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  • The latest Brock has a good article on Break Even Costs in IA. Seed, chemicals, fertilizer, etc.=325/a. Land=270/a. Machinery=149/a. 325+270+149=744/a. Say 200bu/a. 744/200=$3.72/bu. If you say an ave basis of -.30, 3.72+30=4.02=CZ5. Lots of luck with that. Ohhhh....wait. Crop Insurance will save the day. What's the spring base guarantee??? 4.15? If you have 75/100, that's 4.15 x .75=3.11. I told you not to plant corn.
    Last edited by 48; 05-06-2015, 11:50 AM.

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    • 48, your mind function failed...2 legs for poultry, 4 for livestock...walking it off...

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      • But there are people putting $300 in inputs on paid off ground and equipment, so then it doesn't look so bad. After so many profitable years, there is a lot of cash cushion out there.

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        • Originally posted by dennis1 View Post
          48, your mind function failed...2 legs for poultry, 4 for livestock...walking it off...
          Dennis: I said over and over not to plant corn unless you can WALK IT OUT. That's why all my neighbors have 5,000-10,000 head feedlots. When corn is cheap, they walk it out. When corn is high priced, they turn off the lights on the feedlot, and sell the corn. When they're going to feed it, they grind it high moisture and pack it and/or put up corn silage. Feedlots are a lot more important to making money with corn than tin cans.

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          • Originally posted by cowsrus and kids View Post
            But there are people putting $300 in inputs on paid off ground and equipment, so then it doesn't look so bad. After so many profitable years, there is a lot of cash cushion out there.
            cows: In IA what is the percentage of renters vs no debt operators? There are a lot of renters in IA paying $400-500/a cash rent...NOT Brock's $270/a. And...even if you own the land and machinery free and clear in IA, the property taxes in IA are not exactly chump change.

            BTW...how is ClassIII with a 15 in front of it working out for you? Ohhhh....I forgot...you dairy farmers have guaranteed margin over feed costs no matter how much you over produce!!!!!!!

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            • No guarantees!! The 200 buck grain corn, and reasonable meal has made the price doable. Do you know how many $2,000 beef cows, and $400 bull calves are out there? It gets a little hard to walk anything out when the $1,500 6weight has to do it, doesn't it?

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              • Originally posted by 48 View Post
                The latest Brock has a good article on Break Even Costs in IA. Seed, chemicals, fertilizer, etc.=325/a. Land=270/a. Machinery=149/a. 325+270+149=744/a. Say 200bu/a. 744/200=$3.72/bu. If you say an ave basis of -.30, 3.72+30=4.02=CZ5. Lots of luck with that. Ohhhh....wait. Crop Insurance will save the day. What's the spring base guarantee??? 4.15? If you have 75/100, that's 4.15 x .75=3.11. I told you not to plant corn.
                $149/ac machinery???? Lmao what planet is that on? 149k a year to farm 1000 acres?? If anyone has anywhere near that coat they deserve to go broke

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                • On 207 Illinois grain farms ranging in size from 1200 to 1999 acres of highly productive soils, the AVERAGE Total Power and Equipment costs for 2014 = $134.04.
                  The above includes cash costs for utilities, repairs, machine hire, fuel and oil, and light vehicle expense.
                  The above also includes a non cash cost of $63.59 per acre for machine depreciation. (BTW- though the number I am pulling from don't show the exact Fair Market Value for this line of machinery, this figure is likely less than 10% of the fair market value of those machines. )

                  Building depreciation is not included in the above (sheds, bins, etc) and totals $8.78 per acre.
                  Drying and storage, = $25.08 per acre.

                  In this same group the 2014 average for seed, chemicals, and fertilizer was $275.04 per acre.

                  Farm insurance costs average $28.86 per acre.
                  Hired labor, $17.97 per acre.

                  I didn't list operator labor.

                  I didn't list any interest charges- paid or interest on equity because of all of the variables interest is one of the most and we could have quite an argument about the longer term necessity of earning interest on equity.

                  The average operator in this group of over 200 grain farm operators farming between 1200 and 2000 acres owns 11% of their farmland. The debt to equity ratio in this group is in the low 20s%.
                  Last edited by jabber1; 05-06-2015, 09:20 PM.
                  “Democracy is the worst form of government, -------------------------------except for all the others.”

                  ― Winston S. Churchill

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                  • I suppose you are like my friend that told me his costs were $12 an acre. He also told me crop insurance guaranteed a profit. He had a fair enough sale...
                    The truth is costs can be figured a lot of ways. We may have the same expenses but use a different set of figures. In my friends example his machinery inflated , not depreciated. Transportation was not included, nor were machinery payments, or even fuel. All he figured were the parts he bought at Case- IH. Also it costs a lot more to farm some ground than others.
                    If your combine depreciates $200 an hour and you can only do 6 acres an hour that is over $33 an acre right there. Same combine on a square flat field can do 15 acres an hour.$13.33 an acre. Parts will be 4 times as much because of ditches and trees.
                    You see what I mean I am sure.

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                    • I would bet actual depreciation will be higher this year than past years. I bet my combine dropped over $100 an acre in value this year! $20 an acre per year for the parts just for the combine.
                      Seed chemicals and fertilizer looks low also. $200 won't cover my fertilizer. Seed right at $100. Chemical could be $65 or so, without looking.
                      I guess I deserve to have a sale!

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                      • Originally posted by iadave View Post
                        I would bet actual depreciation will be higher this year than past years. I bet my combine dropped over $100 an acre in value this year! $20 an acre per year for the parts just for the combine.
                        Seed chemicals and fertilizer looks low also. $200 won't cover my fertilizer. Seed right at $100. Chemical could be $65 or so, without looking.
                        I guess I deserve to have a sale!
                        Yeah, Dave the true cost of machinery is not just the fuel, repairs, and parts. The "true cost" is also a mix of loss of fair market value, plus lease costs, plus interest (on paid for "equity" as well as interest on a machinery loan ).

                        The bad news is that if commodity crop prices remain in current ranges we have-
                        - an industry with less profit or net losses which leads to
                        - declining machine values plus
                        - declining farmland values
                        which lead to
                        - declining working cash,
                        - declining net worth
                        - increasing debt to equity
                        - less interested lenders

                        To top it off, a cash basis tax payer is going to use some of that declining working cash to pay income and self employment taxes deferred from prior crop years.

                        Been there- done that.
                        Last edited by jabber1; 05-06-2015, 10:55 PM.
                        “Democracy is the worst form of government, -------------------------------except for all the others.”

                        ― Winston S. Churchill

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                        • Jab, you got an election coming up next year, you'll be seeing alot of pork being thrown the farmers way to garners votes.One thing that concerns me is these "vulture capitalists" that have been accumulating farmland and holding it in there portfolios, will they let farmland valuations cave and dump there holdings? or will they still demand lofty payment and still some suckers will give them what they want on the premise these farm gate prices that are borderline profitable/loss , thinking that they will eventually turn around ,thus solidifying there capabilities of securing large land tracts to farm? Around here there some guys that have paid the big bucks for rent have walked away from there leases, guess they can't pay for that new green POS iron they all tout.My guess is this all comes tumbling down just as soon as Janet Yellow and her merry gang of thieves dare to decide to raise rates.Its very gloomy out there in farmville.My only saving salvo is the USless currency stays strong vs my loonie hoping oil prices soften from here on out. That's pretty sad when one hopes for a scenario like that to pencil in a profit, hence that's why I have a good part of next years crop already booked to deliver. I remember 7.00 beans and 2.50 corn all too well and homie don't wanna play that game anymore.

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                          • Tom....lmao..next year's crop. At the current state of affairs, I'm guessing there won't be a functioning economy, we'll be in total anarchy, or Jesus will have already returned before you can make delivery.

                            As for the new POS Green Tractor, if it weren't for my 8260R with Guidance, my old azz wouldn't have made it through the planting season. I was driving down the highway with my 4020 hooked to seed tender, and was thinking how in the 70's I'd work ground all day on that thing with what, a 12 foot disk back there...no cab, no a/c...wtf....Speaking of seed tenders, my BTO neighbors went roaring by me on the highway with their two tandem axle tenders @ 80mph....I"m sure they got a hoot out of my setup...lmao....at least I didn't have a load of bags on a wagon.....oh...and maybe a ton of bagged fertilizer....those were the good old days. Dust has been awful....can't even see your marker if you use them...which I do...can't get out of the habit of putting not putting them down.....having that line to stare at helps pass time when I'm not surfing the internet on my IPad.....Remember those cabless days when the dust would be so thick with no wind, and the cloud would follow you......it's amazing any of us are alive after breathing that stuff....I can remember blowing my nose for 4 days and still getting mud out on the Kleenex...and had so much dirt in my ears you could germinate a seed in there. I miss those lazy summer days of old...time didn't pass so quickly....the afternoons sitting on a porch swing with my Grandmother eating watermelon....or some of her frozen strawberries.

                            Well, so much for reminiscing...it's back to the grind. Stay safe all.....FWIW...I might be the only one....but I don't have anything sold for 2015 and beyond....Just a warning Tom...that voodoo hex I launched on Greg1 some time ago is still floating around out there looking for a victim....Be careful with all of that forward contracted grain that you might not be able to produce. It is amazing how fast a crop can go in the ground these days. The enjoyment of doing it.....doesn't seem the same.

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                            • Unless one can predict the future, depreciation is awfully hard to figure correctly. I recently sold a piece of tillage equipment I bought new and used for 9 years for $200 more than the original purchase price. A few years back I sold a row crop tractor for 40% more than I paid for it after owning it for three years and putting 600 hrs on it. Granted I never purchased a new 8260R, that probably would have lost $40,000 this past year. My last combine I even sold for more money than I paid for it. Unfortunately, the one I own now is going the other way.

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                              • My actual depreciation on my older, no-til equipment has been zero for several years.

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