While what franc says is correct, we are hitting a plateau of increasing yields... But we have so very much crop carrying over from year to year, prices are at a low point, compared to our ever increasing expenses. Growing more is going backwards economically, but a short crop with low prices are a killer...
I believe the markets we are subject to need a house cleaning, to end the corruption I think we all know probably exists in the computer trading that is now the sole mechanism we use for so called "price discovery". Over the years there have been many small changes to the rules that govern the market place, and not a single one of these changes have ever been in the farmers favor in my entire farming career. Not a single one comes to mind. They are always in favor of the end user, but more especially the large investor. Especially big banks, and hedge funds, who now I feel control way more of trade than ever before. Maybe this is because the CBOT doubled the contract trading limits back in 2005, that aided greatly in the transfer of wealth from the stock market that was burning down in 2008, to commodities, that seemed much more safe. In the mix was the birth of ethanol production, and these two fueled an orgy of money making by farmers the likes of witch had not been seen since WWII.. This drove up land prices, machinery, production inputs, ect.. These same price increases are now our main problem. Crop prices are half of what they were when these prices were established, and darned if they are not coming down much at all...
Some of the farms that are in trouble are of their own doing. Those farmers thought there would never again be lean times. They barrowed, bought, built, with out thinking the gravy train would ever end. Now the party is over and the hang over is in it's 5th year now. Land prices are off the highs by 25% or so, but if they go down much more, they will take the financially weak off the playing field for good...
The livestock markets are even worse with corruption. We have relatively cheap feed, and yet the cattle feeder receive the lowest percentage of retail meat prices in the history of the industry. We have 4 beef packers now that kill and process over 80% of all beef. Their profits along with the retailers profit margins are the highest ever recorded. Does some thing seem amiss with this? R Calf, a producer group recently files a lawsuit against the big 4 for price collusion, some thing very hard to prove.. I wish them luck and can only hope it leads to the house cleaning the commodities markets so deserve..
The trade issues with China are harming Ag in general this year in ways I could not predict. I hope by next week we can put this trade deal to bed. I hope Trump has the balls to hold China by the neck, and make them commit to a deal they would have never thought they would ever have to endure. Trump is doing what every President before him and after he is gone must do, and hold China accountable for a trade deficit. As farmers we know how business should be run, as we do for ourselves. Trump has shown me he means what he says. I back him in his efforts 100%, even though with skin in the game it will probably cost me money in the end. So be it if our country as a whole benefits. Time to end the Chinese gravy train..
Farmers are hurting because we are too good at producing. We have lots of folks helping figure out how to grow more every year. We are a victim of our own success...
Regards, Kirk