Thanks Wayne,

Crop prices doubled and you will still lose money farming. In 2022?

You’re  the farmer but I’d like to see how you’ve derived that with the changes in your input costs  and selling price/income. 

That would make for an enlightening understanding of what producers are actually looking at.

Input cost and income/acre of corn

Assuming 1000 acres, all corn, with 1 famiiy and 1 person spring and fall part time hired help 

Seed                             120.00     150.00

Fertilizer                      120           240

Chem                           30-40       50-80

Crop protection

Fungicide etc.                30-50       60 -80

Machinery repairs

fuel, gas for corn drier etc.     60-80            100-120               

[Shop labour @ 120/hr

adds up quickly for repairs]

We have to dry all corn bu. with propane. Gas prices to dry are higher as is NG. Some will save with dry corn harvested and air drying

Some older combines have come out of the shop with a 20,000.00 repair bill, a 4WD tractor with a 30,000.00 repair bill not including all the other machinery to farm 1000 acres, thus repair bills will vary, from yr to yr.

Depreciation on 2 million

replacement cost over 

10 yrs replacement cost

with 20% residual value

=180,000 total payment/yr

 or 180/acre                              100.00   180.00

Hired labour @ 20/hr

x 1000 hrs =approx 20.00/acre                 20.00       20.00

Family income for 1000 acres

 private insurance plans vary,

 is the wife working with benefits??   50,000  60,000                 

Land rent or opportunity cost 

                                                        300.00   400.00                                    

Edit: new machinery is either more depreciation or older machinery is more repair with less depreciation

[That is a number that will be all over the board ] 

Do you take a chance on parts being available, down time to repair and beat the snow, plus do fall tillage A machine sitting for lack of parts is a scary thought. How long will it sit, given current parts shortage, especially older machines. Tire shortage, doesn't matter what you drive.

Edit

Our canadian fertilizer cost does not equal what some have posted on the internet. Our cost has been quoted  less than some have posted on americian sites, even with exchange factor considered.. I used americian posted prices but what is the truth???  on an inter net??? Plus we buy in off season and store fertilizer on farm in bulk. I do know what our machinery cost is to buy. Will it be more or same?? in a couple yrs. Did we buy at a cheaper price vs 2024 or pay too much??  What is residual value??? Will parts be available or only for newer machinery, as machinery and repairs is a big cost and as said above, this varies with every farm. Our machinery never sees a repair shop although we have had warranty work done and a couple times to re-boot an on board computer which needs a special code.

Given the mess I made above these are the prices I used

Seed                   150.00

Fertilizer             240.00  [perhaps too high]

Chemical             50.00

Fungicide             60.00

Fuel, repairs

propane gas to dry

the corn crop        80.00

Part time hired

help                         20.00

Depreciation        180.00

Family expenses    60.00

Land Rent                400.00

Miscl including

 insurance,

 land tax, bldg

 and bin repair etc       10.00        

Total                      1250.00

200 bu/acre x 5.50 =1100.00

Some cost savings are needed given the above approx COP and selling price

Older/newer paid for machinery and/or paid for or low  land payments due to land purchase some yrs ago, makes a big difference,

 If the machinery is reliable, paid for, and land cost is much lower than above budget, then the numbers can change a lot

Most farmers received a lot of gov't payments during Trump yrs which helped a lot for most grain farmers, plus lower COP vs today

We are a diversified family with more than just grain sales for living expenses and profit.

Edit to above

I was referring to increased fertilizer cost when posted 100% increase

So I did what I thought would be an approx next yr COP with last yr estimated cost

As you can see it depends on the individual situation and cost structure to make a profit or struggle

Crop insurance rarely gives a profit if ever. Crop insurance is designed to give the operator enough money to plant next yrs crop, on  a very tight budget Helps to have some savings for living expenses

Western part of the corn belt seem to have [on average] more yield variation with boom and bust yields. Just MO

Higher crop prices seem to mean we just use more capital to make the same  profit left over for family expenses.

I was just on a drive from Birmingham, AL to St.Louis, MO, a few weeks ago. You maybe would not believe the amount of antiquated equipment that I saw in tool sheds. Tractors, combines, shellers, even corn pickers from the 70's era. Have no idea if they are still operable. But that they still have the old equipment, gives hope that they could still harvest a crop.

I agree that inflation has/will hit, all the way around. I'm a trader. I look to the past, to understand the present, and predict the future. While certain technological differences exist, the fundemental struggles remain. I hope that farmers stick together and help each other out when things go wrong. It's going to take a while for companies to learn that they misplaced their trust. Time to bring it back home.

Part of Brazil has started corn planting having received enough rain for good germination. Other parts are still waiting on rain. If the corn can be planted soon enough and harvested soon enough a crop of soybeans will follow the corn. Brazil is expected to harvest a large crop of corn and soybeans. However, that was the thought last yr

There is much speculation about La Nina and El Nina which SA seems to live of die from

The market will pay close attention to SA crop prospects and also NA crop yields. And of coarse demand or carry over

I expect grain prices to drift slowly down ward as harvest pressure ramps up and folks sell direct off the combine. Just because last yr paid to store does not mean this yr will repeat

Today's price will certainly pay the cost of producing the 2021 crop thus selling for a profit, paying off the crop debts and more than usual left over after paying the operating note for 2021 production. This will look attractive to many. A bird in the hand sort of thinking, might go a long way to encourage fall sales

However, my budget above looked at the cost of planting the 2022 crop and what price is needed for different situations A farmer who might need to finance 75% of next yrs COP will have to take a hard look at the 2022 COP and income needed to pay the bills

I guess I figure zero cost of land, other than property taxes. I figure in family living expenses and the remainder is return to investment.

Sometimes that’s a pretty low rate of return, but it’s nearly always been positive. Leaving out asset appreciation since I will never see that.

Thanks Wayne for generously giving us the lowdown on what cost that a producer looks at with his operation!

This took quite a bit of your time and is much appreciated by us city folk that don't know everything there is to know about farming!!