(don't) let your children be farmers

[randy41]

http://www.nytimes.com/2014/08/10/o...your-children-grow-up-to-be-farmers.html?_r=1

Let Your Children Grow Up to Be Farmers|Jenna Woginrich

here's a couple of interesting articles about small scale farming today.

 

[riptides]

interesting reads.

 

[paulharvey]

I think part of there problem was they need to define "farm". Many people have 5 acres with a couple goats and a garden, maybe a half dozen pigs; that's not going to be a money maker; it's a hobby farm. Farm should refer to an Agribusiness; a for profit agricultural venture. Farming has changed, you don't need, or in some cases even want to own land. If you can lease a couple hundred acres for peanuts, have a buyers contract, hire harvest, etc you probably will be far ahead of the guy would spent all his money to buy 20 acres and a tractor.

 

[smstonypoint]

The USDA defines a "farm" as "any place from which $1,000 or more of agricultural products were produced and sold, or normally would have been sold, during the year" for purposes of the Ag. Census.

The USDA also uses this classification of family and non-family farms:

Small Family Farms (gross sales less than $250,000)

Rural-residence family farms:

Retirement farms. Small farms whose operators report they are retired.
Residential/lifestyle farms. Small farms whose operators report a major occupation other than farming.

Intermediate family farms:

Farming-occupation farms. Family farms whose operators report farming as their major occupation.

Low-sales farms. Gross sales less than $100,000.
High-sales farms. Gross sales between $100,000 and $249,999.

Commercial Family Farms: (gross sales more than $250,000)

Large family farms. Gross sales between $250,000 and $499,999.
Very large family farms. Gross sales of $500,000 or more.

Nonfamily farms:

Any farm not classified as a family farm, that is, any farm for which the majority of the farm business is not owned by individuals related by blood, marriage, or adoption.

The National Commission on Small Farms selected $250,000 in gross sales as the cutoff between small and large-scale farms.

Source: https://www.extension.org/pages/13823/usda-small-farm-definitions

The median household income in the US has been just north of $50K in recent years. You have to have substantial ag. sales if you want to achieve that level of income from farming.

Steve

 

[mikehaugen]

The USDA defines a "farm" as "any place from which $1,000 or more of agricultural products were produced and sold, or normally would have been sold, during the year" for purposes of the Ag. Census.

The USDA also uses this classification of family and non-family farms:

Source: https://www.extension.org/pages/13823/usda-small-farm-definitions

The median household income in the US has been just north of $50K in recent years. You have to have substantial ag. sales if you want to achieve that level of income from farming.

Steve

Anyone have any figures for typical gross/net income difference... say for typical feed corn or soybeans? If net is, say, 20% of gross typically, then the $250,000 grossing farms don't sound so impressive.

 

[smstonypoint]

Anyone have any figures for typical gross/net income difference... say for typical feed corn or soybeans? If net is, say, 20% of gross typically, then the $250,000 grossing farms don't sound so impressive.

Mike,

Ag. economics departments at the various land-grants publish prototype enterprise budgets for corn, soybeans, nad other crops (agronomic and horticultural). Here are 2014 budgets from Iowa State: http://www.extension.iastate.edu/agdm/crops/pdf/a1-20.pdf.

The estimated total cost for corn following corn with a yield of 185 bu/acre is $4.84/bu. The estimated total cost of herbicide tolerant soybeans following corn with a yield of 55 bu/acre is $11.02/acre. Current futures are $3.77/bu for December corn and $10.51/bu for soybeans.

Steve

 

[smstonypoint]

To follow up on my previous post, corn and soybean futures can trade for several years in advance of maturity. For example, December 2017 corn futures are now being traded. Some of the the larger commercial farmers use futures/options to "lock-in" a price or minimum price for their crops well in advance of harvest. December 2014 corn traded at over $6/bu back in 2011 and 12, and November 2014 soybeans traded at $13/bu in 2011, 2012,and 2013.

Steve

 

[SPIKER]

To follow up on my previous post, corn and soybean futures can trade for several years in advance of maturity. For example, December 2017 corn futures are now being traded. Some of the the larger commercial farmers use futures/options to "lock-in" a price or minimum price for their crops well in advance of harvest. December 2014 corn traded at over $6/bu back in 2011 and 12, and November 2014 soybeans traded at $13/bu in 2011, 2012,and 2013.

Steve

Not many "Farmers" trade FUTURES in the markets, the SPECULATORS (Hedge Funds, Big Banks Pro Desks etc) do, they drive prices up/down based on the ability of them to make money. Even if the contracts are selling at $10/bushel does NOT mean the farmer will get that for his grain. In most cases the farmers are taking grains in on spot prices at best & often under spot-market prices. I don't think many farmers will hedge out more than a season as most don't know/can't plan in advance or know weather conditions out there.

The Speculators (Hedge funds, big banks/pro desks et all) are ones who generally are skimming $ off top AND off the bottom (Farmer is at bottom, people-consumers are at the top.) The speculators drive prices down on the spot market while pushing them up in futures, the medium/minor makers pay more to have a near term supply coming in. The big places (Kellogg, Frito Lay type BIG places) contract farmers directly and provide seed to them with contract to provide produce to them. The mom & pop places are ones without the pricing ability or the ability to work with farmers directly way the big boys do.

Mark

Mark

 

[Larry Caldwell]

Not many "Farmers" trade FUTURES in the markets, the SPECULATORS (Hedge Funds, Big Banks Pro Desks etc) do, they drive prices up/down based on the ability of them to make money. Even if the contracts are selling at $10/bushel does NOT mean the farmer will get that for his grain. In most cases the farmers are taking grains in on spot prices at best & often under spot-market prices. I don't think many farmers will hedge out more than a season as most don't know/can't plan in advance or know weather conditions out there.

The Speculators (Hedge funds, big banks/pro desks et all) are ones who generally are skimming $ off top AND off the bottom (Farmer is at bottom, people-consumers are at the top.) The speculators drive prices down on the spot market while pushing them up in futures, the medium/minor makers pay more to have a near term supply coming in. The big places (Kellogg, Frito Lay type BIG places) contract farmers directly and provide seed to them with contract to provide produce to them. The mom & pop places are ones without the pricing ability or the ability to work with farmers directly way the big boys do.

Mark

Mark

That's not true. All real farmers use forward contracting, which is a form of futures, or market using puts and calls to hedge their prices. A farmer is a commodities trader who is always long in the market. Once in a while playing the spot markets pays off, but you can really get burned if prices tank. You don't have to be huge to pay attention to marketing. Just last year my family contracted 75 acres of soft white wheat to a poultry farmer, including on-farm storage and a delivery schedule. We split the difference in the money that normally goes to brokers and middle men. He paid below FOB farm prices, and we got above market delivered prices. All contracts were signed well over a year in advance. He contracted to raise chickens, and wanted to lock his input costs. We knew what we were going to plant and signed contracts for seed, fertilizer and chemicals before the first seed went in the ground.

Hobby farmers shouldn't expect to make a living at it, but professional farmers who treat it like a business can do quite well. Yes, the big funds sometimes get into the ag commodities market, but as often as not they get skinned and leave big money in the farmer's pocket. Quite often it turns out they weren't as smart as they thought they were. The ag commodities market is a great place to make a fortune or lose one overnight.

 

[dave1949]

I think Ag Co-ops deal in future contracts and do some market hedging. They used to at least. So, co-op members are indirectly trading. The farmer I worked for many years ago would do some contracts or store his grain and wait for a favorable market price.