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College economics and the grain markets.
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plowboy
Posted 4/3/2010 16:47 (#1148551 - in reply to #1148508)
Subject: Re: College economics and the grain markets.



Brazilton KS

It is pretty simple really.   Talking long-run here.   Any profit in an enterprise will be capitalized into the value of whatever scarce resource limits production.   In farming, generally speaking this is perceived to be farm land. If the value of the production goes up, the price of land will go up.  If the value of the production goes down, the price of land will go down.   In a shorter-run view, fertilizer can be considered a limiting factor, and it can receive capitalization of profit, as we saw on occasion the last few years. 

If we could ever get it to the point where the farm management was the limiting factor, then we (managers) would be able to make some profits, but as long as there are capable people interested in entering the business,  that's simply not going to happen...we are going to have to earn our money.

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