Monday, January 28, 2008
So wheat on the Minneapolis exchange closed on Friday at $12.37. Folks around here are thinking that the farmers are getting rich. We'll they're really wrong. First off, most of the wheat around here was sold in the $9.00 range. That was an incredible price and so most of the crop went to the elevator earlier or was contracted and is now being delivered, which the elevator is now selling down in Minneapolis for a hefty profit. OK so you're still saying nine bucks a bushel...that's a huge price everyone is getting rich. Several things are happening that are causing that to be a false statement. First of all fuel prices have been somewhere near the stratosphere for a couple of years. A hungry tractor might take 200 gallons of the stuff a day and at 3 bucks a gallon...well you do the math. Then multiply that by maybe 3 tractors and during the planting, harvest, and delivery seasons add on five or six trucks. Then calculate that for the year. Now let's add in fertilizers and pesticides and herbicides and such. All of those products have gone through 200% and 300% raises in the last while. And now let's make it even more complicated. This extremely high price for product might drive up the cost of machinery and equipment and services, but like every other commodity, the price will fall some day. It might fall significantly, but the prices for fuel, and chemicals, and equipment will stay high. People who gamble more money in a season than most people make in a life time, will probably be no better off and there's a good chance that they will be worse off. Is this a whining farmer typing? NOPE, I'm a realist who lives amongst hardworking, upright, men (and women) of the soil. They're no different than you, they just want to leave their children something more than they got. Washington and world bureaucrats seem to do all they can to see that that won't happen. Think about this when it's time to vote. Are the people you're voting for strong enough to do what's right? Seems to me that nothing else should matter!