Farming 101: What difference do a few pennies make?

Farming is an expensive occupation.  Whether the farm raises cattle on 20 acres or raises corn and soybeans on 5000 acres, the expenses and risks are high.

That being said what difference do a few pennies make?

All the difference in the world.

Today the USDA released its monthly report showing the status of cash crops grown in the U.S. such as corn and soybeans.  At this time of the year (prior to most farmers planting the current years crop) the reports can show esitimates of how many acres will be planted into certain crops, estimates showing how many bushels of grain are sitting in storage in the country and the demand for their eventual usage.  All of these factors and many more go into determining the price of the grain for local and worldwide market levels.

When reports like this come out the market often reacts quickly. Sometimes it rises quickly and stays there offering the farmer a opportunity for increased revenue, other times it’s not so positive. To a farmer, that move in the market prices can mean the difference between turning a profit for the year or being in the red.

Here is a screen shot of the markets reaction to the USDA’s report today. Showing a $0.13 cent drop in the Corn price shortly after the report was issued. 

Let’s pencil this out:

A farmer farms 1000 acres of Corn

After paying the landlords rent, or making land payments (if he/she owns the land) and paying for all input costs like seed, fertilizer, machinery, fuel, etc, he/she may have a total per acre expense of $750.00/acre of corn.

That same acre of corn has been known to produce an average of 190 bushels per acre (bpa) of corn grain at the years end.

Using the prereport price per bushel of corn for $3.98 the potential income equals

190 x 3.98 = $756 income per acre.

Now let’s Subtract the $750 he/she spent to plant the acre.

$756 – $750 =  $6/acre return on investment.

Remember: there are 1000 acres of corn,

This results in a mere $6,000 profit for the year.

As you can see there is income but isn’t enough to support the farm or the farm family, but, this is a real life situation.

So what financial effect did the reports initial reaction have on this farmer?

At the time of this screen shot the market price for corn was $3.85. So let’s calculate the farmers income.

190  x $3.85 = $731 income per acre.

Remember the farmer needed $750/acre income to turn a profit.

$750 – $731.50= $-18.5 per acre loss.

1000 acres x $-18.5 per acre income = $-18,500 loss for the year.

Harvesting Corn

Sure the market moved only 13 pennies per bushel of corn but the result to the farmer was a $24,500 change in potential income and a $18,500 loss, all in a matter of minutes.

  I bet the pile of change you have in your cars cup holder looks a little different now!

Interested in watching how the market performs in the coming days?  You can watch the price of May Delivery Corn fluctuate by up to $0.40 per day by clicking here to visit the Chicago Mercantile Exchange website.

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Friday Farm Flicks 3/27/15

it’s been quite a while since I have posted, since December 5th actually. But just as spring brings change to our environment it brings change to The Farmers Story too!  As spring arrives so does the planting season, aka #plant15 on social media.   With that I thought I would share some photos from the winter and beyond to get the season started off right!

Let’s first go back to this fall, #harvest14.  This pic was taken on the last day of harvest and is very special to me.  This is a pic of 3 generations of Boucher Farms working together for the first time harvesting corn.  In the pic, my oldest child (BF generation #5) takes the wheel of our combine (with me sitting beside her) harvesting corn while simultaneously unloading corn “on the go” into the auger cart and tractor driven by her grandfather (BF generation #3)  while I (BF generation #4) take the pic.  While it wasn’t the first time she drove the combine under my watchful eye, it was her first time unloading while combining which was a big step for her, making for a proud Dad and Grandpa!  I mean, how many 10yr olds can handle a combine in stride?   I was grinning ear to ear for a few days straight!  Great Job Miss H.!!

The next picture brings us to post harvest plowing.  This pic shows our John Deere 9510R 4 wheel drive tractor pulling our Case IH 870 disk chisel/ripper. This tool allows us to mechanically till and loosen the soils in preparation for the following year.  

 This pic shows an alternative method of tilling to the mechanical one above.  These plants are called Tilliage Radishes.  They are a type of cover crop that allows farmers to loosen the soil, help prevent soil erosion, help needed nutrients remain in the soils and also help deter weeds and other pests in our fields. These radishes were flown on as seeds over top of our growing soybean field before harvest.  I dug these up to see how they were progressing and many of them were already about 12″ long, which is around the same depth that we mechanically till the soil, and having similar effects.

   

Christmas came and went but not without a first for our family. This year we spent part of Christmas Day on a Florida beach, near my inlaws winter home.  While Christmas isn’t the same without the cold and snow, we didn’t miss it either!

  On our way home from FL we stopped in Nashville TN.  Upon a visit to downtown Nashville we found a cowboy boot store with the most boots we have ever seen in one place! 

January brought us back to reality and the cold and snow of IL.  The pic below shows us unloading soybeans we grew for a seed company, who will clean them, check them for top quality, package them and sell them to other farmers to grow in 2015.  We will be growing more seed beans for them again this season, so more farmers can utilize the seeds we grow in 2016!  

This is a pic of the sweep auger inside the grain bin where the seed beans were stored.  The sweep augers its atop the bins floor and helps bring the beans from threshes of the bin to the center where there is a hole in the floor where another auger catches them and draws them outside of the bin and eventually into a truck.

What good is a Friday Farm Flick post without some country sunrise and sunset  pics from our farm?  Enjoy!

 

  

   

  

In closing I’ll leave you with a little St. Patrick’s Day Ag Humor.   

  Have a great weekend and check back often! As spring arrives and the farming seasons gets busier, I’ll post more blog entries to keep you up to date on what’s going on in the country!