white shadow - 2/10/2024 10:57

I like the stuff Dr. Michael Swanson from Wells Fargo puts out. Got to listen to him yesterday at an Agtegra event. You don't have to have a Doctorate in economics to realize the next 3-4 years will be different/harder from the last 3-4 years. Almost everything in life breathes in cycles, including markets. History does and will repeat itself.

I posted on this a few weeks ago. CRP is going to take acres out of production. This is simply a given. Most of these acres will be in the tier of states from Texas to North Dakota-----just like last time. Corn belt might see some specialized continuous CRP practices signed up, but the soil is just too good and their coefficient of variability to production is just too low.

In the late 90's and early 2000's I went and listened to Dr. Swanson. At that time, he said 60 percent of your ground will make money every year, 20 percent of your ground will break even, and 20 percent of your ground will lose money. His thesis at that time was to identify that 20 percent that loses money every year and do something different with it. High prices and technology has moved the 60-20-20 to different break downs, maybe 80-10-10 but the core of the argument is the same-----most people have acres that lose money every year. At that time, I put about 800 acres of my worst ground in CRP and added value by starting a hunting lodge and we managed very well through some tougher times. I started breaking it all up in 2009 and currently we are farming even more than fence row to fence row because we tore out all our fences and maybe edged into the right of way in a few spots. LOL

Today after farming most of this old CRP ground for 10 years or more we are starting to see a few spots where it is becoming very obvious why we put those spots in CRP 20 years ago. We lose money on these spots every year. At 6-dollar corn and 14-dollar soybeans we are going to roll the dice and farm through these spots. At 3-dollar corn and 10-dollar beans this will change for a lot of folks. Plus, rising input costs push the ratio of 80-10-10 back towards 60-20-20.

When I participated in CRP last go around, rental rates were $45-55/acre. Now rates of $145 to $165 are common and even more than that east of me. I don't see the big general sign ups happening and right fully so, but I can see a lot of different continuous signups happening that try to address specific issues like salinity. If current prices extend into a 3–4-year period I believe we will see increased CRP signups. The math is just too obvious. Myself, I might sit this round out, and just farm, but then again, I do like mathematics; especially when attached to the dollar sign. Hunting every day for 3 months is definitely, without a doubt, off the table---never worked so hard in all my life and I have lost my tolerance of people doing stupid things as I have aged. LOL