I have been following the price of wheat with interest noticing that it has been shooting up and now I see a story in the Gazette about it. Nine dollars a bushel for wheat. That's a lot of money. Is it enough? That I'm not to sure about.
My dad raised wheat for a lot of years out here and he would be real excited to see these kinds of prices. The prices have been so low lately i got out of wheat and even with these prices i am not tempted to get back into it. Hell, the cost of the equipment itself to try to get back into it efficiently would preclude me from doing it let alone trying to get the fields ready.
All the fields my dad farmed were leased. I tried to come to arrangements with the owners about planting the fields down to grass or something but they never would let me so all they are now is weed patches that haven'
t been tilled or taken care of in years. In fact, I have leases on all of them again but as grazing leases for a lot less money than farm leases are worth. The cows really seem to enjoy the weed patches and it gives me extra grazing which is always useful.
The owners of one of the chunks have been shopping it around trying to find someone, anyone willing to farm it and pay farm ground rates for it. They have been unsuccessful. One guy contacted me about it but when I told him the state the land was in with weeds and all he was not interested.
Some of the ground I just finished planting down to grass could be suitable for wheat but I don't want to go there. I've heard more than one guy recently talking about plowing up hay ground or other ground they have to plant wheat with prices the way they are. I personally bet by this time next year wheat prices will be under 5 dollars per bushel. It is way to easy for people to switch to wheat production from other crops they might have and to really grow a bumper crop. I think that is what is going to happen.
Here in Montana, for instances, there has been a lot of growers trying different things like canola or peas, trying to make money while wheat was cheap. Now that wheat has spiked up I bet that the majority of those producers that have been trying alternative crops jump back into wheat because of the price spike. These kinds of decisions are going to be happening all over the US and the world so wheat prices will be driven back down fairly quickly. This is what happened in the early 70's and its what is going to happen now, at least in my opinion.
The present price isn't high enough for it to be worth it to me to get in. Kudos though to those guys who are still growing wheat and reaping the prices. They deserve it. They have been struggling with low prices for a lot of years and deserve this spike in price to help them out. I don't think it will be as high next year but it will be interesting to see.
On a grassroots level we say that man can touch more than he can grasp. Gabriel Marcel
Friday, September 14. 2007
Wheat
Sunday, March 19. 2006
Rail Rates
Aaron asks the question, "are High Railroad Rates Good or Bad for Montana?" He specifically asked me for my opinion as an agricultural producer. Why you ask a cattle rancher who got out of wheat production because of it's impending profitability a question about freight rates of wheat is beyond me but I can throw my opinion out for all to hear.
If high rail rates were good for Montana, since it would provide incentive to finish more of the product here in the state, it seems to me like it would have all ready happened. The rail rates have been extremely high comparatively for over 30 years so and vertical integration should have happened all ready. We do see a couple of enterprises such as Wheat Montana and Pasta Montana making a go of it and doing very well at it but that is about it. Why is this? Why hasn't there been more vertical integration?
These are questions I can't answer. Are the farmers just lazy and don't want to do it, or are they so cash strapped due to the high rail rates they can't see the free cash to do it? Maybe this is the case, with relief from the high rail rates they would have the free cash to pursue a vertical integration venture. More than likely though they would use the cash to pay down debts they are carrying from years of drought and high rail rates.
Do the farmers need to branch out away from wheat in the state and look for some other value added crop to raise and boost them selves up that way? It wouldn't hurt, it would pull them away from the high rail rates for wheat and cause people to explore new possibilities. Can they afford to do this? That's' a bigger question. You get away form a government approved crop and you lose all your farm subsidies and a lot of the farmers need those subsidies to stay in the game. Change crops, lose subsidies. Lose subsidies, lose the farm. Pretty vicious circle to be staring in the face. It's not very appealing to switch crops if you are the one looking at losing your farm.
There is no easy answers when it comes to rail rates. Are they high? Yes. Is the state right to sue to lower them? I don't know. You can only get the vertical integration if the farmers have the money to do it. With the high rail rates they don't have the money. Catch-22.
The question of whether it
If high rail rates were good for Montana, since it would provide incentive to finish more of the product here in the state, it seems to me like it would have all ready happened. The rail rates have been extremely high comparatively for over 30 years so and vertical integration should have happened all ready. We do see a couple of enterprises such as Wheat Montana and Pasta Montana making a go of it and doing very well at it but that is about it. Why is this? Why hasn't there been more vertical integration?
These are questions I can't answer. Are the farmers just lazy and don't want to do it, or are they so cash strapped due to the high rail rates they can't see the free cash to do it? Maybe this is the case, with relief from the high rail rates they would have the free cash to pursue a vertical integration venture. More than likely though they would use the cash to pay down debts they are carrying from years of drought and high rail rates.
Do the farmers need to branch out away from wheat in the state and look for some other value added crop to raise and boost them selves up that way? It wouldn't hurt, it would pull them away from the high rail rates for wheat and cause people to explore new possibilities. Can they afford to do this? That's' a bigger question. You get away form a government approved crop and you lose all your farm subsidies and a lot of the farmers need those subsidies to stay in the game. Change crops, lose subsidies. Lose subsidies, lose the farm. Pretty vicious circle to be staring in the face. It's not very appealing to switch crops if you are the one looking at losing your farm.
There is no easy answers when it comes to rail rates. Are they high? Yes. Is the state right to sue to lower them? I don't know. You can only get the vertical integration if the farmers have the money to do it. With the high rail rates they don't have the money. Catch-22.
The question of whether it
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