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Winter wheat.

G

GordoSD

Well-known Member
Based on several weather models for 2017 I planted some winter wheat last Sep. Combined it yesterday and got 67BPA. About the best in the county.
Deducting input costs , custom labor, At todays prices I have a net profit of $204 per acre. Probably more if I bin it in the middle of this drought. That includes ALL costs and taxes. Land is paid for. Triple digit temp today, lowest rainfall totals in 20 years and the corn and beans are pretty toasted.
 
Neighbor recently harvested his winter wheat and in 3 days planted beans. Next year he will plant corn. Then plant winter wheat as soon after corn is harvested.
 
We are a tas too far north and west to do that. And right now there is zero moisture in the soil.
 
Here is my wheat. Where is yoursI leave the straw for N and helping the clay soil retain moisture. And the deer eat it in a bad winter. Send me the name and address of them that can't make money on wheat./ Maybe I can help them? Small consulting fee. LOL
 
Where are you, Gordo? I don't think we've had any measurable rain in over two weeks (I've been gone, wife can't remember any, but the only grass growing is in the shade). Still looks better than West River. Neighbor's beans look pretty good and corn on good ground is doing ok. We had a wet May and one good week of rain in early June.

Glad the wheat worked out for you.
 
Found you on "the map". I drove past you Friday on the way home. Saw lots of hay being cut south and west (Winner).
 
I don't know how some wheat farmers in the dry land areas make ends meet even with very low rent. Ten years ago or so We harvested
3-5 bushel wheat in Idaho in the mountains at about 7000 feet elevation. I kept pushing dirt with the head trying to cut that short stuff. The farmer was paying $10 per acre at the time but he was going to give it up because the landlord (native reservation) wanted to raise the rent to $13. This land also included grazing so I have a hunch he rented the land for the grazing but had to take the wheat acres too.
 
I am close to Mt Vernon N Of 90,1/2 inch of rain in July 1 inch in June. I planted corn late 1 May, big mistake. and looked at it today. It is cooked, won't do 70 bushel If this heat keeps up maybe 20 Bust. Earlage.
Hay crop is excellent But there won't be 1/2 T per acre second cut. Not worth the fuel
 
gordosd: I am glad you had a pretty good wheat crop. Just one thing. Your "profit" seems to not include any land cost other than taxes. So that is not really the total profit form the crop. You have income form the land included. So what would be an average rent in your area??? The $204 less the rent would be the true profit on the wheat crop.

I know kind of splitting hairs. It just is a touchy subject with me. A older local farmer in the 1980s, would brag around at the coffee shops of how he did not understand why the farmers where saying times where hard. He would say he made so and so on his corn crop. I confronted him on it. He did not count the land or his equipment as having any cost. He just took seed, fertilizer, fuel and chemicals as his cost per acre of crop. He was quoting making $100-150 and acre. So with the average rent being $100 at the time his numbers where not off other then he did not include all his costs. So the farmers that included land and equipment cost you where breaking even to loosing money. How it effected me and other area farmers is several of our landlords took this fool's numbers as gospel and kept pushing our rents up.
 
Gordo it is the land cost that makes the difference. Rents here are averaging $300 an acre. Top rents are still $500. So even with 100 BPA wheat and a $5 price you can not grow wheat here and make any money. An actual local price on wheat is around $4.50 if you can even find a market here. I know of one farmer that grows wheat. He wants/needs the straw for bedding.
 
JD, you can't have your cake and eat it too. You are correct that I could rent that land, probably for $200. So by your logic I made $4 per acre. But like Sinatra said, I did it my way, And the renter would be on his own to make a profit. BUT___ What damage would he do? What problems would I have? Would I like to look out the window and watch what was happening? Then I might "walk his beans" and see amess I couldn't tolerate.
I'm only 77 yrs old. What can go wrong? LOL
At this stage in life the $ are really secondary.
 
Actually I did not include "equipment costs" Todays methods of leasing amd trading the equipment costs are a neutral plus not a minus. Taxpayers make up the difference,
If you equipment is costing you money you need a new CPA.
 
gordo You made money by owning the land not growing the crop is my point. I am glad you own your ground and are able to farm it. That is GREAT. Glad you made some money. Just think about how non farming people will look at your statement.

I do not understand what your talking about with the having your cake and eating it statement. I would guess your talking about land ownership and renting. If you where younger and making a land payment or paying rent on that ground you would not be making much money. You would be building future assets but could very easily have a negative cash flow.
 
Gordo equipment costs money. Tax deductions do not make payments. You still have to earn the money some where to pay for the equipment.

So your costs did not include a cost for planting or harvesting your wheat?? How about fuel?? Your doing kind of the same thing the other fellow did years ago. Your quoting a profit that is not "real". It does not include all costs.

Are you going to say the same thing as the other fellow??? "He said he owned the ground any way and since his equipment was paid for it did not cost him anything." LOL To a fellow struggling to pay for his old cheap equipment and make his land payments, that statement was not warmly welcomed.

Gordo I am not trying to pick on you. I just know that few farmers in SD are going to make much this year. The dry weather coupled with crop prices are going make for tough going for many.

I really watch what I post about farm finances/acres/crops/rents because unless you have the knowledge of the entire business it is easy to give people the wrong impression. Farming in general is a low margin high capital business. So you can easily handle large sums of money and not make a dime.
 
JD, no one can push the rents up past money making stage very long or they will soon break all the potential renters, I would not pursue any venture that did not at least pencil out. I don't follow your logic regarding the land cost, what advantage is there in calculating the rent you could have charged? Whether you generate dollars from rent income or crop profit it's all taxable.
 
Sorry I meant to say the only way I can make money on wheat is the straw. I get more for a bale of straw than a bushel of wheat. As for the straw containing N a ton of straw has between 5 and 10 pounds , now it does have around 25 pounds of potash a ton. By removing a ton of straw it cost around $15 in fertilizer so 3 bales of straw! The growing conditions in the Midwest are a lot of different than yours and there's a lot more money in corn around here.
 
Gordo, it's great that you made 204 an acre, but I'm with JDSeller on this. It's really not a fair number if you didn't include the cost of the land and equipment. I get that you cleared 204, but that's with zero land cost. Very few guys have zero land cost. I just don't like that people reading this will say to themselves, "Wow, I know a guy that farms 10000 acres, he's profiting over 2 million dollars." It's just not true. He may only be making $10/acre because of his 175 rent and equipment costs. As far as equipment costing nothing, I don't know who put that idea in your head, but again, it's not true. Even the guys getting Multi unit discounts have equipment costs. If they buy a combine for around 500000, harvest 10000 acres each year for 2 years, and trade the combine for 150000 difference on a new one, it still cost them 7.50 an acre without any maintenance and no breakdowns or repairs (once out of warranty)
 
JDseller, I understand struggling to paying for agricultural land because I have done it. I have been on both sides, as young farmer struggling to eek out a living with owned and rented ground and now just a (paid for) land owner who doesn't farm a lick. I do operate my farm as a business and have a cash rent tenant. You would seem to be saying that a person who owns land free and clear must attach a cost of ownership above taxes, insurance, maintenance and other real costs in fairness to those who do not own land or did I misunderstand what you said? My paid for farm does in deed cost me money each year, a LOT of money actually but still far short of what it cost me each year when I was paying for it and FAR FAR short of what it would cost of purchased today. I am of course talking cash flow here not making or losing money. In my case what others pay to a lender goes in my bank accounts, same with my paid for equipment that I use to maintain the place outside of repairs and fuel. Sometimes I think that making money, loosing money and cash flows gets talked about one and they same when they indeed are very different things. I am not trying to pick a fight either, just curious about your line of thought. At current land and crop prices around here land cannot be purchased and have a positive cash flow via farming it nor can it cash flow if cash rented. I am also pretty certain that it doesn't make money when a person takes into account gaining equity but that is an educated guess. Only thing I am certain of is that at current cash rents a person can own tillable land and it not only cash flows, it makes money, at leat the IRS seems to think so when I pay my taxes, LOL
 
My costs did include everything from cradle to grave . But no depreciation of equipment as I paid custom rates to neighbor for field work.
 
In my area of $75-125 cash rent it takes around 60 bushels to break even..Several that I have talked
to said their wheat was making 50-65 bushels per acre..Its been wet here and lots of the wheat
fields are rutted up....We had a 3" rain on July 4th...Everyone hopes to get 30 bushel double crop
soybeans..Only about 10% of the double crop beans are planted but by mid week it will dry up to where
the rest of the beans can get planted....A few still have early beans to plant..In 2015 it was wet and some
planted beans the last week of July....We had a late freeze and the beans made up to 30 bushels per acre..
 
Hi again JD, If I had read this reply before posting above I would not have written the other reply. I see now that you split hairs that some do not split when you say we must differentiate making money on owning land vs making money growing crops. When I actively farmed the farm was the farm in it's entirety, we didnt have a "company" that owned the land and another that farmed it, making or losing in our case was determined by looking at the entire crop operation. Obviously a person must have land if he is going to crop farm. In my case the decision to buy or lease land was determined by cutting the hair you speak of. In my active farming days what we owned had to be supplemented by rented ground because even back then you could not purchase farm ground and expect to pay for it and the equipment to farm it and make a living. The rented ground provided the extra income to purchase the ground we owned and buy groceries. I guess we are saying that same thing, you just make more divisions in the operation than I ever did.
 
I'm absolutely not trying to pick on you at all, but I have farmed wheat for many years, all my life if you include my Dad's wheat, and somehow your numbers aren't right. There's no way you could have netted over $200 an acre, unless the custom farming was done for free.
I am thinking along the lines of HRWW. You may be growing something different, or have a specialty crop in which case you certainly may have netted north of $200 and acre. If so, that was a good lick for wheat. Bob
 
LAA IF you could rent land out for $350 an acre and you farm it and only clear $200 you lost $150 an acre by farming it. So I think if your going to treat your farm like a true business you have land cost. If you own it free an clear, rent it, or are making payments there is a cost/value of the land.

In the 1980s the landlords drove many farmers off land chasing higher rents or trying to maintain high rents. It took awhile until they seemed to run out of suckers that would try the impossible, farming ground that cost you money per acre to do so. The response of some landlords was effected by fellows telling them untrue profits on owned ground. Also banks really caped the amounts they will loan on rents. They have to cash flow now.

In the original post Gordo says he made $204 per acre on his wheat crop. Well he did not have any equipment cost or land cost in his figures. So to a person with little farm knowledge it looks like he made a profit on just the wheat sale. He actually made the majority of his profit from owning the land. He states he could have rented the ground for around $200. So from a pure business perspective he could have rented the ground out and made about the same return. Truthfully more as he would have had zero equipment wear/maintenance.

Now you can not put a value on his enjoyment form farming his own ground with his own equipment. So I am all for him farming his won ground. He kind of has a self funding hobby. LOL I am no way trying to knock Gordo's farming. I just want people reading his statement to understand the true economics of the crop picture.
 
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