EC SoDak | Joe Junior - 8/25/2024 13:58
I have no quarrel with you, just playing devil's advocate. I am a farm owner. Why do you price other imputs and then see what you can pay me? Why don't you get my price and have your other suppliers cut their price to make it work? Do you have that little of respect for me? You want me to come down in price so you can afford the other costs even if they go up. Kind of looks like you want me to pay the increases instead of you.
My above post is far from a whole synopsis, if you read some of my replies below, it adds a little more. Not sure if you read those… It’s also a bit of a case by case basis, but I’ll do my best on how I handle big declining markets and you’ll probably see I’m far from putting it all on the landlord. This is certainly an easier conversation on a phone or in person vs typing in a phone, which we can do you if you would like. Feel free to ask more questions as well.
As with any business, you have to look at all avenues of costs and then work them into likely sales/production. This requires looking at inputs, land, yourself, etc. Inputs are a bit easier in the sense you can get quotes and apply some pressure. If you read my other replies, you’ll notice on the seed side, I’m willing to do the full gamut, conventional to SmartStax, generally I go to the lower cost option unless the ground calls for higher trait and I have to be willing to shop around a bit, I’ve personally already called 6 different seed guys from various companies to beat source seed. On the chemical end, I shop around every year for the best priced source, generally around 4 sources. Although none have been able to consistently beat the supplier and agronomy of the one I’ve always used. I run my own sprayer, so I’m able to really drill these costs down and am not afraid of good generics vs name brand when available. Fertilizer is a traded commodity, so the best you can do is call around to find the best price, I’ve called 4 sources this year, but prices will go up from last year. Not much I can do there other than wait and hope spring prices are lower, but hope isn’t a business tactic IMHO. Equipment can get out of hand quick when folks are buying to help with taxes, so it’s prudent to keep an eye on those line items. Personally, in the last 7 years, I’ve only bought one piece of equipment and the reason I did was because of the 4 year drought so I wanted to handle tillage/moisture conservation better.
Living expenses on the farmer’s end are important as well. That is very person specific, so that’s up to the landlord to decide if the farmer lived too high on the hog. I personally haven’t increased my lifestyle all that much other than inflationary increases in my day to day living. Ie: still drive the same old vehicles, didn’t put up an expensive shop, live in a 70 year old house that I haven’t remodeled, no big vacations, etc.
The other big expense in farming is rent, which tends to be the biggest expense and fluctuating target. This one can be very location and situation dependent. For instance, during the price run up, in my area has been in drought for the most part and unfortunately farmers are more willing than ever to travel. So, folks where it’s rained, had a crop, and could sell at a good price call searching for more ground offering high introductory prices. Now, I have good landlords I’ve had for years and year, they have kept with me and cut me some breaks on increases vs what they were offered. However, that’s not to say those weren’t my biggest increases during these high price times. So, naturally, if land rents increased the most when the grain markets went up, that is the cost that should decrease the most when grain markets tank. Personally, I focus on keeping costs in check and put a ton of emphasis on grain marketing, so I can pay the aggressive rents that you have to pay here to farm. In my area, it’s all big farms that do all the input cost controls, so much of the excess money goes into rents and/or land purchase. Meaning, very sharp pencils. I’ve spoken with enough folks from south, SW, and other areas of MN on here and other forms of communication that maybe they’ll reply to this, but they’re typically very surprised how expensive land is for its production vs their area. It’s just very aggressive here if you want to farm…. I don’t know your area, ground quality, etc. Maybe you have not received the increases others have received the last few years? I’m about to buy a couple drop decks and expand my territory. I think I could do well with more consistent ground at $100 less and acre…
As I said, feel free to ask questions or email, this isn’t the best mode of communication to explain something so detailed.
Edited by SoDak Farms 8/25/2024 15:53
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Pioneer’s Iowa State/County Yield Estimate
