduce tax load. No different than a dentist buying a new dental chair.
But in the end, it is a business just like any other. Income needs to exceed expenses.
 
Alaskan swamp collies said:
Well I can’t comment about land cost in the lower 48 I have just noticed something of interest. Traveling through northern Alberta where they grow a lot of wheat I see massive areas where they are clearing forests to make wheat fields. I mean the amount of effort, time and money being put in boggles my mind. There must be money in wheat farming to make that happen. I also remember seeing some place that north central South Dakota used to produce more wheat than anyplace else in the US. Crops are changing due to genetic modification and also climate change, but farmers are still making money. Maybe not every year but in the long run, so land will probably not ever get cheaper and CRP is a tough sell to farmers.
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I saw a ton of wheat in western Kansas enough so that it made me google wheat acreages. Down from 10 years ago but consistent with recent years. Sure seamed like a lot must have been a regional thing
 
Quick question, good farm ground in Iowa is going for what 15-20K per acre (maybe that’s low) remy3424 could tell us. What price does corn/beans need to be at to make that number work? And what about the years of drought, hail etc.,? I get there is insurance, but How long does it take to payoff that land payment?
 
Just frustrated what I see going on, high land prices kick out the small family farms and going the way of corporate, which in turn has a direct impact on quality habitat.
 
Drake1 said:
Just frustrated what I see going on, high land prices kick out the small family farms and going the way of corporate, which in turn has a direct impact on quality habitat.
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I've been watching this scenario unfold for so long I'm sick of bitching about it (well obviously not). Here's just one scenario; Farmer wants his kids to have a better life. Sends them to college. One son stays and works the land with his dad. Flash forward 30 years. Father dies leaves the farm to all the kids. The kids who only see the farm only when they come home for the holidays, wants their share. Son can't afford to buy them out. Son winds up with a few acers and the house. Corporate farmers buy the rest and within days the dozers move in. In a couple days what was once diverse habitat teaming with game and non-game species is now a biological wasteland. I have deep roots in southern Indiana. If not for those I would be a long way from row crop farming. You guys who farm do not need to respond. I understand the other side of the coin, and I do not have the answer. I'm just sad about it.
 
Drake1 said:
Quick question, good farm ground in Iowa is going for what 15-20K per acre (maybe that’s low) remy3424 could tell us. What price does corn/beans need to be at to make that number work? And what about the years of drought, hail etc.,? I get there is insurance, but How long does it take to payoff that land payment?
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Break even crop prices will vary from farm to farm. It depends on debt load, overhead costs, machinery costs, efficiency level, input cost, own or rent the land, plus a myriad of other factors. Insurance usually only allows you to play the game next year. Land payments/payoff will also vary too, kind of like buying a house. All cash, 20-30 percent down. 15 -25-year note, rent to own. etc.,,,,. When you hear the ag gurus say it takes 5-dollar corn, 12-dollar beans to break even, that is just their best guess based on a average farm. But what is average?
 
The ground selling today can't pay for itself, you need to have some free & clear ground (or at least all your acres can't be highly leveraged), you will likely have a 30-year note term, if you want to cash-flow and if you financed it, your banker will need to see you can have a positive cash-flow. The range for IA ground Drake gave ($15-20K) will catch the majority, $10-25K would get 90% of it currently I will guess. The breakeven prices as WDH says in the his last post is spot on. "Off the farm spending" (how well the guy lives) vary so much between farmer, some need much better prices for just that. The last years insurance revenue target prices were high, which really helped the locals guys around me (south of me) that suffered from the on-going intense drought. It seems like most months there are 3-4 farms selling around me...not forced sales currently, estate sales. As stated somewhere earlier, when folks are spending big money on ground, they want it as productive as possible....bye-bye to any trees and non-essential buildings, tiling waterway and no habitat will be left. This will get worse before it gets better here. If we can't get some more ground protected long term, there will be little bird hunting to be had in Iowa in my area. If landowners aren't sportsman/hunters (retired is also helpful), they likely aren't interested in CRP.
 
Farmer here and in the trenches. One thing y’all ain’t mentioned in all your farming knowledge is urban sprawl. When you have 2-3 different buyers at a farm auction who just sold their own farm on the edge of a city or town for 130k/A…local yokels just can't compete. Feller here had a farm right outside town going towards the freeway. Some corporation offered 80k. Talked with the wife, and a sure goodun she is, she said well hell throw 130k at em and see what they say. They said sold. He’s now lookin for new dirt. Think you’re gonna win an auction against that guy?
 
He is just a displaced local yokel himself, looking to keep farming. His new farm is going to be bigger than the old one I am guessing!
 
There is so much unsaid or misstated in SOME of the above posts that I just don't know where to start. WDH, Remy and Tomahawker come closest to getting it right. Anybody who thinks that farming is a gold mine is very sadly misinformed. This big equipment that some think is bought by rich farmers ? A lot of it is financed. Combines on some of the biggest operations can cost anywhere from $500,000 to upwards of $1 million. This machinery DEPRECIATES---and for farmers to keep their landlords happy (planting, harvesting, etc. on time) the farmer must continue to maintain and replace it--whcih costs money!! How would YOU like to buy a Deere combine (used) at $500,000, finance 70% of it--let's see, thats $350,000---pay it off over 5 years at 7% with annual payments being $85,361.18/year...and the payment comes due whether you harvested 130 bu. corn/acre or 230 bu. /acre---and whether you got $6.00/bu. or $3.75/bu. and believe me, it makes a hell of a lot of difference--and that's just payment on ONE machine!! Not to mention the operating money you borrowed for seed, fertilizer, insecticide, fungicide, fuel, repairs etc. And we haven't discussed land mortgage payments or cash rent payments yet. And the farmer has NO control over weather and Government regulations that are always changing and very little control over crop prices because he raises a COMMODITY - #2 yellow shell corn or soybeans so he can't differentiate his crop from the next guy's---that makes him a PRICE TAKER, not a price maker. I worked for FARM Credit from 1974-1985, and was an ag lender /Bank President from 1986-2014. I've counseled farmers, cried with them , been loved and hated by them. I've seen the financial statements, income statements and cash flows in the great years and the downright despicable years---and I know. In many ways it's a racket and certainly NOT a gravy train. But I would rather loan to farmers than make retail loans on washers and dryers and used cars! Don't get me started.....
 
Think one of my farmer friends who I talk with routinely told me corn had recently broken through $4…was double that not that long ago, which served to set cash rental rates, land prices, etc. Tough stuff…lots of decisions on a very regular basis. I couldn’t do it.
 
Bob Peters said:
Don't most farmers now have a job and farm on the side. Or maybe the wife works a full time gig?
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Not sure most would be the term but as with any demographic there is a wide range of different scenarios from true hobby farmers to full time farming and every arrangement in between.
 
Bob Peters said:
Don't most farmers now have a job and farm on the side. Or maybe the wife works a full time gig?
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The wife working is a high likelihood, but in our region the small hobby farmer is disappearing quickly. The big guys swallow them up. The few hundred acre guy can't buy inputs at a price where they can compete on rent. And Mama Deere and these equipment prices force these guys to grow to spread their equipment costs. There will be about 10 guys that will farm 90% of the acres in our region within the next 10 years, maybe 5.
 
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A lot of times the wife works for the health insurance, not to mention the extra income. The #’s that a farmer contends with are astronomical…starting with the land. If you’re not born into it, hard to imagine making a go of it. The farm family I’m closest to farms ground that the deceased grandpa inherited, and, bought starting at $25/acre in the late 40’s…he continued to acquire more in the next few decades. The grandson, in his early 30’s, is now acquiring land at a $1,000,000/quarter...land they had been renting, but now was being sold…they don’t like “losing” ground that they had been farming for decades. A few years ago I drove him to town to pick up a vehicle at the shop…he also had a meeting with a lawyer to draft a will…I told him that was smart, since he was already a millionaire…he looked at me like I was an alien…I reminded him he already owned 320 acres, thanks to Grandpa, and at the time land was over 4k/acre…
 
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