The Farming Industry: Is It In Trouble?

By
Real Estate Broker/Owner with Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska
https://activerain.com/droplet/5bWY

The Farming Industry is in trouble.  I keep hearing that and if it is true...That means America is in trouble.

I hate being a Chicken Little and saying the sky is falling...and I really, really, really hope I am wrong...but there are many cracks in the fabric of many farms...and we do not want to lose them.

I do not think many people outside of farming are really aware that we need higher crop prices to stay afloat.Mike McCann Sold the Farm 2018

Crop prices are still way too low for the farmer to make a decent living. Cattle prices have had the bottom fall out of their industry as well.

If you think Farmers going broke does not affect you because you live in a metro community or do not work in the farming industry...you need to rethink your thoughts...because if the farming industry fails...we all fail.

Farmers are perhaps the best number crunchers in the world, most of them are easily the hardest working, and all are a resilient bunch of people. However...

Farmers are at a critical crossroads in 2018 where many farmers will not weather another bad year for crop prices. So what does that mean?

The Banks are getting very, very nervous as the Federal Reserve Board  continues to raise the Prime Interest rates and the crop prices are flat at best.  

The loss Banks may have when a Farmer is forced to sell out is way higher than any extra interest they may earn with higher rates, in my opinion.

 

Banks will be forced to make clients liquidate equipment and/or farm land to meet financial obligations. They can only help a client hang on for so long. But they might not get dollar for dollar return on any liquidation.

Mike McCann Mach1 Realty Sold the Farm 2018

 The ripple effect will mean more land on the   market in the fall than is normal...less   qualified  buyers...so the rich get richer and the   poor become tenants or hired hands or go to   work somewhere else.

 Generational farms could be lost through no   fault of the farmer or operator but simply   because global and national prices, interest   rates, weather, conflicts, and politics are   adversely affecting the prices all at the same   time.

We DO NOT want to see that happen. And here is why.

When farmers do not make money...they do not buy new equipment...or new vehicles...or new pivots...or take trips...or donate near as much to charity or local causes. They have to tighten the purse strings and that ripples down to many other industries.  

For Nebraska...it also can greatly impact taxes.  Fewer land buyers will mean lower land sale prices...which will mean lower land values and lower tax revenues.  This area of taxes needs to be lower...but not because of a depression. That is a discussion for another time however.Mike McCann will auction it for you! 2018

So what is the solution? We need corn prices at least in the low to mid $4.00 range...if it was at $4.50, the farmer could pay the higher interest on any loans and put a few dollars in the pocket.  If it is below $4.00, the only way the Farmer can make any profit is if the yields are sky high.

And with fickle Mother Nature...that is always a risk.

So...How Do We Get There?

Many things can impact the pricing quickly...but that usually means a problem somewhere such as drought, too much rain, crops being planted too late...or needing to be replanted to a shorter season crop...hail and wind, trade wars, and war, etcIt could also mean an early freeze cutting yields short in the southern hemisphere, but all of these are only short term solutions at best.

We need to communicate with our local, state, and federal governments and really articulate what is going on in the real world...and what we need to do for the farm to survive...which is every farm on every mile in the Midwest. Not some fancy operation somewhere that is all glitter and gold that you see on the news...but a real farm that is a working farm and those are everywhere but on the news.

Long term, we need to continue to develop...although at a faster rate...more uses for the renewable crops. I feel this has stagnated or slowed immensely. 

IE: Find more ways to use the product that benefits society and/or find a wider range of products for the farmers to produce. Hemp is a great example.

One thing that is absolutely needed:

WE NEED TO CUT OUT THE MIDDLE MAN! Right now there simply are too many fingers in the 'till. If you are a middle man...you know I am right.

There are multiple layers of Institutional Buyers who are buying and selling commodities, in this case, crops, and turning around and selling them...or holding them... for a higher amount and thus a profit...for doing basically nothing but buying and reselling.  They have way too much control on the markets and any future trends.

Imagine it this way:  You are having a garage sale...but the only people you can sell to are the guys that own thrift stores and they determine what they will pay you.

You have no say so in the price and cannot sell it to the small neighbor because the small neighbor has to buy it from the thrift store.   

Except....if you have a big, rich neighbor who needs your items...(like an ethanol plant for corn growers)...then you can sell to that big, rich neighbor for a higher price than if you were selling to the thrift store. Mike McCann The sun sets on another combine!

But even that big, rich neighbor sets the price.

Why? Because your friend is also having a garage sale and selling the same stuff as you and thus is your competition and is willing to take the price the big, rich neighbor is offering...thus forcing you to take that price as well. Or keep it and make no money.

So you rent a storage unit and then pay to store your items and try to sell them at the next garage sale for the same amount...thus losing money. 

The farmer stores the corn at the elevator and pays a monthly storage charge to do that...and most of the time loses money doing that while the elevators reap any profits.

The elevators also have multiple ways of dinging the crop prices...ask your favorite friendly farmer to explain this to you if you do not know what I mean.

We need to get rid of some of the layers...in this current electronic age...they are simply profit takers and unnecessary in my opinion.

I am an eternal optimist...and I know that the industry as a whole will survive long after I am gone...but I do not want to see any clients, friends, or farm families lose their livelihood through no fault of their own.  I also hope that they are being careful with their farming operation and looking at all angles for bringing in revenue into their operation.

Until next time...keep planting the seed of life!!

Mike McCann Denny Pouk Planting Corn!

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Mike McCann Nebraska Land Broker This has been Mike McCann...Nebraska Land Broker...Coming to you from the Farm Land of Nebraska and America!! Visit me at www.mikemccann.com to learn more about the agricultural and farm land for sale market. 

Many farms For Sale in Nebraska are not listed publicly...please call, text, or e-mail with your questions, wants, and needs!

Mike is your Ag, Farm, and Auction expert throughout Nebraska!

308-627-3700 and 800-241-3940 call or text me at these numbers or

mike@mikemccann.com for easy e-mail access! Mike McCann Nebraska Land Broker

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Freddie Legault 04/24/2018 09:10 AM
  2. Robert Vegas Bob Swetz 04/28/2018 10:29 AM
  3. Eileen Burns 05/02/2018 06:28 AM
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Rainmaker
669,870
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

Hi John Wiley   I apologize not answering your questions sooner...I knew I had seen the email on my phone and went back and saw your post. 

Yes...Government subsidies can be a two headed monster. 

Both good and bad at the same time.

There are actually some farmers who refuse to give their farming data to the FSA (Farm Service Agency) and if they do not give their data such as crop yields and acres planted...they cannot qualify for any subsidy.

I am seeing more of this in recent years since any subsidies are not much any more for most farmers.

I cringe when I see this and although most farmers think they have to give the data...some simply do not. That makes it much harder to sell to anyone except the close neighbor that can tell crop yields by driving by from years of experience.  (I am not one of them...I can't tell even close what a yield will be).

This is kind of like the Sellers Condition Disclosure on a house. Imagine how much harder most houses would be to sell if the Sellers never gave a condition report and you could not check the condition.

I do believe that help is needed is getting the income stream from the end user back to the farmer without so many hands in the till. Until that happens...the only solution for the farmer is higher prices on the commodity market.

Apr 25, 2018 11:40 AM #45
Rainer
518,319
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Mike,

Diversification, at least in part, may help farmers. A long time ago, we tried things like decorative hazelnut for the floral industry, miscanthus, artichokes, even specialty potatoes & carrots in a crop rotation. In Vermont, there are people growing saffron in high tunnels for a good profit. The great thing: it grows at the end of winter, when it is too cold for other crops, so they can still do their tomatoes & cucumbers in the summer. Corn & other conventional crops are hard to make money with, especially if you have to buy glyphosate resistant seeds & throw a bunch of glyphosate on it to have it ripen equally. RoundUp is only good for RoundUp sales people, in my humble opinion.

Apr 25, 2018 11:56 AM #46
Rainmaker
1,544,258
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

Farmers need an app/platform like Airbnb or Uber where they can offer what they have to sell and consumers can contact them directly. Some smart farmer needs to come up with that.
Here in Hawaii farming is hard to break into because of high land prices so some of them get creative and turn to other ways to make income such as farm tours, value added products sold in their own gift shops, combining gardening with yoga and inviting volunteers to help. Creativity and diversity is key to attracting consumers to the property. There is a movement happening here where young people want to learn more about farming because they're sick of factory farm food.

Apr 25, 2018 01:17 PM #47
Rainmaker
560,198
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

Farming has to be one of the hardest jobs for the least amount of  money. Seems farming has been in crisis mode since the 1980s.  

Apr 25, 2018 01:40 PM #48
Rainmaker
669,870
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

Hi Dorte...thanks for your frank comments.  I agree that diversification is important.  I also agree that roundup is a nasty product...and in all honesty glyphosphate is not great either. 

Apr 25, 2018 06:06 PM #49
Rainmaker
669,870
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

Hi Georgie Hunter R(S) 58089   Thanks for stopping by and sharing your thoughts.  That is a great idea...now to make it work!!

Apr 25, 2018 06:07 PM #50
Rainmaker
669,870
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

Hi Mary Hutchison, SRES, ABR   Yes it is one of the hardest and I am sure you know some farmers in the KC area that would agree with this article. And your comments.  Thanks for stopping by!!

Apr 25, 2018 06:08 PM #51
Rainer
26,431
James Grant
Asheville, NC

Hi Mike - Indeed farming is the hardest job ever since. Natural disaster also is common factors that affect the crops. But Greenhouse and Nursery agriculture can help too.

Apr 26, 2018 12:05 PM #52
Rainmaker
669,870
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

Hi James Grant Thanks for stopping by and commenting and welcome to Active Rain.  I do have some friends who start their truck gardens in greenhouses. right now, large greenhouses are rare in Nebraska due to cost in the winter time to maintain the temperature.  Hopefull technology evolves fast enough that solar can eradicate some of that short term cost.

 

Apr 26, 2018 02:43 PM #53
Rainmaker
3,297,790
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Mike I just wanted to stop in and wow I found this great post of yours, I am so glad it was Featured getting the word out is the best way when it gets featured, too bad it is such a difficult subject Endre

Apr 26, 2018 10:17 PM #54
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MichelleCherie Carr Crowe Just Call...408-252-8900
Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

Thank you for a thought-provoking post on a subject that affects all of us.

Apr 26, 2018 11:37 PM #55
Rainmaker
669,870
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

Hi Endre Barath, Jr. Thanks for stopping in and reading.  I think we all live in our own "area worlds" and all we learn about the day to day world of others is what we see on the news, alittle bit from family and friends, and now on social media.

What that does...and has done for generations...is create areas that we all lack knowledge on...for instance...I have no idea how severe the water issues have impacted California over the last decade except for what I read and hear.  I am sure it has been devestating for some.

The blunt truth is...the entire Farming Industry is in trouble. 

Whether that is because of a lack of water, too many fingers in the till, or because of low commodity prices...the fact remains that the industry is in turmoil.

This is what I call a "M.O.B. Crop Year" (make or break). If the prices stay the way they have been the last 2 crop seasons...many farmers will not survive for next year. 

A fifty cent per bushel increase would alleviate half of that trouble.

Doesn't seem like much but it sure is.  Now in the last few weeks fuel prices have jumped as well.

I absolutely hope I am wrong...but my banking sources are saying I am right...and that scares the heck out of me.

 

 

Apr 27, 2018 06:39 AM #56
Rainmaker
669,870
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

Hi Michelle Carr-Crowe-Top 1% Diamond Certified Real Estate Team Sells Cupertino San Jose Homes-Just Call 408-252-8900 

Thanks for stopping by...I hope everyone is paying attention to this potential crisis.  It will trickle down to all states and even metro populations.  No income means no 2nd homes or retirement homes in a warm climate.  Less travel...less sharing of dollars which impacts all other industries...and on and on.

Apr 27, 2018 06:43 AM #57
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Robert Vegas Bob Swetz
Las Vegas, NV

Wow Mike,

What a great post and yes the Farms and Farm Land are in trouble! In many parts of California Farmers can't even get water to grow their crops. Congrats on the Gold Star from the AR God's and your post has also been featured to the group:

LATE NIGHT - EARLY MORNING AT ACTIVERAIN

Apr 28, 2018 10:22 AM #58
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Jeff Dowler, CRS
eXp Realty of California - Carlsbad, CA
The Southern California Relocation Dude

Hi Mike

Glad to see this sobering post featured so the word gets out. I suspect most people, other than those in the farming industry, have any clue about the issues that plague our farmers. The water issues in California (and no doubt in other states) remain abig problem and I think are getting worse.

Jeff

Apr 29, 2018 03:52 PM #59
Rainmaker
669,870
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

Hi Robert Vegas Bob Swetz Thanks for stopping by.  Water in California is huge.  When people are paying 20 dollars for strawberries and lettuce...they can thank the powers that be that keep changing the rules and harming the industry.  

Apr 30, 2018 06:29 AM #60
Rainmaker
669,870
Mike McCann - Nebraska Farm Land Broker
Mike McCann - Broker, Mach1 Realty Farmland Broker-Auctioneer Serving Rural Nebraska - Kearney, NE
Farm Land For Sale 308-627-3700 or 800-241-3940

Hi Jeff Dowler, CRS   The problem is man is selfish.  It is proven hundreds of time over that the biggest harm to our planet comes from man.  Whether it is from no water in California for the crops...or low prices in Nebraska...it really is not the farmer who is causing the problems...it is how water is distributed...or stolen by major municipalities. 

20 years from now their will be regional battles...not lawsuits...battles over water and who has a right to it. I sure hope I am wrong on that...  

Thanks for stopping by!

Apr 30, 2018 06:34 AM #61
Ambassador
2,334,476
Robert Vegas Bob Swetz
Las Vegas, NV

Hello again Mike and just to let you know I did re-blog this post.

And in February I wrote a post why the farmers are struggling in California because of water, and I am sure in the future the cost of water and lack of will effect the whole nation.

Water and Power - The California Heist

Click on the link above to read my post and when you get a chance watch the documentary on Netflix, it will really open your eyes.

Several other reasons the farmers are effected is the taxes and cost of items for running farms, I think that farmers should get breaks on gas, water and or everything they use to produce their crops.

Another huge problem is genetically engineered seeds for growing crops. I have heard of horror stories where certain seeds produced by certain corporations will find there way through the wind and other means. And after their specific crops start to grow on other farmers fields the corporations get big shot attorney's, take them to court and end up taking the other farmers fields and land.

There is really so much going on with the farm land across the country and I do believe that greed and power are really helping to destroy the farmers, fields and land.

And huge builders are purchasing farmers land to build homes on.

And Natural Gas Companies are purchasing farmers land so they can drill and or produce natural gas ... the list goes on and on ;o(

Thanks again for your post and information ... 

Apr 30, 2018 07:57 AM #62
Rainmaker
999,323
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Being from Kansas I so appreciate your post.  I held onto it until I had time to read and comment.  Spot on with your assessment, too many middle men.  Not enough profit.  I hope our farmers can "weather" the financial storm that makes them profitable.  

May 02, 2018 09:20 PM #63
Rainmaker
486,441
Bruce Hicks
Best Homes Hawaii - Honolulu, HI
Your Lifetime Friend/Helper!

It appears that CHINA is aiming to be the top dog in farming.  Just like in Real Estate, lot of people want their hands in the pie Mike McCann - Nebraska Farm Land Broker .  My Grandparents on moms side had 110 acres in Tennessee, SOLD IT.  Grandparents on dad's side had 60 acres, SOLD IT!  Of course, they both were elderly and have passed on.  Purchasers have done nothing with the land.

May 20, 2018 11:41 AM #64
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