this post was submitted on 07 Feb 2024
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AG 101 "How to lose money on corn"
Rent more land than you own.
Buy the cheapest seed you can find to "save money"
Grow the corn non-irrigated
Use custom operators to fertilize, plant, spray, and harvest but minimize what you put down to "save money".
Gamble the entire year on the commodities market selling your crop.
Even with subsidies this is a recipe for losing money. These "farmers" tend to consistently lose money until they eventually go under after all the equity in the land they own is gone.
It's so common that entire generations have grown corn at a loss. Why, entire states built their economies on the losses they found from corn. It's such an unprofitable crop that only half of the United States grows it, and it's a pretty poor country.
You are looking at survivorship bias. Look at the number of farms statistics. It's been steadily declining for a very long time. Every year thousands of farms go bankrupt or sell out mostly following the above steps. Because of the large amount of equity in the land value and the relatively small net return or loss it takes a long time for them to go bankrupt. On average around 15-20 years of poor management.
Now the ones that survive follow AG 102 "How to make money growing corn."
Own the land outright without any mortgage.
Do research plots to evaluate corn varieties and purchase the seed with the highest potential net return. Do not be loyal to any brand/supplier.
Invest in irrigation, even in areas that usually get enough rainfall. Running a pivot 1-2 times at the right time can equal 100+ bu higher yield.
Purchase and maintain your own equipment. Replace equipment on the good years, repair it on the bad one.
Open bid on your inputs. Offer no loyalty to any one supplier, do your own application when possible. Buy generics and cheaper equivalent inputs when possible.
Manage your risk when selling. Contract the bulk of your sales early to guarantee a return ad cover your costs.
Do not get on the debt cycle of paying for inputs by taking short term loans. Maintain a healthy reserve from good years to cover the bad ones
My dude, what lemmies are you subbed to? I want to discuss these things somewhere, can't find anything reasonable.
I keep hearing this, but someone has to be making money on corn or there wouldn't be corn. My guess is that the margin is so thin that the only way to put any appreciable amount of money away to get you through a market dip is to do tremendous volume, which would cause the industry to tend to push out small farmers, which kicks off a feedback loop because the big conglomerates are even bigger and can take even longer bad times, so they can snap up even more failed small farmers, etc etc ad nauseaum.