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Economics in agriculture are changing
The economics of the ag industry are changing. As projections for the 2014 corn crop continue to grow, margins for farmers are becoming tighter. Purdue ag economist Mike Boehlje says farmers are going to have to be better managers of risk.
But, he says, these aren’t new ideas. “It’s actually returning to what we did before we had this price run up,” he says. “Many of the things we need to do now are dust off the old playbook, think about how margins were tighter at the earlier part of this century, and think like we’re back in the 1990’s.”
Boehlje tells Brownfield it’s about returning to the basics of farming. “We do need to know our costs,” he says. “We have to have a tighter handle on our cost structure and we need to not do all of our costs by acre, in my judgment, but rather per bushel. Ask ourselves how much do I have to get out of each bushel to make my land costs – because I don’t sell acres, I sell bushels.”
Knowing cost structure, he says, also allows farmers to know what the major cost items are, control them, and hopefully reduce inputs.
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