Just rambling thoughts about anything that happens to be on my mind and that usually isn't much!
This blog best viewed with IE4 or greater and tongue in cheek

Tuesday, June 14, 2005

A drought?

.....it's been nearly (not quite) 24 hours now with no rain.......so no doubt that within a week or so, some rancher or farmer will say...."getting kind of dry"! Farmers are worse about it than ranchers are, but you can bet someone will say it within a week.

Did you ever really stop and think about it? Any farmer of any size is a millionaire on paper because of his land holding. And because of landholding, he pays a bundle of taxes...all land is taxed. Now to farm, naturally he has to have a lot of equipment. Tractors of any size will run $65,000 on the smaller utility side......upwards to almost infinity. Combines well over $100,000 just to start looking. Not uncommon for a medium sized farmer to have 3/4 to 1 million dollars tied up in equipment. Then comes planting season and he starts buying seed, fertilizer, chemical and easy to tie up $150-200 an acre in a row crop.

Now take the rancher. If he is a yearling/stocker guy he is purchasing calves around 4-500 lbs at $1.25-1.50 per pound for each animal he purchases, prays the animal will live after the truck ride home, adds several more dollars in medications, feed and mineral (my part), grass bills, winter bills, vet bills and then transportation back to the point of sell and would feel he did great if he makes $50 a head. (now quickly do the math to see how many head he has to run to make $30,000 over initial cost only...and remember, no benefit package) The cow/calf man would have similar figures as that.....with only one pay check a year.

These guys share one similar interest, they pray there is no government program, mad cow scare or some similar act of stupidity that comes along and breaks the market just before they are to market their wares. As you can read, farmers and ranchers are the plumpest pickles in the jar or they wouldn't be doing that! Makes absolutely (from an investment / business standpoint) to take those types of risk. Even on the GOOD years, neither will have a ROI (return on investment) of 2-3%.....which would be a bad investment by any industry standard.

But yet, each day, I go out and talk to millionaires, with bib overalls, crumpled hats, junk yard pickups and blue heeler cattle dogs to make my living. These marvelously industrious, optimistic, hard working people who buy everything they use from a retail system so they can sell everything they produce at "raw ingredient price" to the food industry.

If they truly ever wise up to what is going on.....we are all gonna starve

No comments: