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| The problem is there hasn't been a 'correction' to wash out this 'business model'. Sure it's a stupid way to do business and almost everyone involved gets hurt financially eventually. Until land ownership decides it's a bad idea long term it will probably go on. We've got a guy making his bid to get to the bto ranks and is having some serious difficulty with a bank right now (elevator changed ownership because of it). Certainly the way he farms he won't be maximizing yields, but then again this higher price might buy him new life if he can scrape together the cash to satisfy the bank.
The problems us 'regular farmers' (defined as farmers not actively trying to put others out of business) see is with this practice:
1. Lots of planting done in very poor conditions - new iron doesn't guarantee 200bpa
2. Labor source are usually not farmers - just gettin it done
3. Every year someone doing business with these guys gets the shaft
4. Doesn't appear to be a business - more of a statement of ego (10-20% return on equity would be a business)
5. It would seem any of us pursuing this model would face terrible tragedy at some point - not desirable
6. Contrary to popular belief insurance and gov't payments will not cover the cost of farming this way (they barely would cover mine).
7. The whole aph game of running bushels around eventually results in a conviction (though the gov't is slow to act).
Bottom line there is almost everything at risk with only modest compensation if things go well - what's the point? I'm guessing none of the landowners participating would take similar risks in their own lives, but ol' gorden gecko must have been right 'greed is good'
What I find in good landlords is an understanding that we both have to make money to be successful and that often the business relationship is more important that who gets more money - what are we living for anyway (no uhauls behind hearses). I certainly pay more rent than I ever have and probably will pay more if yields stay decent and prices climb. I'm fairly confident they will back down if things really tank and stay tanked. After all we're in business together.
Thanks,
Pat
Thanks,
Pat
Edited by Pat H 9/25/2010 08:15
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how much will ILL. land rents fall
