I just don't know how the big farmers, banks, and accountants make the numbers work anymore. As land prices go up input (seed, chemicals, fertilizer, machinery, etc..) costs go up and this year we have unprecedented increases in fuel, Round Up, Liberty, and nitrogen costs. How guys can pay $26k per acre when the income is a fraction of that I have no idea. Here is some quick math, and I'm pretty dumb with math, so please bear with me.
- 100 acres * 200 bushels of corn per acre= 20,000 bushels.
- As of May, corn was trading at $7.39 per bushel (20 year average is around $4). 20,000 * 7.39= $147,800 gross annual revenue.
- Profit on that $147,800 is maybe $40,000?
- $26M mortgage @ 3.92% interest over 30 years has a monthly payment of $122,932
If these guys paid cash for this ground, how in the world are the farm subsidies we all pay for to enable US farmer to compete justified?