I find that K.Y. jelly lube helps a bit!
A bulk tanker delivers here every month!

 

Beat me to it but its true

 

Now if my math serves me right that's $10.60 per bushel, my local elevator today is at $5.92 per bushel!

Could be much worse ..... -- JRI elevator bid today was $4.17 in SW Sask.

 

usally $70 per tonne in costs or around that plus blue freight advantage hence russias price

 

Ok so that's about $2 per bushel, puts us up to $8. There is still over 2.5 dollars missing that someone is getting rich on

 

But, the world has so much wheat.....
May be a good time to get into the grain bin business.

 

Some of that is shipping charges I am sure.... I know the wheat doesn't miracle itself over there.

So Say thats a 1 dollar per bushel. Still a lot missing somewhere. I guess rest of money buying foodstamps for the "poor"

 

Isn't it wonderful that we pay the shipping. Farming is the biggest rip off ever. The only business going that has to pay the shipping on the products we buy and the products we sell.

 

if you really believe that, give Ritchie brothers a call. Land is at record highs and this is a great opportunity to get out of "the biggest rip off ever" and make a killing doing it. Unless you meant that farmers are ripping off everyone else, then it would make sense to stay in it I guess.

 

Some of us never put a whrench on their toys and still like to complain..............

 

You really can't complain... Farmers are a bunch of individuals that won't work together, same as consumers. We all ***** about the prices we pay for inputs and prices we get for product but don't do anything about it. Farming is the most important and influential industry in the world, without agriculture allot of people wouldn't eat. The companies in between the producer and the consumer have it made because they know if one won't supply there are ten that will, same goes for truckers.

 

Allot of truth in there. Farmers in Canada HAD protection from gouging in the form of farmer owned co-ops IE the three pools and UGG but wouldn't support them. It's no coincidence that basis levels have skyrocketed since the last co-op ceased to be "farmer owned" and then ceased to exist all together.

 

And your all suprised, be are forced to buy our inputs from 3-4 companies, and sell our crops to 3-4 companies, who are all owned by 3-4 people. WHat would you expect ..

 

We have all (yes, ALL) the power and the solution is as simple as apple pie. But, I don't want to bore anyone with the details.....

 

Go on, Chris!

 

lol capital gains will bend you over so hard the retirement won't last you that long

 

Most farmers on here could sell one quarter and have more money than most would ever dream of seeing. I love my job, have a great wife and kids, live in a nice house. What more could I want. If we got an extra 2 bucks a bushel we would just bid up rent till the extra profit was gone anyways.

 

Despite what a number of the hippies say about "urban agriculture" it can't happen. If one uses extremely simple math involving square footage of apartments etc, other than that the theory is all skittle ****ting unicorns and ends with holding hands and singing kumbiah.

The realities of this are much different.

For starters the buildings are designed for living and not structurally capable of handling the extra weight created by indoor farming. The same goes for rooftop gardens, you would get buildings collapsing all over the place.

To supply the electricity required to run the grow lights the entire country's electrical infrastructure would have to be completely rebuilt. Think of all the brownouts that occur when there are too many air conditioners running, now multiply that because of the grow light's heat. If this were to take place copper futures would go nuts with all of the new wire needed.

The final nail in the coffin is the water consumption. Most cities are already running their water systems at close to capacity. To supply a large centre with vegetables only there would need to be massive water projects created. I worked out the water use needed for the tomatoes that New York would need in a day and it was staggering. I can't find the numbers right now but it was a 20% or so increase in water use just for tomatoes without any other foods.

Basically it is a nice sounding theory as long as things such as the laws of thermodynamics, biology, and ecology are ignored.

 

The reason I am a little concerned about the direction farm business is heading, can be explained a bit by the following:
Recently an independent analysis was made, on Profitability of Australian farming from 1965 to 2009.
Results are as follows:
Production has increased 150%.
Real costs have increased 100%
Real income has stayed about the same
Real profit has declined by 80%

Australian agriculture is unsubsidised, but I would hazard a guess that that trend is fairly general in western agriculture.

A statement was made that "as productivity gains drove agriculture closer and closer to the margins of productive capacity, it took increasingly smaller shocks to seriously impact on farm performance"
Also that "there was no longer any "fat" in the system and as such, there was no room for mistakes."
We are being encouraged and advised to invest/spend more money on technology, to squeeze that tiny bit extra in production. Why?... the more product we produce, the lower the price for the product. Supply and demand, Right?

Farmers product price (inflation adjusted) continues to decline, as middlemen continue to parasite their inflation adjusted margins.
Farmers are taking on 99% of the risk to produce these goods and the lions share of the cost.

Farmers are increasingly running down their natural resources to make ends meet. Those who have bought farms and therefore have a mortgage will know what that means.
Some of the younger farmers who have inherited a generational property, may have an "I`m alright, Jack" attitude at the moment, but the smugness may well wear off sooner than they think, if the trends from this survey continue unabated. Return on investment IS important, and there are family farms with megabucks tied up in Land assets, Machinery, and the latest technology, producing a very ordinary return on the total investment.

You wouldn`t see any other business types absorbing costs, like farmers have done, over this 44 year survey period.
It`s time that the farm business model was run like any other business, with a price placed on product that reflects risk, return on investment, inflation and fair profit year in year out.
Lynas.

 

Hey Lynas, good post. You've raised some good points. But I'm struggling to come to terms with the analysis. Production increase of 150% I agree, maybe even a little conservative. But Real costs, I assume mean cost of production, would have to have increased by about 500% from the 80s (which is about as far back as I can remember) seed, fert, fuel, machinery etc. Real Income, I assume mean GP, can't possibly be the same (production x 150% - costs x 500%) and finally real profit, well we all agree it's negligible.
Supply and demand, you are dead right. China's productivity declines- iron ore price drops. A cyclone wipes out Innisfail- bananas go through the roof.
But how do we control it? Domestically we are at the hands of Coles and Woolworths, globally we don't even count. We once owned all the concrete silos dotted around the country. If we still owned them we all could store our grain and demand a floor price. But in our wisdom, we sold them.

You wouldn`t see any other business types absorbing costs, like farmers have done, over this 44 year survey period.
Lynas.

Spot on; they realise the business is unviable and they get out. One less supplier, a bit more pressure on demand. The problem we face as farmers is that dirt gets under our fingernails and then into our blood stream and we start making decisions with our hearts and not our heads.
That said, I hope the industry remains viable because I enjoy farming.

 

Lynas you said the Australian farmer is unsubsidised which is true. So if the US has crop insurance and other program's plus dirt cheap labour and machinery then the tread should be American Farmers getting screwed but Aussie farmers are getting screwed even more!

 

There were two boys, grew up on a large wheat farm and later went off to college to get business / ag degrees and then came home to take on as the next generation of the family farm.

One boy got a big loan and some investors to set up an ethanol plant, the other opened a bread bakery in a nearby town. They had had enough of just selling the wheat on a slim margin, but wanted to participate in the big money that comes on the next product level.


Both businesses thrived, the ethanol and the bread went out to the city in semi loads every day. So much so, they needed to buy wheat from the other farmers in the area to keep up with demand.


I leave the story at this point for you to take the next step. Did they buy the wheat at a competitive price to what the grain elevator is paying, or did they toss in another $4 bucks a bushel for those other neighbor farmers, just for fun.

 

No worries. I've done the same many times

 

My gripe is not about fluctuating farm prices. That is normal in business. I accept that. However, the prices we receive should be fluctuating about on a steadily climbing plane...one that keeps pace with inflation. That is the primary point of difference between what has occurred with farming, over how many years and any other business. We are continuously absorbing other businesses inflation adjusted costs, with no way to pass those costs on, because we are at the end of the supply line.

 

Yes but we can still control some of our input costs. Nothing worse than hearing someone complain about $3 corn while paying $450 an acre rent. Everything will always work out in the end. It usually takes a few tough years but once again things will return to more normal levels. Anyone who didn't see this price collapse coming has had their head in the clouds too long.

Nothing has changed as far as us getting screwed either. Even when we were getting $10 wheat they were selling it at the ports for $16.

 

That doesn't make it right. Seems to be a dis connect with farmer price and port price. I'd be curiouse what others in other countries are getting per bushel for comparable wheat and adjusted for exchange rate? I feel this thread is missing the point. Inputs are understandable, I just feel like USA prices are not world competitive and it's not the farmers fault. Also, anyone who thinks as long as a farm has a good manager that they are making great money is not always true. Weather can affect everyone different, and you can't always insure for everything, and just because a country as a whole has a big crop doesn't mean everyone did.

 

This is why banking on the food boom may not be so wise, our PM mr Abetz is under the illusion it will be like the iron pre boom and government coffers will get filled, personally I laugh to myself.

In order to take advantage of the iron ore boom there was some key elements, which u will see none are present in Ag....

There are only 4 main suppliers worldwide

3 of which were Australian, one brazilian.

All of which own there own rail to port infrastructure

1 of which owns its own ships to cart iron ore

3 of which have a heavy influence on there government in Australia

4 of them control 90% of the premium greenfield exploration sites for iron ore world wide, they control expansion on there market.

4 of them responsible for for over 80% of all sea borne iron ore.

None of which have succession problems.

None are effected by ageing community

None are capital restricted

Get the picture....sure we will see some price hikes, then have them negated by fert and chemical...

Ant....

 

Being a young farmer I can say it seems most "success" is fueled by ones own greed. Everyone wants to make the most profit possible, I have had land taken away under my nose last minute by a greedy neighbor before. So it is true farmers themselves are driving rent prices up.

As for the grain handling I've worked at an elevator for 3yrs out if highschool and you'd be amazed what goes on to make the elevator quick money. The prices are lower now because supply is so high. The elevator I haul my wheat with just dropped 1$ a bushel over a week, they buy until they are full, once they need grain again they up the basis.