How do farmers make any money?

[hayden]

I'm not a farmer, never have been, and never will be. But I'm fascinated by youtube videos of farm operations, in particular larger operation, and I can't help but wonder how they are able to survive. Maybe the answer is they aren't surviving? On the surface it looks to me like the people making money are John Deere (and others), Monsanto, and ADM. I see massive investments in equipment, and very expensive equipment at that. Multiple row crop tractors, all sorts of planters and other implements that I expect are very expensive, combines and all the different heads, specialized carts for mixing or hauling product, huge bins with auger systems to load and unload them, several tractor trailer trucks with specialized trailers, etc. Oh, and huge storage and workshop buildings, Denali trucks for everyone, few side by sides, and one or two tele-handlers. Probably a couple of skid steers too.

Can anyone help me understand how this works? What does it cost in equipment payments and operating costs plus seed, fertilizing, weed control, and proprietary seeds? How many acres typically get planted? Then what are the harvest costs, gathering, storage, and ultimate transport to a buyer? How does this break down per acre, and what is the final crop value per acre?

 

[oldnslo]

The bigger farms are amortizing equipment over more acres so cost per acre for equipment is lower. With out storage or grain bins you are either selling straight out of the field or paying someone else to store your grain.

Around here costs are around $700 - $800 per acre for corn which includes fertilizer, seed, fuel, and normal harvest costs. Get a bad fall where fighting mud, high moisture corn those costs can increase significantly due to added fuel, more break downs, drying cost, etc.

Farmers are the biggest gamblers in the world. You spend thousands of dollars planting a crop hoping that weather will cooperate so you get a crop and that prices for that crop will net you enough to gamble again next year.

 

[hayden]

The bigger farms are amortizing equipment over more acres so cost per acre for equipment is lower. With out storage or grain bins you are either selling straight out of the field or paying someone else to store your grain.

For certain. This is why I asked how many acres.

Around here costs are around $700 - $800 per acre for corn which includes fertilizer, seed, fuel, and normal harvest costs. Get a bad fall where fighting mud, high moisture corn those costs can increase significantly due to added fuel, more break downs, drying cost, etc.

OK, but it sounds like that doesn't include the cost of equipment?

And what is the market value of that crop?

Farmers are the biggest gamblers in the world. You spend thousands of dollars planting a crop hoping that weather will cooperate so you get a crop and that prices for that crop will net you enough to gamble again next year.

Yes, I agree. I'm equally astonished at the value of the equipment that they must be financing.

 

[big bubba]

maybe wait a year for a more accurate answer to your important & relevant question to see the effect of across the board tariffs & federal spending cuts. overall, i agree & sympathize with your complex question, regards

 

[part-time-Farmer-NC]

As with any business you have to juggle taxes along with other operating costs. Uncle Sam gonna get his part no matter what. Many businesses would rather buy more tractor than they need to offset paying that or similar amount income taxes. Then after its amortized they can sell it and get a little back.

Also Farmers around here use to be able to take out low interest loans to purchase more land for farming. The land of course only goes up in value. BUT.. when they sell land that ole piper is hanging around the corner for his more than fair share (capital gains).

And of course they do (at least in nc) get a tax break on the land (called deferrment) if they mee the requirements.

Most have told me there ain't no money in farming. MY neighbors are up before dawn and work past sunset during March-November. So their hourly rate must not look too great. ??

 

[MapleLeafFarmer]

I have been in agriculture all my life. Without Government / taxpayer support our industry would look much much different. We are thankful for all the support.

Farm Programs: USDA Financial Assistance to Agricultural Producers for Fiscal Years 2019–2023 GAO-25-107174 Published: Dec 17, 2024.​

The U.S. Department of Agriculture (USDA) provided $161 billion in financial assistance to agricultural producers from fiscal years (FY) 2019 through 2023, the last year for which data were available.
Texas, North Dakota, and Iowa, in that order, received the most assistance.

Government Accountability Office (GAO) an independent, non-partisan agency that works for Congress.

Canada is about similar.

 

[ArlyA]

My family members own lots of storage and do contract sales. That means they plant, grown and harvest to major company for a contract price. They do part of there acres that way so as to guaranteed a modest income while the other things they grow can be more a risk. It is big business and everything there is big, yet it is family owned operation. Here is the harvesting crew. We do have a thread here called "how Ag works"

 

[hayden]

As with any business you have to juggle taxes along with other operating costs. Uncle Sam gonna get his part no matter what. Many businesses would rather buy more tractor than they need to offset paying that or similar amount income taxes. Then after its amortized they can sell it and get a little back.

It's sounding like people don't understand that if you spend $100k on a tractor and deduct it, you aren't saving or getting back or saving $100k in taxes. You are only saving the taxes you would have paid on that $100k of income. The less you are making, the lower your tax bracket and the less savings. The higher the tax bracket, to more you save. Realistically the savings is in the $0.15 to $0.30 per dollar. And of course if you aren't making a net profit from the farm, your savings will be zero.

Also Farmers around here use to be able to take out low interest loans to purchase more land for farming. The land of course only goes up in value. BUT.. when they sell land that ole piper is hanging around the corner for his more than fair share (capital gains).

Ah, I forgot the mortgage on the land, so that adds more to the per-acre cost.

And of course they do (at least in nc) get a tax break on the land (called deferrment) if they mee the requirements.

That's a break on the realestate taxes, right? That seems pretty common and helps, but it's yet another cost per acre.

Most have told me there ain't no money in farming. MY neighbors are up before dawn and work past sunset during March-November. So their hourly rate must not look too great. ??

 

[Jstpssng]

When it comes to crop failure, many farmers buy insurance.

 

[oldnslo]

Farmers are the only business that I know of that buys everything at retail and sells his crops at wholesale prices dictated by some pencil pushers that guesstimates crop production and fluctuate prices accordingly.

 

[hayden]

Farmers are the only business that I know of that buys everything at retail and sells his crops at wholesale prices dictated by some pencil pushers that guesstimates crop production and fluctuate prices accordingly.

Good point about retail vs wholesale, but I think there is more to crop pricing than some Poindexter throwing darts at a board.

 

[Jstpssng]

Farmers are the only business that I know of that buys everything at retail and sells his crops at wholesale prices dictated by some pencil pushers that guesstimates crop production and fluctuate prices accordingly.

Paraphrase of a JFK quote.

 

[steve tym]

Government subsidies?

 

[quicksandfarmer]

I'm not a farmer, never have been, and never will be. But I'm fascinated by youtube videos of farm operations, in particular larger operation, and I can't help but wonder how they are able to survive. Maybe the answer is they aren't surviving? On the surface it looks to me like the people making money are John Deere (and others), Monsanto, and ADM. I see massive investments in equipment, and very expensive equipment at that. Multiple row crop tractors, all sorts of planters and other implements that I expect are very expensive, combines and all the different heads, specialized carts for mixing or hauling product, huge bins with auger systems to load and unload them, several tractor trailer trucks with specialized trailers, etc. Oh, and huge storage and workshop buildings, Denali trucks for everyone, few side by sides, and one or two tele-handlers. Probably a couple of skid steers too.

Can anyone help me understand how this works? What does it cost in equipment payments and operating costs plus seed, fertilizing, weed control, and proprietary seeds? How many acres typically get planted? Then what are the harvest costs, gathering, storage, and ultimate transport to a buyer? How does this break down per acre, and what is the final crop value per acre?

For the most part, the inputs to agriculture -- seed, fertilizer, pesticides, etc. -- are controlled by monopolies. And farmers who produce commodities sell to monopolies, whether it's Cargill or Perdue or Smithfield.

The monopolies take most of the profit. The actual farmer gets a small piece, and all of the risk -- the risk of crop failure, the risk of poor commodity prices, the risk of physical injury.

 

[nybirdman]

In my part of NY it was the dairy industry,at one time there were 27 family farms(about 20 square miles) now there is three,same number of acres and probably more cows.
Typical herd was maybe 100 head,now maybe 1500 on each of the three remaining.
They have bought up all the small farms.They seem to spend money like water;have no idea how they make it work or make a profit.

 

[Lineman North Florida]

A lot of people are government farming, just Google EWG Farm Subsidies and go to their website put in your state and then your county and you might be shocked at what kind of money some of your neighbors are getting from the government, then you will know how they bore with the big auger and afford all them new tractors and equipment and a new 1 ton diesel trucks every year.

 

[Hay Dude]

Im a farmer. I’m not a big timer, but enough to make a living. I gross about 200K in farm/year crop sales. I don’t have any more than I say, and don’t waste time posting pictures of millions of dollars of machinery I don’t own.

I’m a moderate size farmer, and I’m proud of my worn out machinery and the crop I make each year lol

I find more farmers go under because of poor business decisions on top of an already risky way of life to begin with.
Even with good decision making, you can still get whacked. I worry about it all the time. Keeps you awake and on your toes. Although I did fall asleep once while laying on the ground under a tractor fixing a sensor.

My secrets to staying in the game and also growing in size every year are the following:
1. Resist temptation to own too much new equipment & keep overhead low.
2. Off farm income to add stability.
3. Marry well.
4. Believe in The Lord

It’s simple, really. Farming is just like any business, but one that carriers a lot more risk. You minimize your risk, and sell to the highest bidders you can.

 

[Jrasband]

Look at these farmers and see what they have in common - all very successful. Regenerative farmers that sell direct to consumer.

Joel Salatin - Polyface
Greg Judy - Green Pastures
Gabe Brown - Brown's Ranch
Steve Kenyon
Jim Gerrish
Miller's Bio Farm
Dutch Meadows

And countless others... these are just a few popular ones - the last 2 are Amish.

Farmers that depend on subsidies or insurance are not good examples and are not sustainable.

 

[Hay Dude]

Look at the farmers these farmers and see what they have in common - all very succesful. Regenerative farmers that sell direct to consumer

Joel Salatin - Polyface
Greg Judy - Green Pastures
Gabe Brown - Brown's ranch
Steve Kenyon
Jim Gerrish
Millers Organic
Millers Bio Farm
Dutch Meadows

And countless others, these are just a few popular ones -the last 3 are Amish

Farmers that depend on subsidies or insurance are not good examples and are not sustainable.

I know one of the Amish farms well.
Unfortunately, depending on farm subsidies is ingrained in American farming now.
I don’t get subsidies, unless you count that I don’t pay state sales tax on farm machinery, parts, etc. I’m on my own and always have been.

I don’t want any handouts……but they would come in handy.

 

[Hay Dude]

I'm not a farmer, never have been, and never will be. But I'm fascinated by youtube videos of farm operations, in particular larger operation, and I can't help but wonder how they are able to survive. Maybe the answer is they aren't surviving? On the surface it looks to me like the people making money are John Deere (and others), Monsanto, and ADM. I see massive investments in equipment, and very expensive equipment at that. Multiple row crop tractors, all sorts of planters and other implements that I expect are very expensive, combines and all the different heads, specialized carts for mixing or hauling product, huge bins with auger systems to load and unload them, several tractor trailer trucks with specialized trailers, etc. Oh, and huge storage and workshop buildings, Denali trucks for everyone, few side by sides, and one or two tele-handlers. Probably a couple of skid steers too.

Can anyone help me understand how this works? What does it cost in equipment payments and operating costs plus seed, fertilizing, weed control, and proprietary seeds? How many acres typically get planted? Then what are the harvest costs, gathering, storage, and ultimate transport to a buyer? How does this break down per acre, and what is the final crop value per acre?

Many of the operations you watch on You Tube make significant revenues from their You Tube popularity.
One I have talked to said he makes almost as much off You Tube # of views as he does in crop sales.
My son constantly urges me to do this.