Posted by JD Seller on July 10, 2017 at 16:35:52 from (208.126.196.24):
In Reply to: Re: Winter wheat. posted by LAA on July 10, 2017 at 02:00:45:
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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