Iowa farms minting millionaires (Plymouth: lease, insurance, how much)

[SpeedyAZ]

Interesting article I found on Bloomberg. Iowa Farms Minting Millionaires as Rich-Poor Gap Widens - Bloomberg

I grew up on a farm in NW Iowa until 1999 when I moved to Arizona to pursue a college education. Now at 32 years old, I still enjoy keeping up-to-date on farm prices and agriculture since it runs in my veins. It really amazes me the prices we're seeing for land in this day and age, it's mindblowing. According to my dad, the 3rd generation Iowa farmer, he has NEVER seen a good year. If you listen to him for an hour, you'd think he's the poorest person in the world as the prices for farmland in our immediate area are hitting $15K/ acre and some going over $20K/ acre. Have the days of the "poor farmers" gone by? I see fewer and fewer of my generation (I'm 32) going into farming simply because it's an exclusive club in which they can't afford the price of admission. I think it'd be nearly impossible to break into farming in this day and age when you need at LEAST 1200 acres of land to make a living with machinery costing $500K for a combine, $300K for a tractor, etc etc.

Interesting article though, thoughts?

[todd00]

Interesting article. I've long been amazed at the farm subsidy numbers, 80 percent going to the richest 20 percent, according the article below. I'd read stats stating it was even more one sided than that. The ones with little reason to complain still do plenty of it. Looks like you'd have to win the lotto or take over the farm from family.

Rich Farmers Don't Need Farm Bill's Welfare | Debate Club | US News Opinion

[thedwightguy]

Food, apparently, isn't going out of style. In the last ten years farm prices everywhere have moved up dramatcally i.e. (North America). But that's more to do with those that have access to large amounts of cheap money. And those aren't farmers.

For fifty years you couldn't GIVE AWAY our family homestead in Ontario, and it fed a full family plus a few neighbours from 1910 to 1960, without a dime of subsidy. One contact made THREE MILLION on Canola this year, while another in Chatham, Ontario retired (2004) and told me he sold too early.

Will farming be like "Enclosure" in the 1900's, where they are all tenants? It still has to make some kind of economic sense. Most ranches south of Calgary are still in the hands of family related to the original homesteaders, and some have never seen a bank! I guess that leaves "marrying into the farm" one of the choices!

[Dport7674]

Used to be a lot of individual farmers trying to sell a ton of acres.
A lot less acres on the market now.

[SpeedyAZ]

Originally Posted by todd00

Interesting article. I've long been amazed at the farm subsidy numbers, 80 percent going to the richest 20 percent, according the article below. I'd read stats stating it was even more one sided than that. The ones with little reason to complain still do plenty of it. Looks like you'd have to win the lotto or take over the farm from family.

Rich Farmers Don't Need Farm Bill's Welfare | Debate Club | US News Opinion

The average age of an Iowa farmer is in his 60's I believe. The only people who can AFFORD to take over the family farm are kids who inherit a boatload of land or corporate investors who buy the land from the estate. I have three siblings plus myself that will inherit 960 acres or about 240 acres per person if divided fairly. I could NEVER afford to pay my siblings $8+ million to buy their land from them so I can see how the family farm is being broken up into smaller chunks or being bought by the large, corporate farms. It's really a shame that my generation cannot enjoy the same opportunities that my dad's generation enjoyed in terms of prosperity.

I do agree with subsidies because in all honestly...farmers are what feed America and they need certain assurances for an income. Farmers take a much bigger risk than any other profession, they truly are "risking the family farm" each year and should be assured an income for their labor. We got subsidies before my dad retired and rented all the land to other farmers but subsidies provided food on the table in the 1980's when times were tough. So I completely agree we need subsidies and crop insurance at affordable prices, no doubt in my mind.

[NJ Brazen_3133]

Are most farmers in the Iowa or the US in general sharecroppers, or tenant farmers? Or do most own the land?

Come to think of it, I dont understand why farmers have a poor stigma attached. They make food. The whole point of the economy is to obtain legal tender to buy food or water at some point. Even if they have competition from "large corp farmers" , there has to be someone who needs even more food.

I was posting in another thread about most profitable crop to grow on small farm, and someone mentioned that Big AgriBusiness gets most of the subsidies. And how much risk is there in farming compared to other more lucrative white collar jobs that depend on referrals and social networks? As farmer, you are in control of production of food.

[601halfdozen0theother]

Oh my gosh, did you not hear about the drought? Farmers who were lucky enough to own land in an area that wasn't hard hit did very well this year because prices were high due to much lower crop yield this year. However, those farmers who were in a drought area may well have had to plow their fields under. How did they survive? Crop insurance, which is outrageously expensive.

The risks farmers carry are still the same as they always have been - weather, diseases, the costs of equipment, and the market. I think sometimes we are all slaves to 3 corporations - if we don't grow corn & soybeans in my region, we essentially are completely out of the main market. If we were to change to different crops it might take years for us to figure out and profit from a new market.

And the fact that land has high value on the market now is irrelevent to our daily lives. A farm which could sell for 2 million dollars may still only produce an annual income of 40 to 50 thousand. That is only a tiny part of the cost of one piece of modern equipment, let alone the regular costs of daily life. Most owner-operators I know also lease other farms to make a solid living, so they're really working 2 or 3 farms.

As a part-owner of a family farm in Illinois who works on a farm in Iowa, it really does disturb me that there's almost no way for someone who isn't family to an owner to own his or her own land. But my nephew, who is choosing a different occupation, says that he knows young people who are choosing the small farming, alternative crop route. I think these young people will be the future of farming - at least I hope so. If the ag schools at the state universities will study this and work on helping the change, that will be great. But the big 3 do fund much of what is done in the ag schools, so I don't know. I keep thinking about the big bonanza farms in ND - eventually those collapsed.

And re subsidies, I remember my Aunt once saying that farmers are in the only occupation where other people think they have a RIGHT to our products. Do we have a RIGHT to the products of other occupations? No. And that's why there are agricultural subsidies.

See - agriculture is really interesting, and it is more closely tied into all of the other areas of the American economy than most people understand. For example, most of what we produce goes to industry, not to the table.

It will be interesting to see what happens over the next 30 to 50 years.

[capitalcityguy]

Originally Posted by SpeedyAZ

Interesting article I found on Bloomberg. Iowa Farms Minting Millionaires as Rich-Poor Gap Widens - Bloomberg

I grew up on a farm in NW Iowa until 1999 when I moved to Arizona to pursue a college education. Now at 32 years old, I still enjoy keeping up-to-date on farm prices and agriculture since it runs in my veins. It really amazes me the prices we're seeing for land in this day and age, it's mindblowing. According to my dad, the 3rd generation Iowa farmer, he has NEVER seen a good year. If you listen to him for an hour, you'd think he's the poorest person in the world as the prices for farmland in our immediate area are hitting $15K/ acre and some going over $20K/ acre. Have the days of the "poor farmers" gone by? I see fewer and fewer of my generation (I'm 32) going into farming simply because it's an exclusive club in which they can't afford the price of admission. I think it'd be nearly impossible to break into farming in this day and age when you need at LEAST 1200 acres of land to make a living with machinery costing $500K for a combine, $300K for a tractor, etc etc.

Interesting article though, thoughts?

The next time you hear a farmer say they had a good year, will be the first time you hear a farmer say they had a good year.

[duster1979]

Originally Posted by SpeedyAZ

I do agree with subsidies because in all honestly...farmers are what feed America and they need certain assurances for an income. Farmers take a much bigger risk than any other profession, they truly are "risking the family farm" each year and should be assured an income for their labor. We got subsidies before my dad retired and rented all the land to other farmers but subsidies provided food on the table in the 1980's when times were tough. So I completely agree we need subsidies and crop insurance at affordable prices, no doubt in my mind.

I have no problem with making sure farmers are able to keep their farms in poor years. The problem is that it's been awhile since most farmers have seen a poor year yet many are still getting subsidies. We expect people in other businesses so set aside some of their excess earnings in good years to hedge against the lean years, but for some reason we think it's okay for farmers to sink all of their profits into more land an/or newer equipment rather than set something aside.

[SpeedyAZ]

Originally Posted by capitalcityguy

The next time you hear a farmer say they had a good year, will be the first time you hear a farmer say they had a good year.

Which will be never! Even if my dad had an excellent yield and received great prices...he STILL would never say he had a good year!

And the fact that land has high value on the market now is irrelevent to our daily lives. A farm which could sell for 2 million dollars may still only produce an annual income of 40 to 50 thousand. That is only a tiny part of the cost of one piece of modern equipment, let alone the regular costs of daily life. Most owner-operators I know also lease other farms to make a solid living, so they're really working 2 or 3 farms.

I think you're really estimating on the low end. If you have 40 acres of land and yield 210 bushels/ acre with the price of a bushel at around $7.50/ bushel, for those 40 acres you're averaging $1575/ acre. Multiply that by 40 acres and you're at $63,000. Those 40 acres in my part of Iowa (Plymouth and Sioux counties) would sell for around $15,000/ acre at market prices which translates to $600,000.

Now if you're talking a $2 million dollar FARM...you usually mean 1/4 of a section or 160 acres generally constitutes a "farm". So on those 160 acres even if you only yield 200 bushels per acre at $7.50, you're talking of cash flow of $240,000/ year. Now obviously this is oversimplified but in a broad sense, you're not going to own a $2 million farm and make $40K/ year.