THE HEAVY COST OF FARM MACHINERY

Here in Illinois, we are all fairly familiar with the big farm machinery in the fields during spring and fall, but have you ever wondered what kind of financial investment a farmer undertakes?

3-14-16Tractor
Photo Credit: Holly Spangler, Prairie Farmer

It’s mid-March, the weather is getting more pleasant, and all farmers seem to have one thing on their mind: planting.

The first field of corn was planted near Pearl, Illinois last Tuesday and it is expected that many farmers from all over the state will soon be following suit to start the long process of getting food to your dinner table. However, for farmers to get the food from farm to table, they need machinery to do it, and machinery costs money. Lots of it. But what exactly is the financial investment a farmer undertakes when it comes to their machinery?

Chad Braden, President and Chief Operating Officer of Arends Hogan Walker (AHW), one of the largest John Deere dealerships on the continent, says that the image created by the media about the cost of farm equipment is a negative one, but in reality, it is a necessary part of the production cycle. In order “to sustain a long-term farm operation, you must be able to invest in, and support, a reasonable amount of equipment to maintain the farming operation.” He also suggests that the general rule of thumb should be spending “$95-$100 per acre on machinery costs. This gives a 1,000-acre farm about $100,000 of cash flow to cover annual machinery payments and maintenance, insurance, fuel, etc. Only $70 per acre of this is direct machinery costs.“ Braden closes by adding, “$70 per acre is about 10% of the total costs of production in 2016 for an acre of corn.”

So, it costs $95-$100 per acre for machinery costs, but what about the expense of the actual machinery itself? John Spangler, my uncle, as well as a grain and livestock farmer from Western Illinois, states that this all depends on the size of your operation. A small farmer, who may have around 350 acres, needs nothing more than a $50,000 tractor, $20,000 planter, and a $50,000 combine. But, that is about as “minimum” as you can get. “A 1000 acre farmer is going to need a couple of tractors around $150,000, a $50,000 planter, and $100,000 combine.”

This may seem like lots of money, but Spangler mentions that it is better to keep the combine, planter, and sprayer up to date. “A lot of dollars flow through those machines and a breakdown at the wrong time can be expensive.”

If buying new isn’t something you want to do or can afford to do right now, have no fear. Leasing has become more popular in recent months. Also, there is a company called Machinery Link who connects farmers from all over the U.S. who need different types of equipment at various times. Some farmers even share equipment over two or more farm families. In reality, there are tons of other options to make machinery more affordable. “Everyone has their own philosophies on machinery,” says Spangler. “It basically comes down to what fits best in your operation.”

Kaity Spangler

 

Kaity Spangler
University of Illinois

WHY WE NEED FREE TRADE

Free trade is beneficial farmers. For instance, a strong free trade agreement makes it possible for farmers to have market opportunities and meet food demands around the world. The economic stimulus from worldwide demand for American products also helps each of us feed our families.

TPP-AgricultureA study conducted by the American Farm Bureau Federation o
n the Trans-Pacific Partnership (TPP), a free trade agreement that is already negotiated and waiting for Congressional approval, explains that the American economy benefits from a $4.4 billion revenue increase that not only sustains farming within the United States but also helps to contribute to a healthy American economy.

  • Livestock receipts with implementation are $5.8 billion higher with approval than without. For the crops sector –including fruits and vegetables—receipts are $2.7 billion higher. Net farm income is also $4.4 billion higher.
  • S. beef and pork exports are expected to be $1 billion and $940 million higher, respectively.
  • Farm prices for corn, soybeans, wheat, rice, cotton, fed steers, feeder steers, barrows and gilts, wholesale poultry and milk are all projected to be marginally higher with the agreement in place than without.
  • Net trade rises for rice, cotton, beef, pork, poultry, butter, cheese and non-fat dry milk
  • Net trade of corn declines slightly, but overall use increases and corn revenue rises as higher feed use is needed to provide for the added beef and pork exports rather than being exported as raw commodities.

WHY ETHANOL?

I’d be lying if I said that I’d never heard THIS question before.  Why ethanol?  What’s the point?  Why is our government pushing it?

1. Our government isn’t pushing it.

no ethanol mandateThere’s actually no mandate for ethanol, despite everything you’ve ever heard in the media and the internet.  The Renewable Fuels Standard (RFS) does not mandate the use of corn ethanol or any other type of ethanol.  The RFS does require that oil companies blend increasing volumes of renewable fuels, but does not specify the type of renewable fuel.  Corn-based ethanol has been ready to take on the increasing demand for renewable fuel and was well-poised to grow, when other types of renewable fuel just aren’t there yet.  They are more expensive to produce and don’t net nearly enough volume to meet the renewable energy requirements.

2. What’s the point?  High octane, low carbon fuel.

It’s good for the environment and it’s good for your car.  Auto manufacturers like it because it provides the power they need for the features you want, while also meeting the environmental requirements the government and the public has asked for.    And it’s cheaper than gasoline and many other options.

3. Why ethanol?  It makes sense.

renewable fuel, E85, corn based ethanolForget everything you’ve heard about ethanol.  Forget the “energy balance” argument (which isn’t true).  Forget the “bad for the environment” argument (which isn’t true).  Forget the “heavily subsidized” argument (which isn’t true). Forget the “food vs. fuel” argument (which isn’t true).

Ethanol is a great, environmentally friendly, high octane fuel that makes sense for our country.  And as a bonus, it is Made in America and creates economic activity for rural America.

Mitchell_LindsayLindsay Mitchell
ICGA/ICMB Marketing Manager

SWEET HOME MEETS SWEET CORN

In July 2013, I drove to Illinois with my car packed. I was starting graduate school at Illinois State University and I had never lived in any other place than my home state of Alabama. My GPS, a revolutionary yet flawed device, decided to take me on what we could call the “scenic route” – backroads and small towns. This equates to a longer drive time and slower speed limits. Yet, in this way, I saw the heart of the state and its charisma. As I drove through, I glimpsed a community festival under large white tents in the middle of the town square. I saw golden rows of corn. I witnessed the “amber waves of grain” that I had often sung about as a little kid but had never seen up close. I saw Illinois as it is: welcoming, community oriented, and unapologetic. This is the reason I stayed.

mazon2
Taken near my new home in Morris, IL

Although I am from the South, I grew up in a metropolitan area. The only farm I saw regularly was the Powell family’s few acres on my way to school. Farming absolutely exists in Alabama but I was rarely exposed to it. So many people ask why I applied to and subsequently took a job at Illinois Corn.

Advocacy was one reason I was drawn to IL Corn. At the beginning of high school, I joined the competitive speech and debate team. Speech is a creative outlet that teaches enumerable skills including argumentation, time management, and advocacy. One of the main goals of the activity is to teach people to speak with conviction about an issue that matters to them. Here at IL Corn, I have the opportunity to work with a grassroots organization that promotes the interests of the public that it engages with. In this way, I get to work directly with the people who I am helping to speak for and that echoes the training I received in speech.

Yet, I still have a learning curve. Naturally I hope to learn about the basic aspects of agricultural life. For instance, it took me until living here to know there was a difference between corn for animal feed and corn for eating. At the same time, I am looking forward to understanding the widespread issues important to Illinois farmers today, ranging from technological to political. I am excited to build that knowledge to better help the interests of Illinois farmers through my work.

McDonald_Taylor

 

Taylor McDonald
Communications Assistant
IL Corn

7 SECRETS ABOUT AGRICULTURE THAT NO ONE TALKS ABOUT

  1. THE FARM BILL IS NOT JUST ABOUT FOOD AND FARMING

Farm BillThe Agricultural Act of 2014, better known as the Farm Bill, “is an omnibus, multi-year piece of authorizing legislation that governs an array of agricultural and food programs.” On the contrary to most opinions, the farm bill is not just about farming. In fact, there are twelve separate titles included in the legislation that receive funding.  These programs focus on commodities, conservation, trade, nutrition, food assistance (food stamps), credit, rural development, research and extension, forestry, horticulture, crop insurance, and miscellaneous spending.

  1. ORGANIC V. NATURAL

Organic and natural are two separate terminologies. Organic is a defined and regulated process in which food is produced without synthetic fertilizers. In comparison, natural is not defined by the FDA, which allows so many companies to use the term for their products. It is generally believed that natural foods are ‘minimally synthesized.”

There is no evidence that organic foods are healthier than conventional food products, but many people have this belief. Therefore, the price of organic food products is higher, compared to natural and processed foods.

  1. THE GLOBAL POPULATION HAS A LIMIT – WE WILL BE ABLE TO FEED EVERYONE.

people globeThe Malthusian Catastrophe is the theory that, while food production sees linear growth over time, the global population experiences exponential growth. This means that the population will outgrow our food supply. However, this theory was proven inaccurate due to technological innovations that have greatly expanded our food production process. Additionally, while the global population continues to grow, the growth rate is decreasing. This is due to a decrease in birth rates for developed countries, like the United States. As the world becomes more developed, the birth and death rates will begin to even out. Eventually, the population will stabilize, or perhaps even slightly decline.

  1. FARMERS GROW WHAT THEY WANT

The false belief that farmers cannot grow what they want probably originated from the idea of subsidies. A subsidy is an incentive, which can be used to encourage farmers to plant certain seeds, but it certainly does NOT require it. There is no statute that controls how farmers operate. In fact, there are many other factors that influence a farmer’s decision on want to plant. This includes yield potential, soil type, seed availability, seed pricing, geography, how long it takes to be harvested, resistance to drought and pests, etc.

  1. MOST FARMS ARE RUN BY FAMILIES

While there are many who believe that the agriculture industry primarily features corporate farming, the truth is that “97 percent of US farms are operated by families.” In other words, those views could not be farther from the truth.

One of the reasons that the United States is a global agricultural exporter is because of our family-farm setup. These farmers know how to utilize their land much more efficiently than just some corporate entity. Farming is a privilege for families and individuals to make a living by providing food for the world. It is not just about making a profit.

  1. FARMERS GET WATER FROM VARIOUS SOURCES

water sourcesFor water, farmers rely on springs, rivers, creeks, ponds, wells, and municipal options. Accessing groundwater from wells is a popular technique, as farmers can protect its high quality more efficiently.

Additionally, farmers used various practices to preserve their water resources. Rotational grazing and mulch, for example, allow soils to contain higher volumes of water. Such practices are beneficial to farmers, as they do not have to rely on other water sources.

  1. THE CAREER POSSIBILITIES WITHIN AGRICULTURE ARE NOT LIMITED

With huge agricultural-based companies like Cargill, ADM, DuPont Pioneer, and Monsanto, it’s hard to understand why this even needs to be discussed. There are endless career opportunities within the agriculture sector involving marketing, sales, economics, finance, consulting, nutrition, soils, food science, advertising, engineering, insurance, research, animal care, management, policy making, etc.

austin fee

Austin Fee
University of Illinois

TWO THINGS TO DO BEFORE YOU READ A FOOD ARTICLE ON SOCIAL MEDIA

We could spend hours talking about the incredible and often ridiculous food information that is thrown our way on social media. From dieting how-tos to organic eating guides, Facebook, Instagram, and Twitter are chock-full of information about food. As consumers and social media-frequenters, it is especially important to be critical of the quantity and quality of information that is being placed in front of us. If you ever come across a food-related article, keep these pointers in mind:

  1. Ask, “Where is this information coming from?”

So let’s do an example. The title of one such article is “Research Indicates That GMO Could Be a Cause of Infertility.” What’s the name of the article’s publishing website? Natural Fertility Info. There are links to the site’s all-natural (which are heavily promoted as “all-natural”) products such as a Fertility Cleanse Kits and a Self-Fertility Massage DVD. If a concerned couple were to click on this article and read it, they may begin to panic about GMO consumption.  Maybe they are experiencing infertility. Now, after reading this article, they will not only second-guess their GMO consumption but also shop around for “all-natural” products. We have to be critical of the motivations behind websites.

As an additional example, this article addresses the problem behind relying on sources that seem to be credible because they focus on a certain issue. This article caught my attention, because I am genuinely interested to watch the organic farming industry expand. It is something different and I know that it takes a great deal of hard work. I found that it is on a website titled “GMWatch.” I wandered over to the “About” page and the site claims to “provide the public with the latest news and comment on genetically modified (GMO) foods and crops.” However, in the very next paragraph, the website says, “GMWatch is an independent organization that seeks to counter the enormous corporate political power and propaganda of the GMO industry and its supporters.” Which of the two is the actual goal of the site?  Does GMWatch want to find airtight truths about GMOs or do they want to bring down the GMO industry? If this site truly wanted to shed light on the GMO industry, they should have a much more unbiased profile. Therefore, we have to be critical of the credibility of the sources we get information from.

annatoohill

  1. Be wary of absolutes.

“Always.” “Never.” These are common terms that pop up on my Facebook feed.  Absolutes have a way of providing people with a false sense of security. “If you never eat this, you will be healthy.” “If you do eat this, your healthy diet will definitely be ruined.” This article is a perfect example of using absolutes in order to persuade the reader through threats. No, Pop Tarts and fast food meals are probably not the best for children. However, parents should not feel ashamed to give their kids a treat every once in a while. Sometimes, it is okay to eat something just because it tastes good. When I was growing up, Pop Tarts were a luxury because they were so sugary and delicious. They were not regular staples in our diets. They were treats! Completely banishing any food from a child’s diet (allergies and other health conditions excluded) sends the message that “If you eat this food, you will not be a ‘healthy’ person.” This is not the message that we should be sending the kiddos. We all need to lead healthy, balanced lives and living balanced means treating yourself every now and then!

anna

 

Anna Toohill
University of Illinois