[Originally posted December 16, 2016]
We actually asked for more stable farm profitability last year, but Santa hasn’t brought it yet! In fact, farming has gotten harder with more farmers losing money and more bankers refusing to loan farmers the cash to put in a crop based on their precarious budget sheets.
WE NEED FARM PROFITABILITY!
If you haven’t already read our Are Farmers Rich post, you’ll want to start there … remembering that this particular article and the economic conditions it presents are two years old.
The bottom line is, farmers are losing money. Lots of it. In fact, for many farmers, the more acres you farm the more you’re losing. Luckily, this was a good year for crops and higher yields started to offset the extremely low prices, but that might not always happen.
Think about it: for every other business that creates something, they name the price for that product that includes how much it costs to produce it. Competition in the marketplace might force them to lower their product cost to a lower margin, but they can always guarantee they are making at least a bit of profit.
Farmers are price takers, not price makers. They don’t get to determine how much it cost them to grow a bushel of corn and set their price from there. They have to just take whatever price the commodity markets dictate. And right now, that cost is well below the cost of production.
Most of the other things on our list will help us price prices because they are about creating demand or minimizing costs of production. Trade opportunities and that darn RVP waiver will create more demand in terms of selling more corn overseas or selling more ethanol in the summer months. Better locks and dams will decrease the cost of getting corn to an international market. More conservation will prevent regulations that will cost farmers money.
I swear Santa, we aren’t asking for much. Please … farm profitability for 2017?