How Much Money Do Farmers Make?

everyone who is watching this video will receive a big gift before starting the video. If you don't know who I am, my name is Cole. I am a 22 year old farmer from central Iowa. I farm with my dad. and my little brother and I have something we would like to talk about. I'm wearing my viper sunglasses because the sun is super bright and I'd be doing this all the time and no one wants to see me with my eyes. Close, by the way, we have the vipers on. If you want to buy a pair, see the link in the description.

If you use the code Kohl Star Corn you will get 10% off. I think a lot of people really don't understand. what really happens with farm finances, I mean

farmers

drive around with $500,000 combines and $300,000 tractors, they have to be making tons of

money

, well that's not always the case. This video I will be very personal. In fact, I'm going to go behind the scenes at our own 1,700 acre operation and I'm going to break down all of our income and all of our expenses and hopefully shed some light on what's going on here on the farm. I would say we are pretty

much

an average farm and I'm not here to say our business is perfectly efficient and I'm right in every way, we definitely have a lot of room for improvement, no one is perfect and we are doing our best.

As I said a moment ago, this video is very personal and that's because I'm going to use real numbers from our farms primarily. Now I have a couple of rules, the first rule is that I am not going to use the actual income from our farms. and our actual rental expenses. I'm going to use averages from the Iowa State University Extension website. They put together some really good stuff there, so I'm going to base that on that for the state of Iowa. I don't really care if anyone knows how

much

money

I have or how much money I

make

, but I don't want to put our farm at a competitive disadvantage compared to all our neighbors.

I really don't want them to know all of our information, that's why we're doing it. that and the second thing is that I'm going to round all the numbers to the nearest thousand because no one wants to hear me say $149,000 and 99 cents for each item we're adding up, that creates a lot of unnecessary chatter. Third, just because our company is paying for this doesn't mean other farms are paying for it. Remember that not all farms are the same and lastly, this video is intended to show the shell of how the finances work behind a farm that it is not designed for. a pity video, in other words what I am saying is please don't feel sorry for me or any other farmer.

I know that what happens on our farm is 100% our responsibility and what applies on our farm is not. I'm not going to apply to another farm, farming in central Iowa is very different than farming in western Montana. Oh yeah, I forgot one last thing. I'm going to base it on the 2018 Cup because I have all the numbers for 2018, all the 2019 numbers are not out yet, oh yeah, one last thing. I'm going to miss something and I don't always do everything 100% correctly, no one does. This is a real life farm in the real life world so just posting how we do it so if I miss anything feel free to post it in the comments.

By the way, if you enjoyed this video and learned something from me, could you please like this video? I take a lot of time to say thank you so

farmers

get paid when they sell their product, so in our case when we sell our corn and soybeans, we also get paid when the government pays us, that's true, I said government, government, now I know a lot about People are uncomfortable with that, and believe me, that's right: we don't like just getting a check for doing nothing, but if we don't take that money, it puts us at a serious competitive disadvantage if everyone else completely honest government payments are really helping a lot of farmers right now because there would be a lot of people who wouldn't be in business without them and as far as I'm concerned, I think everyone watching this video would like it. like to eat, so the average corn yield in Iowa for 2018 was one hundred and ninety-six bushels per acre, which is not too bad, since soybeans yielded 57 bushels per acre, so on our farm we grow 1200 acres of corn for a total yield of 235,200 bushels of corn and then We planted 500 acres of soybeans for a total yield of twenty-eight thousand five hundred bushels.

Well, that seemed pretty easy right now. We have to sell it, so when it comes to selling it, we rely on the Chicago Board of Trade, which is the market. shows the current price of corn and soybeans. Now keep in mind that the price we see on the Chicago Board of Trade is not what we actually receive in our pocket when we sell the grain. There's something called a base, so let's say the Chicago Board of Trade. It says corn is four dollars a bushel, but there are a lot of local buyers who don't really need much corn right now, so they only offer three dollars a bushel, that dollar per bushel difference is the base, so in some places actually needing grain, they will have a smaller base.

I've even seen places that have a positive basis, meaning they pay more than the Board of Trade, but when places don't need grain, they have a low basis, there is usually a normal basis. 30 to 70 cents according to the board of trade, so when you remove the basis you

make

a cash sale now as some farmers are excellent marketers, some are average marketers and most are terrible marketers. I just found out that the high cash price for 2018 is the average and the low and then I took all of our bushels divided by 3, so 1/3, so I love the high third sold to the average third sold to the low.

This may not be the most perfect way to do it, but this is how we are doing it. To simplify the video, one third of our two hundred thirty-five thousand two hundred bushels of corn is seventy-eight thousand four hundred bushels, according to the Iowa State site, the highest cash price for corn last year was $3.57 , the average was three dollars forty. -one cent and the minimum was three dollars and twenty-four cents, so all those bushels of corn sold for eight hundred and one thousand dollars, of course, we can't forget about soybeans, so it was always twenty-eight thousand five hundred bushels of soybeans dividing them into thirds. brings it to nine thousand five hundred bushel segments now, once again, according to the state of Iowa website, the high cash price for soybeans was nine dollars and seventy-five cents, the average was nine dollars and five cents and the minimum was eight dollars and thirty-eight cents, so from here on out On the farm we sold all of our soybeans for $259,000, so when we had our corn sales and our soybean sales, that gives us an income of 1 million sixty thousand dollars, oh but wait, remember those government payments I was talking about earlier, this is where they come from. at stake, so in 2018 the United States government introduced the market facilitation program, also known as MFP payments, so MFP payments paid one cent per bushel for corn grown in 2018 at one dollar sixty-five per bushel of soybeans grown in 2018, so on our farm the MFP program paid us two thousand dollars for corn and 47 thousand dollars for soybeans, so when we add our MFP payment to the rest of our sales, that brings us to an income total of 1 million one hundred nine thousand dollars, now there is something I want.

The people we must take into account when we sell our grain to a buyer, the price we get is for corn that is one hundred percent in perfect condition, they say that there is a little damage in the corner, there is a little smell or if bugs got in somehow, all those things can I have a doctor, so a normal document usually costs five to fifteen cents a bushel, but if something is really bad, let's say there's a hot spot in the middle of a container, it which can easily happen that the document can cost up to 40 cents per bushel now in the case of On our farm we can store almost all of our crop and our own grain bins in our own buildings, but there are some grains that we were not able to store in our own warehouse because we simply didn't have space and had to bring them in. that grain to the cooperative now our local cooperative is a place that has millions of bushels of corn and soybeans stored and what they do is when we take our corn there, they store the grain for us to store the grain at our location. cooperative, it costs fifteen cents a bushel for the first 90 days, no matter what, if we decide to sell our grain after it's been there for 30 days, it still costs us 15 cents a bushel to store it and then every month that's extra afterward. 90 days equals 3 cents per bushel, so if we decided to store our grain there for an entire year, it would cost us 42 cents per bushel just to have it stored, so what hope is there of being able to store the grain that a farmer will be able to get? a higher price in the future than today, so when a farmer has storage on his own farm, even if it is not completely free, it is often significantly cheaper than taking it to a cooperative, so now that we have We earn our 1 .1 million dollars, what do we do with them?

This is where my experience in spending money comes in because farmers have a lot of expenses so just to give you an idea of ​​the kind of expenses we are going through here. let's mention them real quick we have equipment correct phones professional fees bank loans old crop insurance property insurance employees collecting expenses repairs see food burning supplies utilities you know we can't forget about miscellaneous expenses the first expense I want to talk about about the equipment gather the equipment expenses for a farm is really difficult because every farm is very different some farms use equipment that is 50 years old some farmers use equipment that is brand new some farmers own some old some new some lease and some don't now I would give you the financial situation of our equipment, but since we have a lot of neighbors watching, I don't really want to give those things away, so I put together an equipment list for a farm our size with some things that are a little newer and some things that are a little older, all what we would need for a farm our size.

Do you want to see the individual elements here on the screen? Pause it and you can see what I've listed for everything, but with this piece of equipment here I thought it would cost around $900,000. Buy it all and let's assume, for the simplicity of this video, that half of its value was written off, so $450,000 were spread over a five-year equipment plan that equates to $50 per acre. Take something like this tractor, for example, if someone were to buy this one. one in particular, new, would cost over three hundred thousand dollars, sprayer behind me, try to find one of those for under $200,000 used and grab the combine behind me, one of these on the ten year old machine, you're probably looking $100,000 so right there and just these three pieces of equipment one hundred thousand dollars three hundred thousand two hundred thousand six hundred grand wrapped in three pieces of equipment now these are just examples of course what I'm saying is that equipment is really expensive when It's about equipment.

Older things are much cheaper. Newer things are more expensive, but older things have more downtime. More repairs. Newer things have more uptime. Fewer repairs. They will be one of the most expensive things, so the first important input we will have will be the seed. Last year we planted 1,200 acres of corn and that cost us 135 thousand dollars just in corn seed and for the 500 acres of soybeans we had. That cost us twenty-four thousand dollars, so in total it cost us one hundred and fifty-nine thousand dollars just to plant the seed. Now that we have purchased a really expensive seed, we want to make sure we can get the biggest yield. from that seat as possible, that's where the machine comes in behind me, this is the sprayer, so we use the sprayer to spray chemicals to keep the weeds out of our fields because the weeds steal the nutrients from the seeds we are treating of planting and that causes them to produce a lower yield during the spring.

I basically live by this because I have to spray all of our corn and bean soil before planting and then after planting I go in and spray it again to keep the weeds away and then we keep an eye on things to make sure they don't come back. appear, because if that happens, I have to hit the entire ground again. On corn herbicides, we spent $48,000 last year and on bean herbicides, we spent $28,000 that year. That's where organic farming would be really good because then we wouldn't have to spray any chemicals and we could eliminate that cost, but keep in mind that for organic farming we would have to be chemical free for three years, but duringthat three year transition phase we would not be able to get the organic premium because our land would not yet be organically certified and also other things to keep in mind when it comes to organic farming is that it requires a lot more time, there is a lot more wear and tear on it. tractors and a lot more diesel fuel to keep the weeds out of the crop and generally in a well organized organic field, the yields will be about half of what we produce and if the weed outbreaks are especially bad, it could be even worse than that.

I don't want anyone to think I'm anti-organic because I'm not. I think it's absolutely amazing, right now it doesn't make sense for our farm, plus since we own our own sprayer we don't have to pay anyone to apply it for us, our local applicators charge six dollars an acre to spray and we would have to go over all of our acres at least twice, so on 1,700 acres, apply twice as much, that's 3,400. acres at six dollars an acre, that's what it would cost to just run the machine on those acres, but since we own it, we don't have to pay for it, so one of the reasons we own it in this last major input is gypsum.

It is fertilizer, think of fertilizers as nutrients and vitamins for a plant to grow strong and healthy and produce a lot of corn. There are two different types of fertilizer that we apply dry fertilizer and liquid fertilizer. The dry fertilizer is applied in the fall after we are finished harvesting and it is placed with a spreader. The spreader is a machine like those things that people use to plant their gardens, the width of the grass where they push, turn and kick the seeds. , that's basically a small version of what a spreader is. when you take the spreader to the field, they add phosphorus and potassium, in farmers' language we call it P and K and then they also add cubed lime, which is short for lime pala ties, and what that lime is going to do is balance the pH in the soil and then it will basically unlock the nutrients in the soil so the plant can use them and then we put another product in there that makes the P and K more available to the plant so the spreader works. round trip on our fields costs six dollars per acre P and K costs $56 per acre Pelle lime costs $15 per acre and then the product that we use to make P and K more available costs five dollars per acre, so Putting dry fertilizer on 1,200 acres will cost us ninety-eight thousand dollars.

So when it comes to liquid fertilizers, farmers do this differently across the board, there are different ways to apply liquid fertilizer, but the way we do it is with 32 percent nitrogen and that's basically giving the steroids. corn, so there are two types of soil that we plant. in corn that was corn the year before, aka corn in corn and then corn that was broadcast the year before, aka corn in beans, since corn steals more nitrogen from the soil than beans, we need to supplement more nitrogen in corn in corn soil than in corn. bean soil, so corn in corn soil requires more nitrogen, so putting our corn on 32% corn costs us between six and eight thousand dollars and putting our corn on bean nitrogen costs us twenty-two thousand dollars, we also add a zinc additive in all that 32 percent and that costs extra every thousand dollars oh yeah, remember the sprayer, most farmers don't have their own sprayer and they hire a cooperative to do it for them, so Let the cooperative come and spray. the first dose of liquid nitrogen would cost six dollars per acre and then the second dose of nitrogen, when the corns are tall, would cost twelve dollars and fifty cents per acre, fortunately for us, since we own our sprayer, we don't have any. to pay that one of the biggest expenses on our farms is cash rent according to the Iowa State University Extension site, they say the average rent in Iowa is $222 per nacre.

Remember that two hundred and twenty-two dollars per acre is an average. Some people pay more. Some people. pay less if the land is better people are willing to pay more if the land is worse people are willing to pay less I have heard of rents as low as $100 per acre up to $500 per acre there are farmers who own one hundred percent of your KERS there are farmers who have rented one hundred percent of their acres and there are farmers who rent some and own others so in the case of us we own 1,100 acres and we rent 600 acres so what we do at star farms of corn is We try to keep our land payments equal to our average cash rent, so when we have some farms that we owe a lot of money to, then we have some farms that we owe a little money to, we try to average that out on the whole. to equal our average cash rent, so in this case it is 222 dollars per acre, so for 1,700 acres at 222 nacre dollars it costs us three hundred and seventy-seven thousand dollars of coal, if renting the land is that expensive, why Why don't you go to a landlord and ask them to lower the rental price, it's a very good idea, but it's not that easy.

The best thing I can compare it to is trying to go to a homeowner and say, "Hey, lower the rent, good luck, there are some landlords." who are really good to work with and will work with the farmer on their rentals and will understand that when prices are low they will not pay as much for rent and when prices are high they will be able to pay a little more as By owning 1,100 acres we get a lovely thing called property taxes, so we pay $32 in property taxes for 1,100 acres for a total cost of 35 thousand dollars a year in property taxes, that's expensive, not only is that pretty bad, but we're buying 1,100 acres. at $222 an acre on a 25-year mortgage, that means we have to pay taxes on it. 1,100 acres at $222 an acre is two hundred forty-four thousand dollars, so basically Dad shows an income of two hundred forty-four thousand dollars.

For lack of simpler terms here, Dad pays taxes on two hundred and forty-four thousand dollars, Dad can deduct interest as a tax deduction, but it's really not that significant in the grand scheme of things, so after doing a quick and dirty tax analysis of this dad. He is paying sixty thousand dollars a year in income taxes after purchasing this land. Now I know people are going to argue that, wow, coal is going to be part of your dad's net worth, so ultimately you're making money at the end of the day and I mean, yeah, you're right, but At the same time net worth doesn't mean much to a farmer because we never plan to sell any of this, so it's money that goes towards something and yes, on paper it is. increase our net worth, but it's like having a three million dollar Bugatti that you can't sell and honestly, it takes a farmer to understand that net worth doesn't really mean anything.

I know this could make a lot of people excited, but at the end of the day we never look at our net worth because net worth doesn't pay the bills and we never planned to sell it anyway, so it doesn't really matter how much it's worth. If we're just looking at a cash flow, I could talk about the advantages of owning versus renting and vice versa, but that's a completely different topic for another video. Am I the only one talking when I say I love paying everyone's license and registration fees? of our vehicles, especially when you have four semi-trailers, five trailers and ten vehicles, yes, we add up, we spend six thousand dollars a year on licenses and registration fees.

I don't know if many people know it or not, but farmers don't know it. If we have that million dollars, we sold them grain into the bank account all year long and then we subtract it as expenses come in, we sell it all year long, which means there are many times during the year when we don't we do. If we have money to buy things, that's when the rent payment of three hundred and seventy-seven thousand dollars comes and we only have twenty dollars in the bank account, that means we have to borrow it, we call that operative note, so we pay interest as an operative note. for the entire year it is only about thirty-six thousand dollars.

I know that interest can also be used as a tax write-off, but I'm not going to go into any of that. I'm not a certified public accountant nor am I a tax expert so I'm just not going to go into that, but keep in mind that some of these things also have a tax aspect, so in our company we have seven tractors that combine a sprayer , ten vehicles, a backhoe, two skid loaders, what else am I forgetting and a lawnmower? Guess what they have one thing in common: they all use fuel, so on our farm in 2018 we spent 41 thousand dollars on fuel, so the next time someone goes to the gas station and sees that their fuel bill is over a hundred dollars, think that someone has it worse. much worse and yes there are tractors and trucks that consume much more fuel but keep in mind that is another expense when it comes to buying equipment, not only is fuel very expensive for us, insurance is great, insurance is expensive , so on the farm we have police insurance and then we have property insurance, believe me when I say insurance is not something we have to try to make a lot of money with between crop insurance and property insurance, we spend $40,000 a year, check this out, yeah, a cell phone basically could We didn't farm without it, so our internet-connected phones cost us five thousand dollars a year by 2018, we paid $16,000 in total labor, so on the farm From time to time we have projects that we are not able to do ourselves because or we do not do it.

We don't have the time to do it or we don't have the equipment to do it. We call this category custom work, so let's say someone comes and helps us plant corn. Someone helps us harvest some beans. Someone gets out their bulldozers. You are an excavator. to take down some trees and fix some waterways for us, this all applies last year, we spent twelve thousand dollars and custom work, you guys want to know what I like most about going to the lawyer and the accountant, that's right, you guessed it, pay it. If we spent three thousand dollars last year on professional fees, look at this building, look at all these tools, look at all these pieces, not only do we have all these things to show, we use them so that that way we can fix our equipment when it comes to equipment. the more we use something the more it will break and the older something is the more likely it is to break well, not always with old things because some of the old things are the best and last a lot longer than new things but you get what you get.

I'm saying on our farm we handle a wide variety of equipment, some of the newest, some of the oldest and we try to do as many of our own repairs as possible, that's why we built this workshop because if we have to take some think that a workshop to Most places charge $120 an hour to repair it and when it comes to semis there are semi places that charge almost $200 an hour last year was a pretty expensive year for us as far as repairs go we just had A lot of things go wrong and sometimes that just happens, so we spent 75 thousand dollars on repairs in 2018.

Well Cole, if you have newer equipment, your repair bill would be a lot less and that may be true, but new equipment It's also very expensive and many times repairs are cheaper than buying something new and new equipment still breaks, we try to use the equipment as long as possible and once it starts giving us more adjustments than it's worth, that's when we upgraded to something newer now on the farm during busy time. Keeping the season going is the name of the game so we carried a lot of parts and supplies in 2018, we spent $5,000 on supplies which brings us to one of our biggest expenses and that is trucking to corn star farms .

We have four semis, but we still rent all our grain to transport, why do we do that? The first reason is that none of our semi-trucks are in the shape that I would like to take them on a hundred and thirty mile round trip several times a day all year round because, well, they are old, so quite a bit of money would be invested in them to that are worthy of inspection. I mean, I guess we could buy new pickup trucks, but you guys just saw how expensive semi-trucks are and even if we did buy newer trucks, there's also a thing called time, so the place we haul to is sixty and five miles away, it's 130 miles round trip and some days there's a three to four hour line where we would be hauling grain the whole time and we don't have time to do anything else on the farm and we have more to do than just the whole grain, which begs the argumentwell, what is transported so far?

The particular place we take you to often has a 30 cent premium. about our local co-op, which means we can hire a trucker who doesn't use our own trucks, doesn't use his own time, gives someone else a job and pays him 22 cents a bushel to transport us there and then They pay 30 cents per bushel more than our local co-op, so even after paying the trucker 22 cents per bushel we are still making 8 cents per bushel by bringing it to our local co-op; In other words, what I'm saying is that it costs us more money to bring it - our local co-op, so it's a win-win situation all the way around so we can take it further afield.

Oh yeah, I almost forgot to mention that we spent eighty-five thousand dollars on trucking last year. light that light requires electricity you see this hand you see how beautiful the skin on my hand is that's because I had water to drink electricity water yes, those are our utilities we spent $10,000 on utilities last year keep in mind it's for corrals two houses two stores grain dryer three bin fans yes now you get the point, before we talk about everything that happened in this video there are two expenses that are a little different on our farm than on most farms and part of that's because of our location and the second part is just our farm management decisions that we make here at star corn farms so the first thing a lot of people do is till, here on our farm we run no till so , we do not do any tillage. between ten and twenty dollars an acre, depending on what you're putting out in the field and what type of tractor you're using, there's a lot of variability, different soil types, soil moisture, whatever, but for simplicity we'll just say it.

It costs fifteen dollars an acre to till, since we don't have to do any of that, we can save a lot of expenses there and the second thing is that because we are located in central Iowa, we often have really nice weather. fall and that allows our corn to dry, which means we don't have to dry it as much and sometimes we don't have to dry it at all, so in 2018 we didn't have to dry a single bushel of corn. but there are many farmers who have to dry every bushel of corn they have and drying can be very expensive if someone has to take the corn to the coop to dry it, our local coop charges four cents per point so if corn costs twenty five percent moisture and it has to be reduced to fifteen percent moisture, they have toTen direct points that cost 40 cents a bushel and to make matters worse, when the corn is wetter it is larger and when they dry it it shrinks, so They have a strength factor added to that, but I'm not an expert when it comes to shrinking. so I'm going to be conservative and just not include that, let's say the ears are being good and I'll just pay the reduction fee and then there are some farmers like us that have on-site drying and we can dry our corn for four and a half cent a bushel, so it is significantly cheaper for us to have our own dryer and dry our own corn than to take it to the co-op, but keep in mind that you must have Ben's fort, which is the most expensive gift, and a dryer, which It's really expensive. you have to have all the electric hookup, LP hookup and all that and the expenses, so there are pros and cons on both sides, but in 2018 we were lucky enough to not have to try any bushels, so we saved a lot money there; yes, this number.

It's real, okay, cool, all jokes aside, now there is no way a farm is losing two hundred and thirty-nine thousand dollars and is still in business. Well, guys, like I said, these were actual numbers of what we spent here on our farm this year, so this number. it's real now imagine someone who harvested a crop that was 20 bushels less than what the numbers were having a really bad day for them so I know everyone is wondering if the farm house will be able to continue if this is reality And, frankly, there are a lot of companies that aren't and this money-losing trend is nothing new, it's been going on for the last six years and there are really only about four things that have kept people out of control.

The first is to have good financials. having a financier that can work with the producer that can refinance things for longer to make lower payments and help the farmer take advantage of those types of agreements has really helped a lot of farmers move forward in the second, it's more Farmers have more from one source of income, meaning they have more than one job. I know in the case of our farm we have some investments, that cash flow we have our grave digging business. I have my YouTube channel. My brother has his hay. packing business and then mom corn star works full time so everyone watching really needs to give mom corn star a hug and a thank you because without her work the farm wouldn't be here there were a few years where we were so financially tight, it was mom's income that kept the farm afloat, so thanks mom, the third thing that keeps farmers afloat is government payments, this loss of two hundred and thirty nine thousand dollars is due to government payment of $49,000, withdraw that government payment we are receiving. about three hundred thousand oh and the fourth thing is to pray as a farmer we have to have faith in God because without him we would not have any of that first of all in our relationship with Jesus Christ it is the only thing we really have in this world and the only thing we will be able to carry with us, therefore, is the most important thing and I know that our farmer's prayer is something I do every day.

I know from the outside, looking at all our expenses and things, it just seems like our business being all over the place is terribly inefficient, we're not effective. I mean, how can a company lose 239 thousand dollars a year? And I would be one hundred percent right if I said that a lot of that is our fault because it is, but there are also factors that are beyond our hands. It seems like the weather and markets are things we simply can't control and yes, we can always become better marketers, but weather mother nature does what she wants so when it comes down to it.

For the farm as a whole, there are many things we can improve. One of the most important things we can do is get a better harvest. We need to learn more about the science behind producing a crop and how we as farmers. we can get a better harvest, something as simple as applying fertilizers that are more effective or perhaps using fungicides to keep a healthier plant or something as easy as taking soil samples or tissue samples to find out what our soil is missing or what our plants lack it. nutrients, so what we can do with all of that is take that information, analyze it and then we can figure out what we need to do better over the next year to get better crops and, like I said a moment ago, mother nature. is the most important factor, but we can have all our other ducks in line, so when Mother Nature is in line, we will have everything else ready to go.

The second thing we can really improve on our farm here is marketing, so two years ago we hired an outside marketing company and we've been very happy since we did because we hire professionals for everything else in our lives. We hire a lawyer, we hire an accountant, why not hire someone who is a marketing specialist before we go through a marketing company? We did everything with cash sales and our sales were so strong that we would have leftover corn from the previous year and then we wouldn't have enough room to store our corn at home, so we would ship a bunch of coops. which is really expensive, as we just saw before, and we were completely bad at marketing, so once we decided to take a step forward and use a marketing service, we started using hedging.

Coverage has been the difference for our farm these last two years. If you don't know anything about hedging and you're a farmer, educate yourself if you don't want to learn, find someone who does because it's the most important marketing tool we've used in our honestly, it's probably a fun fact, you can make money from hedging when is going down using cover. I'm telling you what can do it and then finally, the third thing we can do is just tighten our belts, maybe I can keep going. Daddy Corn Star will be away from a few more auctions so he doesn't have to make impulse purchases of augers all the time or maybe he can keep Cooper out of the parts store so he doesn't buy so many tools all the time, those five hundred dollar purchases alone They really add up over time and make a big difference as time goes by just for fun.

I ran some numbers just to see what kind of pricing, what kind of performance we would need to break even and before we started. I just want to go over something real quick farmers don't do what they do for money frankly in farming most years there is no money in it yes every once in a while there are some years that are really prosperous for farmers I mean look at a lot things in our operation that we wouldn't have been able to afford if we hadn't had prosperous years, but that being said, keep in mind that my grandfather farmed for sixty years and then when my father was 10 years old he started farming, so he has been farming for 45 years, so between my dad and my grandfather it's one hundred and five years of blood, sweat and tears that they've put into the farm and they worked 100% together their entire lives, so everything we have on the farm today It's because of them.

I can't take credit for anything that happened because it was all their fault. I'm just taking the farm from where it is now and figuring out all the ways we can improve it and make it better from there, okay, let's go back to look at the numbers here, what do we need to do to get out of the red? Well, basically, we have two options: we can get higher performance or we can increase the price, so let's try to increase first. the yield and maintain our same average prices since we planted 70% corn and 30% beans, this is how I made the proportions on how much is needed of each crop, so if we are going to maintain an average price of $3 and 41 cents for corn We need to raise $168,000 to break even, so to do so we would have to increase our production by 41 bushels per acre, which would give us a total yield of 237 bushels per acre.

In the case of soybeans, we need to raise 8,000 more bushels. or an increase of 16 bushels per acre now I bring our total soybean yield with 73 bushels per acre and when it comes to maintaining the same yield but increasing the price of corn we would need to raise the price 71 and a half or have 4.13 sick corn In In the case of soybeans, we would need to increase the price by $2.49 or have $11.55 cents. Those prices are very possible. Corn and soybeans can fluctuate a ton and they can do so very quickly, and in 2019 we have seen some of that in corn, but soybeans have a ways to go now.

I hope everyone who has watched this video now understands the shell of how the finances behind a farm work. Remember that every farm is different. Well, there you have it, that's what we do. If you liked the video, please give it a thumbs up and if you have any questions, need clarification on something or just have a general suggestion, write it in the comments and if you like the style of the video, let me know, this is very different than what I normally do, but I enjoy making them so let me know and lastly if you want to stay tuned for our farm's journey hit the subscribe button that way you'll get a notification when I post and then you can tune in and Keep up the good work our trip thanks for watching everyone Oh