Friday, August 05, 2011

5,000 to 15,000 Acres

From Farm Policy, quoting DTN piece:
"Farm Credit lenders in 15 states have received words of caution about the potential for excess risks shouldered by their biggest grain customers. ‘The 5,000 to 15,000-acre commercial grain farmer is emerging as a major customer from Arkansas to North Dakota,’ Ross Anderson, senior vice president and chief credit officer for St. Paul-based AgriBank told DTN in an interview last week."
The idea is these operations are mostly rented land, so they've got a lot of leverage and are therefore assuming a lot of risk.

Risk on the farm interests me.  There have been lots of innovations over the years to reduce risk: vertical integration in poultry, eggs, and pigs; futures; contract farming for popcorn and seed corn, crop insurance, disaster payment programs, production adjustment and marketing quota programs, etc.  But farming evolves; the less risk in one area perhaps the more risk in another.  The safest type of farming is probably still the well-diversified small farm, not having all your eggs in one basket.  But over the last century the US moved away from those farms, a trend which is continuing in this century, as witness the results of planting flexibility.

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