Re: losing money

Posted by John_PA on January 06, 2015 at 00:20:15 from (71.182.160.3):

In Reply to: losing money posted by Brian806 on January 04, 2015 at 11:46:56:

Are you completely new to the cash crop game?

Here is what you need to survive...

-An elevator within reasonable driving distance. Anything other

than that will cost extra.

-Your own trucks to get the grain from the field to the elevator.

-Your own bins to store the grain from the time it comes from

the field, to when it is sold.

-A large bank account to carry you through any problems.

If you lack any of those things, you will loose money. If you have all those things, you make money every year, almost.

Let's break it down.

If you have to take your grain long distances to get your grain to market, it costs a lot of money. As the price goes down, the percentage of profit going towards transportation increases.

If you have to pay jim bob and billly bob to take his truck from your farm to the elevator, you will pay for his time and hs expenses. If you had your own trucks,you just pay for ownership expenses, but not jim bob billy bob's time to drive the grain.

If you are selling all your grain at harvest, you are really just feeding the beast. You need a place to hold your grain so that when you harvest it, you can hold onto it. Being in control of when it is sold is being in control of the price you sell it. This can gain you 10-50 cents per bushel in as little as 6 months time. This can gain you as much as $1.50 per bushel in the same time frame depending on the markets. It could also bite you square on the rear in the same time, if you are not savvy to the markets. Refer to the Kenny Rogers song, "The Gambler."

If you hit a few years when the price of grain does not cover the cost of production, you need to have money to live on. Refer to the grain markets in the past, where corn prices wee so darn bad, the cost to produce meant breaking even, except for a government subsidy on the grain. That doesn't happen now. It is gone. So... In order to make money, you need to invest in crop insurance that hedges you against the price. (That is a drawback of the new farm bill. Now they call it "insurance" and you have to pay for the hedge.) That is the "expected price" protection. For anything else, you need to follow the markets and trends. Plant crops that aren't in the main stream of things, figure a way to market them, and go from there. Some people call it a "niche."

There are 80,000 seeds in a unit bag. Assume it is the same with sweet corn. Right now, I see hot houses that sell a 3 inch pot with 2 sweet corn plants for $4.10. So, by my math, an 80,000 seed bag is worth about $164,000 if you can sell each individual corn stalk. Yeah... see how a niche can make a farm?

That is what you need to find. You need a niche. When you find one, you can continue. If you keep up on what you are doing, refer to the rest of the advice I have given. I won't steer you wrong. I promise.

Good luck. Farming needs young guys. A mojo shift in farming is coming. I just hope that more of us young guys can afford to take over for the generation that is passing. Average age of a farmer is now 60. They are going to pass sooner than later. Young farmers need to be in a position to take over. If you can't do that, you need to stop focusing on which tractor to use when you wake up, and focus more on what land is heading for a sale or a retirement. You need to be a shark. Having a large bank account(refer to above) really helps in this case. You need everything you can get.

Follow my advice, and you won't be a millionaire, but you will eat good and have a happy life.

God Bless

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