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The Economics of Farming?
Bob Whitney
County Extension
Agent‐Agriculture
Texas AgriLife
Extension
Service,
Williamson
County
The
Blackland
Crops
Clinic
was
held
this
past
Thursday,
October
30 and
we had
some
really
interesting
speakers.
I think
everyone
was
surprised
by how
much
can
be packed
into
just
a few
hours
but
the
information
was
really
flowing!
One
of our
speakers
was
Dr.
Mark
Welch,
Extension
Economist
for
Grain
Marketing.
Mark
is really
a down
to earth
economist
basically
because
he was
a farmer
first,
farming
in the
High
Plains
of Texas
before
becoming
an economist.
Mark
gave
us a
situation
analysis
and
discussed
the
outlook
for
grains
in the
coming
months
and
there
were
some
real
interesting
parts
to his
talk
that
I thought
the
general
public
should
know
about.
First
his
outlook
for
grain
demand
and
even
price
is pretty
good.
We
have
seen
corn
prices
drop
continuously
since
the
middle
of summer
but
according
to Mark
we are
probably
at the
bottom
basically
because
we don’t
have
much
corn
in storage.
Economist
use
the
term
"days
of use
on hand,"
to look
at the
amount
of corn
available
in the
world
and
currently
we have
on 49
days
of corn
left,
the
lowest
since
1974.
This
means
we are
in short
supply
and
a short
supply
means
higher
prices
are
around
the
corner.
Also
he said
that
ethanol
accounts
for
34%
of all
US corn
use
and
this
is up
from
23%
in 2007.
This
trend
will
continue
which
only
helps
to push
prices
higher;
I hope
he is
right
because
we can’t
farm
corn
at $4.00
a bushel!
On another
note
Mark
discussed
the
costs
associated
with
farming
corn.
Currently
corn
accounts
for
the
largest
share
of nitrogen
use
of all
crops
and
fertilizer
is the
largest
expense
of the
variale
costs
for
producing
corn.
Fertilizer
is 43%,
seed
21%,
fuel
lube
and
electricity
14%,
chemicals
11%,
repairs
6% and
custom
work
5%.
In
2008
farmers
saw
a 65%
increase
in fertilizer
prices
paid
over
2007,
a 43%
increase
in fuel,
30%
increase
in seed
costs,
7% for
machinery,
6% in
wages
and
4% in
chemicals.
2008
was
a frustrating
year
for
farmers
as farmers
paid
high
prices
to plant
the
crop
hoping
the
grain
price
was
going
to sta
at the
record
prices
recorded
at planting
time.
Unfortunately
grain
prices
began
their
slow
descent
in August
and
only
now
are
they
slowing
down.
Farmers
lost
thousands
of dollars
over
the
course
of just
a few
weeks
or even
a few
days.
Lastly Mark
had
a few
interesting
facts
for
farmers
to consider.
One
is that
the
bushels
of corn
produced
per
pound
of nitrogen
fertilizer
have
steadily
gone
up.
We
have
improved
our
corn
varieties
and
our
technology
such
that
in 1965
it took
one
pound
of nitrogen
to produce
0.9
bushels of
corn.
Today
it takes
one
pound
of nitrogen
to produce
nearly
1.2
bushels
of corn.
This
is phenomenal
efficiency
gains
but
there
is another
fact
that
startled
all
the
producers
in attendance.
In
1960
it took
141
bushels
of corn
to buy
1 ton
of anhydrous
ammonia,
a nitrogen
fertilizer
source.
Today
it takes
161
bushels
of corn
to buy
1 ton
of anhydrous
ammonia.
So
even
when
we think
we have
it worse
off
today
a quick
study
of history
shows
us we
have
seen
these
times
before.
Crop Variety Testing
I get
asked
all
the
time
what
do you
think
the
average
yield
was
for
Williamson
county
for
corn
or grain
sorghum.
Of
course
averages
are
hard
to get
because
I don’t
know
what
everybody
made
but
I can
make
some
educated
guesses.
I compiled
the
results
of all
the
county
grain
tests
I could
find
as well
as looking
at tests
from
just
outside
the
county
staying
only
with
blackland
farms.
In
looking
at 198
corn
varieties
we averaged
76.3
bushels
per
acre
with
a high
of 113
and
a low
of 40.
In
77 sorghum
test
varieties
we averaged
5202
lbs
per
acre
with
a high
of 6770
and
a low
of 2982.
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