Wednesday, March 16, 2011

This Week Is Turning Out Nicely

Corn went down $.60/bushel last week and has gone down another $.48/bushel the last two days. There are many things that factor into the price the local co-op will give for corn, so for the math exercise that follows, the math might not make exact sense, and I'm sorry about that, but it's for illustrative purposes only.

Ben has 2,000 bushels of corn left to contract for October/November of this year. Ben could've sold that corn for $5.50/bu, but today, the co-op was giving $4.89/bu. Theoretically, I've lost $1220 in the last week. I suck at marketing. I'm small potatoes. What if I had 20,000 bushels left to contract? I'll let you do the math.

You know why farmers are crazy? Because we don't set the prices for our own goods. It'd be like a restaurant owner saying "Give me whatever you want for that burger" or a car salesman saying "I've got $20,000 into this vehicle, but I'll let you take it home for $10,000." Sure, we can protect ourselves by forward contracting (and a bunch of other things I'm barely smart enough to understand, much less explain), but as illustrated above, in as little as two days, that can all be taken away.

Another peril in my farming life is the fact that the government has not yet funded my operating loan. I qualify for a young farmer loan from the FSA, which supplies money to me at a much lower interest rate. Normally, I would go to a bank and pay 6-8% interest. With the FSA, I pay approximately 2%. With a $150,000 operating loan, a guy can save quite a bit of money. Problems arise when the government doesn't fund the program. I was told that the local FSA office did receive some funding, but it went to non-beginning farmers, which means it went to either disabled farmers, or minority farmers. Basically, I'm almost 3 weeks late on land rent. I need to pay for some parts for my planter, I bought a controller for my hydraulic pump today, and I need to buy a stalk chopper next week. I'll be paying cash, which normally would be fine, but with Shay going back to school we were planning on using that money to live for the next 14 months. I'm not exactly happy about this, but there's not much I can do. I could go to a bank and get an operating loan, but I'd much rather stick it out and see if I can get the lower interest rate. I'm supposed to find out Monday if they have funding or if they'll get a continuance, which means I wait another week. That puts us nearly into April. I'm semi-freaking out. If the government shuts down? I'm shit out of luck.

You know what really pisses me off about this? I'm exactly the type of guy that every farming publication raves about. They all say the same thing - we need young farmers. This program is in place to help young farmers. I pay my freaking taxes every year. I've never caused any trouble. And I can't get funding for a loan that isn't even pocket change to most people that are "working" on Capitol Hill. The fact of the matter is, If Shay and I were of a different ethnic background, we would've had this loan 2 months ago. If I would've lost a foot in a farming accident, I would've had this loan 2 months ago. The only thing separating me from those people is the fact that I'm white, and I'm whole. Aren't I the type of person that is supposedly the foundation of this country? 

I am thankful for the opportunity provided the last two years, but this year I feel cheated. I wish the people in D.C. would come out here and spend a few days with me. Maybe they'd get off their asses and stop fighting and work together, like they're supposed to. 

I don't know. I'm just a dumb kid.

1 comment:

  1. LOL! In the words of a President "I feel your pain!" I am not laughing at you, but with you. The situation on you loan is due to Congress haveing a stalemate on passing law. I went into my FSA branch to do paperwork and talked with the loan officer and the head of the office. Both stated the same thing you did about having money available to loan out or make payments. They were waiting to see if Congress extended the spending bill for a couple of weeks (which is old news now.) You are trying to live responsibly and get the best margins you can, but your life (along with mine and everyone else in the U.S.)is dictated by elitists that don't quite get it. As for marketing do what I do, sell at the low and buy at the high that way your neighbor is ensured of always doing better.