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| Good points Terry. However, I'm not sure government payments are the big driver for farm size one way or the other. I'm in that just over hobby size at 700 acres (depending on which magazine you read - some think 1500 acres is a hobby). Government payments have certainly helped us considerably and I'm sure help the larger farms as well - especially in tough times. We put up hog barns to avoid fighting to cash rent more ground. Also, not being Morman, I have trouble marrying enough daughters to gain ground as well.
Certainly machinery improvements allow one guy to do what 10 did before, but the economies of scale start running out in the 1500-2000 acre range - there still has to be a tractor on that ground at close the right time in the spring and there isn't a 100 acre/hour combine available (yet). So, it still takes more machinery to farm more ground.
That being said, I think the real culprit in farm consolidation is profit margin and risk adversity. Farming is no longer a find a program that works and stick with it - you are constantly evaluating methods and programs (seed, chemical, fertilizer, financial, etc) to maintain profitability. With continually higher input costs the margins are getting tighter (especially if the promised large yield does not materialize). Also, to grow we face rental agreements that put more and more risk on the producer (higher rents, less than 50/50 leases, etc). So, faced with more 'pencil work', tighter margins and higher risk the type of person willing to farm has changed from the "I can't do anything else, so I'll farm" to "If I play my cards right I might get to farm". Many of the more mature farm operations have little debt and sufficient capital to weather most of the problems that come up, but don't necessarily have a next generation willing to step in (plus much of the accumulated capital is supposed to pay for retirement).
Therefore, some highly risk 'insensitive' folks find opportunity in low profit/high risk and go for it. They tend to be a different set of folks every few years, so I don't see it as how farming will be long term. I don't see us all trying to farm 20K acres, but most will grow or have other enterprises and all will of us will have to deal with more risk (and maybe less fun?) no matter what the government program is.
On a side note, the concept of farming everything at any cost doesn't make much sense to me even if you get your picture on a magazine. I don't think any farm program can support a fully leveraged day trading approach to farming either. We will all have to deal with more risk (or pay a lot for someone else to take our risk), but I don't think we will be required to go the extreme that some do.
My 2 cents,
Pat | |
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- rent, economies of size, and government payments - tkastens : 8/18/2007 01:11
- RE: rent, economies of size, and government payments - coup : 8/18/2007 08:07
- Economics of size. - Hay Wilson in TX : 8/18/2007 08:39
- RE: rent, economies of size, and government payments - Pat H : 8/18/2007 08:57
- Re: rent, economies of size, and government payments - Pofarmer : 8/18/2007 09:57
- RE: rent, economies of size, and government payments - Cliff SEIA : 8/18/2007 12:55
- Re: rent, economies of size, and government payments - Steve in SD : 8/18/2007 15:20
- Re: rent, economies of size, and government payments - paul the original : 8/18/2007 16:02
- How dare you tell the king he is naked..... - John Burns : 8/18/2007 18:12
- Re: rent, economies of size, and government payments - Steve in SD : 8/18/2007 21:05
- Re: rent, economies of size, and government payments - Steve in SD : 8/19/2007 09:45
- RE: Sorry Terry I meant you not Ted, don't know where I got Ted - Steve in SD : 8/19/2007 10:06
- Re: rent, economies of size, and government payments - tkastens : 8/20/2007 08:18
- Re: Thank you administrators - plowboy : 8/28/2007 21:46
- Ditto,,,,,,,,,,,,,,,,,, - eddiedry : 8/28/2007 22:07
- Re: rent, economies of size, and government payments - wheat farmer : 8/28/2007 22:24
- Re: rent, economies of size, and government payments - Steve in SD : 8/30/2007 19:11
- Rent vs own - Les NCKS : 8/19/2007 10:10
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rent, economies of size, and government payments
