This past Friday was a perfect example. At the end of the show farm broadcaster emeritus Lee Kline (who has a great radio voice) was telling a story of a recent farm land auction that he had attended in central Iowa. There was something like 240 acres (I don't remember exactly) up for auction that day, and quite a few people were in attendance. The story telling was great as always, but the price the land sold for was the most interesting for me. $6,000 per acre was the final winning price ... that is $1,440,000 if you are scoring at home!
That is pretty scary number for someone like me who would like to add land and grow the farm, but it became more interesting (and possibly scarier) after I went home and checked the mail. It just so happens that we received a bulletin from the boarding school where we used to work. In this issue there was a short article about farmers donating commodities (grains) as financial donations for the school. The idea is that there is a better tax break for the farmer when it is done like that. Good information and I hope that some people take advantage of it because the school is a worthy cause.
But, it is the example that really got me thinking. The example says:
In 2006, Bud Peterson, a grain farmer, donated 1,000 bushels of corn to the local Christian School. Bud's cost of production was $4,000, and the proceeds generated by the sale of the grain to the elevator by his favorite charity were $5,000.Let me extrapolate a few numbers from that. Let's just say that the average yield for this farmer (he was from Illinois) was 175 bushels per acre. That means that his donation came from 5.71 acres of land. Taking the $4,000 in production cost and dividing by the number of acres we see that it cost him $700.53 per acre for inputs (probably includes land, equipment, seed, chemicals, etc.). Now we can divide the $5,000 that was made on the sale by the number of acres to find that he would have made $875.66 per acre of corn. That gives him a total profit (if he hadn't given it to charity) of $175.13 per acre.
It is going to take a lot of acres to make your living wages off of that ... plus we really need to know if land payments were factored into the $4,000 of production costs. If they were not ... well then there is a problem. Especially if the land cost $6,000 per acre!
I believe this is a perfect real life example of why we need to be looking at different methods and operations when it comes to farming. We need to make better use of our land and better use of our time!