I was reading this post on the projected profitability of corn and felt there was something missing. First the Information that caught my attention.
“The corn profit picture for 2012 isn’t quite as rosy as 2011, but the marketplace could still offer very lucrative returns for growing corn this season, says Chad Hart, Iowa State University agricultural economist.
“In Iowa, we’re projecting season-average prices to range between $5.30 and $5.40/bu., and we’re projecting inputs costs to be about $4.40/bu.,” says Hart. “So, if that holds true, the market in Iowa will be offering 90¢-$1/bu. in profits to grow corn for 2012. Returns from growing corn in Iowa last year have averaged about $1.60/bu., but that corn is still being sold.”
Historically, anything over zero is a good return for corn, because government subsidies have typically provided adequate profit incentive, even when the market has not, adds Hart. He notes that from 1972 to 2008, the return on a bushel of corn averaged -7¢/bu.”
Wow, a negative 7¢/bu. return on corn from 1972 to 2008, how can this be. You cannot continue in any business this long if you are losing money.
Then there is the part about government subsidies providing enough money to provide adequate profit incentive. That piddling amount that we get, adequate? I’ve never received more than a percent or two of my gross income from the government, and it always comes with a lot of strings attached, meaning extra work for me. Sorry, it is not adequate for me, it is next to nothing.
Something must be out of wack here, because I don’t remember losing money from 1972 to 2008. I would not have been able to feed my family, much less put three kids through college and go on a vacation or two, on a negative income.
Obviously I am not the norm here. I expect to make a profit, or be pushed out. Yes, I’ve gone through lean years, but there was always something there to feed the family. Of coarse I do not only grow corn, and that has helped.
So, I’ll take the increase in profitability that is available for me now, I have some very old debts to pay off. It will be nice to make a buck a bushel or more in profits. I know if we make money now, we will have some lean years ahead to make up for it.