Really this whole thing is in the weeds. I think neither of us want subsidies but for different reasons. That being said, it's an interesting discussion and neither of us seem riled up about it so I'm going to pursue it one step further.
Chief Illiniwek - 12/23/2024 13:30
To the point about expenses, you’re absolutely right. I do realize the cost to grow a lower aph crop is less. It would be interesting to hash out the exact differences but that would take us off into the weeds. I do acknowledge it’s less for sure, but I think you can acknowledge it’s not a 1:1 trade off either. In other words, including all expenses including machinery, it doesn’t cost 1/2 as much to grow 125 bu corn vs 250 bu corn.
I can definitely see where it would seem that way but I'm not sure how it would play out in reality if we actually took the time to compare expenses. Some examples:
- You likely have a substantial investment in bins
- My entire annual grain bagging and unloading operation is almost certainly less than the opportunity cost alone on your grain bins
- You likely truck to your bins and then truck from your bins to wherever
- My crop only goes through a truck once
- You likely have a pretty good dryer setup and a significant bill for natural gas or propane annually
- I don't have a dryer and don't spend anything on natural gas or propane. Different climates and different risk profiles
- Not a sure thing but you likely have 1 or more tillage operations to contend with the residue from a corn crop
- I don't do any tillage
- I imagine you need potassium every year and likely have an annual lime budget where you're saving for a big lime application once every bunch of years
- Both of those are a 0 for me
- I imagine you have a tile budget even though it's not an annual expense
- That's a 0 for me
- Do you have a budget for rock damage and rock picking?
- 0 for me
- I know you have to have a substantial fungicide and insecticide budget for your corn ground
- 0 for me although there are some extreme circumstances that can occasionally change that. Maybe once every 5 years on a field or three?
Overall, I agree it's not 1:1 but I suspect the cost difference is more substantial than you might think. I can of course acknowledge that it's unlikely my herbicide program is cheaper than yours and it's unlikely my harvest cost is half of yours and it's unlikely the cost of my planting operation is half of yours.
Chief Illiniwek - 12/23/2024 13:30
I definitely misspoke saying your gross is higher with the lower yield goal. I was trying to acknowledge your net would be higher because of the lower yield goal (less input expense).
I wondered if that might have been the intent.
Chief Illiniwek - 12/23/2024 13:30
You’re correct about basis too depending on your proximity to certain locations, but it’s not as awful in some of the net surplus areas as you think. I can get 6 easy loads a day to an end user that is always positive basis. It’s not great currently at +5 but it’s often 20c+.
That's better than I expected. I'd say it might be a $0.35 to $0.40 gap on average between the two of us then.
Chief Illiniwek - 12/23/2024 13:30
Yes I realize there’s subsidies for other crops and would advocate for those to stop also.
The overall point to my post was to extrapolate out why subsidies lead to marginal ground getting planted. If my example of 125 aph ground didn’t demonstrate that inevitability then you could sub in 100aph ground and $3 corn and it shows it even more so.
Overall I do greatly appreciate your reply and it showed my simple calculations didn’t show the entire picture.
I agree, subsidies, especially predictable ones like subsidized crop insurance definitely increase the odds of marginal ground being planted. That being said, even though I'm vehemently opposed to them, I don't think the unpredictable ones (like the $43 corn deal) have much impact because they're not a sure thing and people aren't going to factor them in to their decision tree when it's no they aren't a sure thing. The unpredictable ones are "icing on the cake" as you described it earlier.
I agree, overall it's an interesting discussion. Even though we've been talking 125 vs 250, I'd call my area a 100 bushel corn area because most corn is continuous corn around here and while yields vary wildly from year to year, if you average them out on continuous corn they would probably actually be under 100 (corn planted into wheat stubble or fallow is probably closer to 140 or so average). Due to the things I described I think the ability of marginal areas to make a profit with corn is likely better than you might think.
Regardless of where the cutoff is for not being able to do it profitably without subsidies, I think we both agree that subsidies skew reality and often have unintended consequences and definitely artificially increase the value of the land they are applied to. On balance, I think that's a bad thing. | 
Does anyone have statistics on how many farmers actually want disaster payments and subsidies?
