How Much Money Do Farmers Make?

everyone who is watching this video is in for one heck of a treat before we get started with the video if you don't know who I am my name is Cole I'm a 22 year old farmer from central Iowa I farm with my dad and my younger brother and I have something I would kind of like to talk about I'm wearing my pit viper sunglasses because the Sun is super bright and I'd be doing this the whole time and no one wants to see me with my eyes shut so we got the pit vipers on by the way if you want to pick up a pair check out the link in the description if you use the code Kohl the corn star you'll get 10% off I think a lot of people really misunderstand what actually goes on with the farms financials I mean farmers are driving around with $500,000 combines and $300,000 tractors they have to be making tons of money right well that's not always the case this video I'm going to get very personal I'm going to actually go in behind the scenes on our own 1,700 acre operation and I'm going to break down all of our income and all of our expenses and I'm hoping I can shine a little light on to what goes on here on the farm I would say we're pretty much the average farm and I'm not here to say our business is perfectly efficient and I'm percent correct in every way we definitely have a lot of room to improve no one's perfect and we are trying our best like I said just a little bit ago this video is very personal and that's because I'm going to be using our farms actual numbers mostly I have a couple rules now the first rule is I'm not going to be using our farms actual income and our actual rent expenses I'm going to be using averages from the Iowa State University Extension website they put together some really good stuff there so I'm going to be based off that for the state of Iowa I really don't care if anyone knows how much money I have or how much money I make but I do not want to put our farm at a competitive disadvantage compared to all our neighbors I don't really want them knowing all of our information so that's why we're doing that and the second thing is I'm going to be rounding all the numbers to the nearest thousand because no one wants to hear me say $149,000 and 99 cents for every single item that we're adding together it makes a lot of unnecessary chitchat the third thing because our firm is paying for it doesn't mean other farms are paying for it remember not every farm is cookie cutter and lastly this video is intended to just show the shell of how the financials behind a farm work it's not designed to be a pity video at all in other words what I'm saying is please don't feel sorry for me or any other farmer for that matter I know what goes on on our farm is 100% our responsibility and what applies on our farm isn't going to apply on another farm farming in central Iowa is a lot different than farming in western Montana oh yeah I forgot about one last thing I'm going to be going based off the 2018 Cup because I have all the numbers for 2018 all the 2019 numbers are not out yet oh yeah one last one last thing I'm going to miss something and I don't always do everything 100% correctly nobody does this is a real-life farm in the real life world so I'm just putting it out there how we do it so if I do miss something please feel free to write it down in the comments it's by the way if you enjoyed this video and learn something from me could you please give it a thumbs up this video it took me a lot of time to make 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 right I said government government now I know a lot of people get uneasy about that and trust me we do - we don't like just receiving a check for doing nothing but if we don't take that money it puts us at a severe competitive disadvantage if everyone else is taking that money and to be completely honest government payments are really helping a lot of farmers right now because there would be a lot of guys who wouldn't be in business without it and as far as I'm concerned I think everyone watching this video likes to eat so the average corn yield in Iowa for 2018 was a hundred ninety six bushels an acre which isn't too bad in soybeans yielded 57 bushels an acre so on our farm we raised 1200 acres of corn for a total yield of 235 thousand 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 well now we have to sell it so when it comes to selling it we go based off the Chicago Board of Trade that's the market that shows the current price of corn and soybeans now keep in mind the price that we see on the Chicago Board of Trade is not what we actually get in our pocket when we sell the grain there's a thing called basis so let's say the Chicago Board of Trade says corn is four dollars a bushel but there's a lot of local buyers around that don't really need a lot of corn right now so they're only offering three dollars a bushel that dollar a bushel difference is the basis so in places are really needing grain they're gonna have a smaller basis I've even seen places have a positive basis meaning they're paying higher than the Board of Trade but when places don't need grain they have a low basis a normal basis is usually around 30 to 70 cents under the board of trade so when the basis is taken out that makes a cash sale now since some farmers are great marketers some are average marketers and most are terrible marketers I just found the high cash price for 2018 the average and the low and then I took all of our bushels divided by 3 so 1/3 so love the high third sold at the average third sold at the low this might not be the most perfect way to do it but that's how we're doing it for the simplicity sake of the video so a third of our two hundred thirty five thousand two hundred bushels of corn is seventy eight thousand four hundred bushels according to Iowa State's site the highest cash price for corn last year was $3.57 the average was three dollars and forty-one cents and the low was three dollars and twenty four cents so all those corn bushels sold for eight hundred and one thousand dollars of course we can't forget about soybeans so ever twenty-eight thousand five hundred bushels of soybeans dividing that into thirds brings it into nine thousand five hundred bushel segments now once again according to Iowa State's website the high soybean cash price was nine dollars and seventy five cents the average was nine dollars and five cents and the low was eight dollars and thirty eight cents so here 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 government payments I was talking about earlier this is where they come into play so in 2018 the United States government government came out with the market facilitation program aka MFP payments so the MFP payments paid a penny per bushel of corn raised in 2018 in a dollar sixty five per bushel of soybeans raised in 2018 so on our farm the MFP program paid us two thousand dollars for corn in 47 thousand dollars for soybeans so when we add our MFP payment to the rest of our sales that brings us to a total income of 1 million one hundred nine thousand dollars now there is something I want people to keep in mind when we sell our grain to a buyer the price we get is for corn that is a hundred percent perfect condition say there's a little damage to the corner there's a little smell or if bugs somehow got in there all those things can have a doc so a normal doc is usually five to fifteen cents a bushel but if something's really bad say a hot spot gets in the middle of a bin which can easily happen that doc can be up to 40 cents a bushel now in the case of our farm we can store almost all of our crop and our own grain bins in our own buildings but there is some grain that we weren't able to store in our own storage because we simply didn't have the room so we had to bring that grain to the coop now our local co-op is a place that has millions of bushels worth of corn and soybean storage and so what they do is when we bring our corn in there they store the grain for us to store grain at our local co-op it costs fifteen cents a bushel for the first 90 days no matter what so if we decided to sell our grain after being in there for 30 days it still costs us 15 cents a bushel to store it and then every month that's additional after 90 days is 3 cents a bushel so if we decided to store our grain there for an entire year it would cost us 42 cents a bushel just to have it sitting in storage so what the hope is by being able to store the grain a farmer will be able to capture a higher price in the future than what it is right now so when a farmer has storage on their own farm while it's not completely free oftentimes it is significantly cheaper than taking it to a co-op so now that we've made our 1.1 million dollars what do we do with it this is where my expertise comes in my expertise in spending money because farmers have a lot of expenses so just to give you guys a little feel for what kind of expenses we're going through here let's just name them real quick we got equipment phones right professional fees bank loans do old crop insurance property insurance employees charging expense repairs see burn supplies food utilities you know we can't forget about the miscellaneous expenses the very first expense that I want to talk about is equipment putting together equipment expense for a farm is really difficult because every farm is so different some farms run equipment that's 50 years old some farmers run equipment that's brand spanking new some farmers own some old some new some lease and some don't now I would give you our equipment financial situation but since we got a lot of neighbors watching I really don't want to give that stuff out so I put together an equipment list for a farm our size on some stuff that's a little newer some stuff that's a little older everything we would need for a farm our size do you want to see the individual items here on the screen pause it and you can see what I have listed for everything but with this equipment here I figured it'd cost about $900,000 to purchase it all and let's just assume for the simplicity sake of this video that half of its paid off so $450,000 stretched over a five-year equipment plan that comes out to $50 an acre take something like this tractor for example if someone were to buy this particular one brand-new it would run over three hundred thousand dollars the sprayer behind me try finding one of those for under $200,000 used and take the combine behind me one of these in the ten-year-old machine probably looking at $100,000 so right there and just these three pieces of equipment a hundred thousand dollars three hundred thousand two hundred thousand six hundred grand wrapped up in three pieces of equipment now these are all just examples of course what I'm saying is equipment is really expensive when it comes to equipment older stuff is a lot cheaper newer stuff is more expensive but older stuff has more downtime more repairs newer stuff more uptime less repairs a lot more efficient faster bigger in a heck of a lot nicer to riding but also a lot more expensive on any farm input are gonna be one of the most expensive things so the first major input that we're gonna have is seed last year we planted 1200 acres of corn and that cost us 135 thousand dollars in just corn seed and for the 500 acres of soybeans we had that cost us twenty four thousand dollars so as a whole it cost us a hundred and fifty nine thousand dollars just for the seed to plant now that we've bought some really expensive seed we want to make sure that we can get the most yield out of that seat as possible that's where the machine behind me comes in this is the sprayer so we use the sprayer to spray down chemicals to keep weeds out of our fields because weeds Rob nutrients from the seeds that we're trying to plant and it causes them to produce a lower yield during the springtime I basically live in this thing because I have to spray all of our corn ground and bean ground before we plant and then after we plant I come in and I spray it again to keep out the weeds and then we keep an eye on stuff to make sure stuff doesn't come back because if it does that I have to hit all the ground again on weed killer for corn we spent 48 thousand dollars last year and weed killer for beans we spent $28,000 that is where organic farming would be really nice because then we wouldn't have to spray down any chemicals and we would be able to eliminate that cost but please keep in mind for organic farming we'd have to go chemical free for three years but during that three-year transition phase we would not be able to get the organic premium because our ground wouldn't be organic certified yet and also other things to keep in mind when it comes to organic farming is that it requires a lot more time there's a lot more wear and tear on tractors and a lot more diesel fuel is gonna be expended in order to keep weeds out of the crop and generally speaking in a well organized organic field yields are gonna be about half of what we produce and if weed outbreaks are especially bad it could be even worse than that I don't want anyone to think that I'm anti organic because I'm not I think it's absolutely awesome just at this point in time it doesn't make sense for our farm also since we own our own sprayer we don't have to pay anyone to applicate for us our local applicators charge six dollars an acre to spray and we'd have to go over all of our acres at least twice so at 1,700 acres hit twice that's 3,400 acres at six dollars an acre that's what it would cost just to run the machine over those acres but since we own this one we don't have to pay that so one of the reasons why we own it in this to our last major input and that's fertilizer think of fertilizer as nutrients and vitamins for a plant to grow big strong and healthy in yield a lot of corn there's two different types of fertilizer we put on dry fertilizer and liquid fertilizer dry fertilizer is put on in the fall after we're done harvesting and is put on with a spreader the spreader is a machine kind of like those things people use to seed their yards width of grass where they push and it spins and it kicks seed out that's basically a small version of what a spreader is so when the spreader is brought to the field they're putting on phosphorous and potassium in farmer speak we call this P and K and then they're also putting on pail lime which is short for pala ties lime and what that lime is gonna do is balance the pH in the soil and then it's gonna basically unlock nutrients in the soil for the plant to be able to use and then we put another product in there that makes the P and K more readily available for the plant so for the spreader to go back and forth in our fields it cost six dollars an acre P and K runs at 56 dollars an acre Pelle lime is 15 dollars an acre and then the product we use to make the P and K more readily available that costs five dollars an acre so for us to play dry fertilizer on it costs eighty two dollars an acre and the good news here is we all have to put it on our corn acres so for us to put dry fertilizer on 1200 acres it's gonna cost us ninety eight thousand dollars chump change so then when it comes to liquid fertilizer farmers do this different all across the board there's different ways of putting on liquid fertilizer but the way we do it is with 32 percent nitrogen and that's basically giving the corn steroids so there's two types of ground we plant on corn that was corn the year before aka corn on corn and then corn that was beamed the year before aka corn on beans since corn Rob's more nitrogen from the soil than beans we need to supplement more nitrogen back into corn on corn soil than corn on bean soil so corn on corn soil takes more nitrogen so for us to put our corn on corn 32% it costs us six to eight thousand dollars and for us to put our corn on bean nitrogen it costs us twenty two thousand dollars we also add a zinc additive into all that 32 percent and that cost an extra each thousand dollars oh yeah remember the sprayer most farmers don't own their own sprayer and they hire a co-op to do it for them so for the coop to come in and spray the first rate of liquid nitrogen down it would cost six dollars an acre and then for the second rate of nitrogen when the corns yay high it would cost twelve dollars and fifty cents an acre fortunately for us since we own our sprayer we don't have to pay that one of the biggest expenses on our farms is cash rent according to Iowa State University's extension site they say the average rent in Iowa is $222 nacre remember two hundred and twenty-two dollars an acre is an average some people pay more some people pay less if ground is better people are willing to pay more if ground is worse people are willing to pay less I've heard of rents being as low as $100 an acre in as high as $500 an acre there are farmers who own a hundred percent of their a KERS there's farmers who've rent a hundred percent of their acres and there's farmers who rent some and own some so in the case of us we own 1,100 acres and we rent 600 acres so what we do on corn star farms is we try to keep our land payments equivalent to what our cash rent average is so when we have some farms that we owe a lot of money on then we have some farms that we owe a little bit of money on we try to get that to average together to equal our cash rent average so in this case it's 222 dollars an acre so for 1,700 acres at 222 dollars nacre that costs us three hundred and seventy seven thousand dollars coal if land is so expensive to rent why don't you just go to a landlord and have them lower the price of rent that's a really good idea but it's not that easy the best thing I can compare it to is try going to a landlord on a house and saying hey lower the rent for me good luck there are some landlords who are really good to work with and will work with the farmer on their rents and understand when prices are low they're not gonna pay as much for rent and when prices are high they're gonna be able to pay a little more since we own 1,100 acres we get a delightful thing called property taxes so for property taxes we pay $32 over 1,100 acres for a total cost of 35 thousand dollars a year in property taxes that's expensive not only is that bad enough but since we're buying 1,100 acres at 222 dollars an acre on a 25-year mortgage that means we have to pay taxes on it 1100 acres at 222 dollars an acre is two hundred and forty four thousand dollars so basically dad shows an income of two hundred and forty four thousand dollars so for lack of simpler terms here dad pays taxes on two hundred forty four thousand dollars dad is able to 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 on this dad is paying sixty thousand dollars a year in income tax after buying this ground now I know people are gonna argue that whoa coal that's going into equity which is going towards your dad's net worth so you're ultimately making money at the end of the day and I mean yeah you're right but at the same time net worth doesn't really mean a whole lot to a farmer because we're never planning on selling any of this stuff so it's money that goes into something and yes on paper it is adding to our net worth but it's kind of like having a three million dollar Bugatti that you're not allowed to sell and it honestly really takes a farmer to understand that net worth really doesn't mean anything I know this might get a lot of people fired up but at the end of the day we're never looking at our net worth because net worth doesn't pay the bills and we're never planning on selling it anyway so it doesn't really matter what it's worth 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 whole nother topic for a whole nother video am I the only one speaking when I say I love paying the license and registration fees on all of our vehicles especially when you have four semis five trailers and ten vehicles yeah it adds up we spent six thousand dollars a year on license and registration fees I don't know if a lot of people know this or not but farmers don't just have that million dollars we sold them grain sitting around in the bank account all year and then we subtract out of it as expenses come we sell throughout the year as it goes so that means there's a lot of times during the year where we don't have money to buy things it's when the three hundred seventy seven thousand dollar rent payment comes around and we only have twenty dollars sitting in the bank account that means we have to borrow it we call that an operating note so the interest we pay an operating note throughout the year is just about thirty six thousand dollars I know that interest can be used as a tax write-off too but I'm not gonna get into any of that I'm not a CPA and I'm not a tax expert so I'm just not gonna go there but keep in mind there is a tax aspect to some of this stuff too so in our firm we have seven tractors combine a sprayer ten vehicles a backhoe two skid loaders what else am I forgetting and a lawnmower can guess what they have one thing in common they all use fuel so in our farm in 2018 we spent 41 thousand dollars on fuel so the next time someone goes to the gas station and sees their fuel bill over a hundred dollars just think someone's got it worse a lot worse and yes there are tractors and trucks that are a lot more fuel efficient but keep in mind that's another expense when it comes to buying equipment not only is fuel really expensive for us insurance is cool insurance is expensive so on the farm we have cop insurance and then we have property insurance now believe me when I say insurance isn't something we have to try to make a lot of money off of between crop insurance and property insurance we spend $40,000 a year see this yep a cell phone basically couldn't farm without it so our phones tied with internet cost us five thousand dollars a year for 2018 we paid $16,000 in total labor so on the farm from time to time we have projects that we are not capable of doing ourselves because either 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 say that someone comes and helps us plant corn someone helps us harvest some beans someone brings out their bulldozers you're an excavator to tear down some trees and fix some waterways for us all of this stuff applies last year we spent twelve thousand dollars and custom work you guys want to know my absolute favorite thing about going to the lawyer in the accountant that's right you guessed it paying for it we spent three thousand dollars last year in professional fees see this building see all these tools see all these parts we don't just have all this stuff for show we use it so that way we can fix our equipment when it comes to equipment the more we use something the more it's gonna break and the older something is the more likely it's gonna break well not always with the old stuff because some of the old stuff is made the best and it lasts a lot longer than the new stuff but you get what I'm saying on our farm we run a wide variety of equipment some of its newer some of its older and we try to do as many of our own repairs as we possibly can hence why we built this shop because if we have to take some think to a shop to have it worked on most places charge $120 an hour 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 when it came to repairs we just had a lot of stuff 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 lower and that may be true but new equipment is also really expensive and often times repairs are cheaper than buying something new and new equipment still does break we try to run equipment as long as we can and once it starts giving us more fits than what it's worth then that's when we upgrade to something newer now on the farm during the busy season staying up and running is the name of the game so we carry a lot of parts and supplies in 2018 we spent $5,000 on supplies this brings us to one of our bigger expenses and that is trucking on corn star farms we have four semis yet we hire out all of our grain to be hauled away why do we do that in the first reason is none of our semis are in the shape that I would want to take them on a hundred thirty mile round-trip multiple times a day all throughout the year because well they're old then they would be quite a bit of money put into them in order to get them d-o-t inspection worthy I mean I guess we could buy new trucks but you guys just saw how expensive semis are and even if we did buy newer trucks there's also a thing called time so the place we haul to is sixty-five miles away it's 130 mile round-trip and some days there's a three to four hour line we'd be hauling grain all the time and we wouldn't have time to do anything else on the farm and we have more to do than just all grain which that brings up the argument of well what do you haul so far away the particular place we're bringing it to often has a 30 cent premium over our local co-op meaning we can hire a trucker not using our own trucks not using your own time giving someone else a job pay them 22 cents a bushel to haul down there for us and then we get paid 30 cents a bushel more than our local co-op so even after paying the trucker 22 cents a bushel we are still profiting 8 cents a bushel over bringing it to our local co-op in other words what I'm saying is it costs us more money to bring - our local co-op so it's a win-win situation all the way around for us to bring it to the place further away oh yeah I almost forgot to mention we spent eighty five thousand dollars on trucking last year you guys see that right there that's a light that light requires electricity you guys see this hand you see how beautiful the skin is on my hand that's because I had water to drink electricity water yeah that's our utilities we spend $10,000 on utilities last year keep in mind that is for for farmyards two houses two shops grain dryer three bin fans yeah you get the point now before we talk about everything that's happened in this video there are two expenses that are a little bit different on our farm than in most farm and part of that is because of our location and the second part is just our farm management decisions that we make here on corn star farms so the first thing that a lot of people do is tillage we run no-till here on our farm so therefore we don't run any tillage tillage can run anywhere from ten to twenty dollars an acre depending on what you're pulling out in the field and what kind of tractor you're using there's a lot of variability different soil types ground moisture whatever but for the simplicity sake we'll just say it cost fifteen dollars an acre to run tillage since we don't have to do any of that we're able to save a lot of expense there and the second thing is due to us being located in central Iowa oftentimes we have really nice weather in the fall and that allows our corn to dry down meaning we don't have to dry our corn as much and sometimes we don't have to dry our corn at all so in 2018 we didn't have to dry a single bushel of corn but there are a lot of farmers who have to dry every single bushel corn they have and drying can get really expensive if someone has to take corn to the coop to be dried our local co-op charges four cents a point so if corn is twenty five percent moisture and it has to be brought down to fifteen percent moisture they have to direct ten points that costs 40 cents a bushel and add insult to injury when corn is wetter is bigger and when they dry it down it shrinks so then they have a strength factor added to that but I'm not an expert when it comes to shrink so I'm going to be conservative and just not include that well say the cobs are being nice and just waves the shrink fee and then there's some farmers like us who have on site drying and we're able to dry our corn for four and a half cents a bushel so it's significantly cheaper for us to own our own dryer and dry our own corn than to take it to the coop but keep in mind you have to have Ben's fort which are the expensive gift of and dryer which is really expensive you have to have all the electricity hookup the lp hookup and all that and expense so there's pros and cons to both sides but in 2018 we were lucky enough to not have to try any bushels so we saved a lot of money there - yes this number is real all right cool all jokes aside now there's 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 is real now just imagine someone who harvested a crop that was 20 bushels less than the numbers were going off of really bad day for them so I know everyone's wondering the house of farm able to continue going on if this is the reality for it and frankly there's a lot of firms that aren't and this loss of money trend isn't anything new it's been going on for the past six years and really there's only about four things that have been keeping people off low the first one is having good financers having a financier that is able to work with the grower that is able to refinance things out longer to make payments lower to help a farmer scoop by those kind of deals have been really helping a lot of farmers scoot along in the second one being is most farmers have more than one source of income meaning they're working more than one job I know in the case of our farm we have a few investments that cash flow we have our grave-digging business I have my youtube channel my brother has his hay baling business and then mama corn star works full-time so everyone watching really needs to give mama corn star a high five a hug and a thank you because without her job the farm wouldn't be here there were a few years where we were so tight financially that it was mom's income that kept the farm afloat so thank you mom the third thing that's keeping farmers afloat is government payments this two hundred and thirty nine thousand dollar loss is with the $49,000 government payment take that government payment out we're getting close to three hundred thousand ouch and the fourth thing is praying as a farmer we have to have faith in God because without him we wouldn't have any of it in the first place in our relationship with Jesus Christ is the only thing that we really have in this world and the only thing that we're gonna be able to carry with us therefore is the most important thing and I know our farmer praying is something I do every day I know from the outside looking in at all of our expenses and stuff it just looks our business is all over the place is terribly inefficient we're not effective I mean how can a business lose 239 thousand dollars a year and you would be a hundred percent correct by saying a lot of that is our fault because it is but there also are factors that are beyond our hands seems like the weather and the markets are things that we simply can't control and yes we can always become better marketers but the weather mother nature kind of does what she wants so when it comes to the farm as a whole there are a lot of things we can improve on one of the biggest things we can do is raise a better crop we need to be learning more about the science that goes in behind raising a crop and how we as growers can raise a better crop something as simple as applying fertilizers that are more effective or maybe utilizing fungicide to keep a healthier plant or something as easy as doing soil samples or tissue samples to figure out what our soil is lacking or what our plants are lacking for nutrients so what we can do with all that stuff is take that information analyze it and then we can figure out what we need to be doing better for the next year in order to raise better crop and like I said just a little bit ago mother nature is the biggest factor but we can have all of our other ducks in line so when mother nature's in line we'll have everything else ready to go the second thing we can really improve on on our farm here is marketing so two years ago we hired a third-party marketing firm and we have been so happy ever since we did that we hire professionals for everything else in our lives right we hire a lawyer we hire an accountant why not hire someone who's a professional marketer before we went through a marketing firm we did everything on cash sales and our sales were so strong out and we would have carryover corn from the year before and then we wouldn't have enough room to store our corn at home and so we'd be sending a bunch of the coop which is really expensive as we just saw before and we were just flat-out bad at marketing so once we decided to take a step forward and use a marketing service we started utilizing hedging hedging has been the difference maker for our farm these past two years if you don't know anything about hedging and you're a farmer please go learn about it if you don't want to learn about it go find someone who knows about it because it is the biggest marketing tool that we have used on our farm hands down honestly probably ever fun fact you can make money off the market when it's going down by utilizing hedging I'm telling you what can do it and then lastly the third thing we can do is simply tighten up our belts maybe I can keep daddy corn star away from a few more auctions so he doesn't have to do impulse auger buys all the time or maybe I can keep Cooper out of the parts store so he's not buying so many tools all the time those five hundred dollar purchases just really add up over time and they make a big difference as time goes on just for the fun of it I crunched some numbers just to see what kind of prices what kind of yield we would need in order to break even and before I get started in that I just want to brush on something real quick farmers don't do what they do for the money frankly in farming most years there's not any money in it at all yes every now and again there are a few years that are really prosperous for farmers I mean look at a lot of things in our operation we wouldn't have been able to afford them had we not had years that were prosperous but with that being said keep in mind my grandfather farmed for sixty years and then when my dad was 10 years old he started farming so he's been farming for 45 years so between my dad and grandpa that's a hundred and five years of blood sweat and tears that have been put into the farm and they worked 100% together their entire life so everything we have on the farm today is because of them I can't take credit for anything that's gone on because that's all been on them I'm just taking the farm from where it's at now and I'm figuring out all the ways we can improve it and make it better from there all right let's get back to a number crunching here what do we got to do to get out of the red well basically we have two options we can get a higher yield or we can raise the price so first let's try raising the yield and keep our same average prices since we plant 70% corn and 30% beans that's how I made up the ratios on how much is needed from each crop so if we're gonna keep an average price of $3 and 41 cents for corn we need to raise $168,000 in order to reach break-even so in order to do that we'd have to increase our production 41 bushels an acre giving us a total yield of 237 bushels an acre in for soybeans we need to raise 8,000 more bushels or a 16 bushel an acre increase now I bring our total soybean yield with 73 bushels an acre and when it comes to keeping the same yield but raising the price for corn we would need to raise the price 71 and a half or have 4.13 sick corn in for soy beans we would need to raise the price $2.49 or have $11 fifty five cent beans those prices are very possible corn and soybeans can fluctuate a ton and they can do it 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's watched this video now kind understands the shell of how the financials behind a farm work remember 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 any suggestions in general please write it down in the comments and if you guys like the style of video please let me know this is a lot different than what I normally do but I enjoy making these so let me know and then lastly if you want to stay tuned for the journey of our farm please hit the subscribe button that way you'll be notified when I post and then you'll be able to tune right in and keep up with our journey thanks for watching everybody Oh [Music]

Channel: Cole The Cornstar

Views: 2,622,526

Keywords: farming, agriculture, agriculture jobs, welding, fabricating, machanic, farm house, restoration, renovation, combine, tractors, tractor videos, tractor videos for kids, family farm, excavator, skid steer, semis, farm life, midwest, fixer upper, junk yard, scrappers, agribusiness, agriculture technology, house transformation, technology, handyman, construction, case ih, john deere, new holland, massey furguson, remodeling, small business, usda, big equipment

Id: Xsa46CXwfdY

Length: 34min 1sec (2041 seconds)

Published: Sat Jan 18 2020

Reddit Comments

[u/RuthlessGravy]

I went to high school with Cole, and he is a very business savvy man. He's a real perfectionist, and I've enjoyed seeing his YouTube channel grow. He's definitely the one I've gone to in the past for financial insight.

[u/FreiherrVomStein]

Most farmers have more than one source of income. (…) We have our gravedigging business (…)

Working day and night.

[u/Fletch_in_the_hizzie]

Well, very interesting video. You put your video together really well and broke things down for a layman such as myself to understand. I’ve gained a ton of respect for the business. Hope and pray for a great 2020 for you and all farmers here in the US and around the world.

[u/satchel_malone]

Wow crazy coincidence that you posted this! I literally found this on related videos on YouTube yesterday after watching non-farm related videos. It is definitely interesting and very eye opening to anyone thinking about watching it.

[u/BeefPieSoup]

Really interesting, informative video for those of us who've never had any exposure to this industry. Thanks

[u/slappymcnutface]

Honestly if they're netting negative each year (not necessarily true for them), why even stay farmers? He even says everyone in the family basically has another job. Why don't they just go full time doing those other jobs without the $1,000,000+ expenses every year?

[u/thundergolfer]

Cool video, worth the time to watch (at 1.5-2.0x speed). Would have expected that they were getting more than $50k a year from the government in subsidies. I wonder if there's any other significant area of government intervention in the corn and soybean markets.

[u/CravingsYT]

Good Video during Lunch or Dinner....

[u/independentthot]

Great video! My parents let me ride on the combine as a kid!