00:00:00 Two middle-aged farm guys sit down to talk about farm economics. No, that's not the setup for a joke. 00:00:04 It's actually this episode of extreme ag cutting the curve. Welcome to Extreme ags Cutting the Curve podcast, 00:00:10 where real farmers share real insights and real results to help you improve your farming operation. And now here's your host, Damien Mason. 00:00:20 Hey there. Welcome to another fantastic episode of Extreme Ask. Cutting the Curve. I got a neat one for you today 00:00:24 because for the last 20 minutes, Kevin Matthews and I have been sitting here without the recording on talking about farm economics. 00:00:30 And I said, why the hell don't we just push the record button and actually get this on tape? So that's what we're doing. We're talking about 00:00:34 the farm economics. By the way, we are recording this the very day after the announcement that we're going to have, uh, 00:00:42 $31 billion tossed at agriculture, of which $10 billion right now from what we're reading is going to go to row crop producers. 00:00:49 There's a lot of fuzziness still. It's a lot of gray areas. So by the time you're hearing this, 00:00:53 it'll probably be more flushed out and it should be more fleshed out. But right now we're just talking about it. 00:00:57 We're talking big picture here. You know, Kevin just turned what? 53? 52. 52. 52. 00:01:02 52. So we're old enough that we're talking. We're just talking about the Pick program. If you are a younger viewer listener, it's a, 00:01:08 it's a interesting concept. And Kevin says, I'm not sure I'll bring it back. Basically we're talking about the supply 00:01:14 and the commodity prices being where they are and what we've seen historically and how it looks like. We're kind of rolling right back into that. 00:01:22 And we're coming off of 21, 22 and 23, which are record years nominally nominal, and real dollars, the biggest three years we've ever had in 00:01:30 American agriculture in our history. So yeah, we got a little bit of downturn going on. Headlines. Today's Wall Street Journal talks about US 00:01:37 agricultural downturn hits farmers and company profits. So we're kind of talking all about the economy. So you were talking finally. 00:01:42 So let's just hit the record button. So go ahead Kevin. US farm economy, go. Yeah, it's, I mean, it's rough. 00:01:48 You know, we, you just talked about the pick program, you know, I remember that well, my dad and them. And then the LDP days. I gotta experience it. 00:01:56 Actually, I made pretty good money in the LDP days because I was a younger farmer. I had very little overhead. 00:02:02 So I didn't have a big payroll to make. I didn't have office to keep up and a bunch of staff. And, um, so I actually done pretty good. 00:02:09 But it was through, uh, using a lot of hedging to do that. Futures was what I used. 00:02:16 I did very few options at that time. I've never been real comfortable with them. But the futures worked, uh, real well. 00:02:22 I had plenty of storage and the storage allowed me to capitalize on that LDP, whereas if you didn't have storage, you couldn't. 00:02:28 But, you know, I hope we don't get back to them days. But let's face it, Damien, if Brazil and South and Argentina has this bumper crop 00:02:37 that they've got in the field right now, they got ideal weather, which we gotta remember. They go a week without rain 00:02:42 and they're like us, they going to a drought pretty fast. So it can all change the crop's. 00:02:47 Not nowhere near towards reproduction yet. But, um, if they have a bumper crop and, uh, they throw this big number out, 00:02:55 and then let's just say the US happens to have a big crop. I'm, I'm really not expecting the US to have a big 24 00:03:01 or 25 crop with the commodity prices where they are now. Soybeans could get really ugly 00:03:08 and, you know, it would not surprise me if they don't have to start encouraging to put stuff back in CRP 00:03:15 or possibly even coming out with a program similar to like what the pick was. You know, we don't, we got way more supply than we need. 00:03:22 So let's just, uh, for perspective here, 'cause this is, this is a, again, it's, it's like your daughter's 20, what's Danielle 26 7. 00:03:31 Yeah. So, and you know, you're not being anyway mean, it's just a reality. The younger people in ag that are in that 20 to 30 00:03:39 or so, they've seen pretty much nothing but gravy. I mean, 2005 we started, you know, going off to the races 2005 to 2013 were, uh, you know, banner times 00:03:50 for American agriculture things got a little softer 2014 to 2019, but not soft like the eighties Right. 00:03:56 Or the, you know, or the dust bowl or anything like that. So when we give this historical perspective, it's, it's kind 00:04:03 of, supply has caught up and it does not look like there's any blips on the horizon where supply doesn't stay strong. 00:04:13 Which means when demand's only going up by a whatever, half a percent a year or something, and, and product and production's going up by 4% a year, here's where we are. 00:04:23 Yeah. I mean, it's, you're right. Um, I, you know, a farmer's always opt optimistic that, you know, this year's gonna be better and uh, 00:04:31 or next year's gonna be better. So 25, um, you know, it just, all it, we do know, we've learned in 2012, you know, we went into 2012 00:04:40 with a pretty, you know, a heavy balance sheet. And, uh, at the, I'll never forget our grain business. We had a customer that we, we delivered corn year round to, 00:04:52 and it got down right before harvest. We was, uh, the pipeline, as we call it, is grain en route to the mills was down to about a 10 day 00:05:02 to two week timeframe. And so, you know, all of a sudden you look back at 2010 and then you go to 2012 and you're like, wow. 00:05:11 So it can change a lot. But the Trump card here is, Brazil wasn't as big a player in 2012 as it is today. 00:05:18 So that concerns me deeply. 'cause they, they didn't, you know, we had the opportunity to be there in February and see it firsthand. 00:05:26 Um, and we didn't even go to Gros. And Gros is just amazing what they're doing there. Right. But yeah, it's, it's a serious deal. 00:05:34 But the one thing you talk about the gravy times. So let's think about what our kids has seen, uh, and the 30 year olds has seen. 00:05:45 So in 2016, we bought, um, our new com, we bought three new class eight combines, $385,000 a piece. 00:05:55 Mm-hmm. Alright. Last year they priced me a class nine for over 800,000. And a class eight was going to be just a little over 00:06:09 just under 800,000, about 780,000 brand new. So when you look at that price increase on equipment, uh, to get back down to the profit levels where we were. 00:06:24 Yeah. You know, yeah. I, I tell you what, it's, it's, it's scary to think about that. And I just can't see, you know, right now, 00:06:31 equipment manufacturers, equipment dealers, I know, uh, case ih, they're, they're throwing, if a piece of equipment's on the lot, a big tractor 00:06:40 or something, they're knocking 40 grand off right there just to take it, you know? So they're trying to move this equipment, 00:06:45 but it's, it's serious. I mean, these, these equipment prices are cost. Our seed corn, our seed beans, all 00:06:52 of our cost is unbelievable. Now for fertilize, though, Damian's not really out of the, it's not that far out of balance in 00:06:59 what it's been in the last 20 years. Um, it's higher, but in relations to the other stuff. So it's going be a, it's gonna be a challenge this year. 00:07:09 So let's just talk about what you just said in a decade. Uh, your machinery cost using equivalent class 00:07:18 class eight to class eight. You said it went from 3 85 to seven 80. It's double. Yes, Sir. And so 00:07:24 what else has doubled in that amount of time? Well, nothing. Okay. Then you can say, well, the productivity of 00:07:30 that machine is better. Sure. I, there's no question. I'm sure it is. I mean, it can get more acres, 00:07:35 more bushels per hour, all that. But is it double? Is it double better? No, it's not. No. We're not being mean to our companies that we work with. 00:07:42 We obviously have companies we work with as business partners here that are in machinery business. We're not being mean. We're just saying the doubling. 00:07:49 And then we can say, okay, inflation, pretty much the basket of goods. And, and this is a hard one 00:07:54 because the government keeps telling us that the gov the inflation's under control. But you know, as you go to the grocery store, your, 00:07:59 your grocery cart don't tell you that I bought a truck a year ago. It literally was 50% more. 00:08:05 That would've been just five years prior to that. So inflation is 40 to 50% of that. But where's the rest of it? 00:08:12 If efficiency gains or a few percent of it, that's the tough part. And you just talked about a squeeze on the equipment. 00:08:17 Your seed, your, uh, pretty much everything you touch is arguably up. Uh, 00:08:24 And our labor, our labor's higher. I mean, we're having to pay our employees more now. And, and quite frankly, 00:08:30 our employees aren't getting paid nowhere near what they deserve. If, you know, if we could afford to pay 'em 00:08:35 what they deserve, you know, it would, it would be pretty awesome situation. But our profit margins are so narrow. 00:08:43 Let's talk about this equipment deal a little bit on this production side because this, you know, I, 00:08:50 I always look at how efficient something is and the productivity of it, and that that equates profitability. 00:08:57 But what I have learned since all this emissions issues and the electronic issues that we're facing, this advanced technology is amazing when it works. 00:09:07 Yeah. But right now, reliability is where our profit's at. Hmm. Because instead of having two machines to do a job, 00:09:14 we're doing it with one. So then the reliability of that one to create you profit is a much higher risk 00:09:19 because if it goes down, nothing's getting done. Mm-hmm. And so that's another aspect we gotta look at. You just talked about cost on machinery. 00:09:28 This article, that's today's Wall Street, uh, profiles, the North Dakota guy that's a farmer. And it, they talked about seed costs going from $150 a bag 00:09:38 to $230 a bag. I don't know, I mean, obviously it varies by brand and hybrid and all that kind of stuff, 00:09:44 but your, your inputs, your inputs are up, and they're likely to stay that way. And that was the discussion before we hit the record button. 00:09:53 If the government starts tossing money at the ag sector, the companies that sell you their, the products you need 00:10:00 to farm, they're not motivated to decrease those prices. And then you said, no, maybe they will, 00:10:04 because even with the money being tossed ass from the government, they're still, there's more stress. You know, bankers talk about, they look at their book 00:10:11 and say, we've got about 30% of our book that's stressed. And so I don't know what that looks like. 00:10:17 'cause I'm not a banker. Well, you look at your, you look at your ratios, whether it's debt to asset, cash flows, um, 00:10:24 there's three key ratios there that they normally look at. And, um, you know, like farm credit system, 00:10:30 they do a red, yellow, green. If you're green, life's good. If you're yellow, yeah, it ain't that bad. 00:10:36 But if you ever get towards the lower side of yellow, end of the red, they're, they're gonna pump the brakes 00:10:40 and put restrictions on your actions and what you do. Mm-hmm. Which is understandable. But to the comment about our input companies, 00:10:50 what I think we're going to see is, even the guys in the Midwest that done a, got a phenomenal yield, um, didn't have the drought 00:10:59 and the hurricanes that we had here in the Carolinas this year that we had to face, those guys didn't make no money. 00:11:06 Um, a lot of 'em lost a hundred dollars an acre. Yeah. So yeah, we we're getting this payment, but it's, you know, it's not even 50% of what we lost. 00:11:15 Yeah. Now, me as a seed company, I'm sitting there looking at all my accounts receivable, a lot of this, uh, 0% financing that they do, 00:11:24 and different incentives to get you to buy theirs and payment in, you know, January, December, January timeframe. 00:11:31 Uh, they're trying to collect that money right now. And, you know, it's hard, it's hard for a lot of growers, uh, including ourself 00:11:39 to get all them paid on time this year. And so they're looking at that, and I think they're looking, 00:11:45 they're gonna be looking at this payment as, okay, maybe this is gonna be the payment that makes me whole with my, on my accounts receivable. 00:11:52 Um, if we can just get made whole and, you know, do the same inventory or, or sales, I guess, numbers 00:12:01 that we reached last year, we'll be happy. I just don't think that they're in a position that they can be, even with this extra bonus of my money, 00:12:09 I just don't see how they can be in a position to raise the prices right Now, I could be wrong on that, but most of us is already negotiated next year's inputs. 00:12:18 So I don't see 'em going up on it. Uh, I wanna talk about, uh, the, the picture at the farm level, 00:12:25 and then I wanna talk about historic remedies and whether that's gonna, we're gonna see that coming to play before. 00:12:28 I do wanna remind you about our friends at Nature's. Nature's is a business partner here of us at Extreme Ag. And they have products that can help you. You know what? 00:12:36 Things are tight. You gotta make every dollar count. Why don't you consider using nature's high quality liquid fertilizer powered by Nature's Bio? 00:12:44 Okay. You can target specific periods of influence throughout the growing season. So we talked about spoon feeding, 00:12:48 putting the fertility on the plant, right, exactly when it needs it, when that plant can absorb it. So you're not just flinging out there 00:12:53 and letting the fertilizer go to waste, or worse yet going into the watershed, whatever the point is, nature can help you do that. 00:13:00 You can mitigate plant stress, you can enhance crop yield, you can boost your farm's ROI, 00:13:03 which is more critical now than it's been in a long, long time. And that's what we're talking about today. 00:13:07 By the way, nature's, uh, also wants you to go to Commodity Classic. If you're a member of Extreme Ag for seven 50 bucks a year, 00:13:13 you get access to guys like Kevin for direct answers to stuff. You wanna go a little deeper on, you get data at the end 00:13:19 of the year from all the trials they're doing. And then you also get special offers. Like this year you go to Commodity Classic for free. 00:13:25 If you're a member of Extreme Ag, you can go for seven 50 bucks a year of membership. You get into Commodity Classic for free, 00:13:31 and you get all that great information from us. So check it out, go to Extreme ag.farm. All right. Uh, historically, I've been asked about this a bit. 00:13:41 Farm blips are not blips, farm downturns, AG downturns could be around for five years. You always talk about David Cole. 00:13:49 God knows, you know, he and I are buddies on the speaking circuit. He'll talk about ups and downs. He talks about super cycles. 00:13:55 Kevin, this is not gonna be over in one year. And so really, you gotta think about what's the remedy that you can do and what's the room. 00:14:02 Do you think the government's gonna toss at it? You know, um, I think the ones that you can do, well, first off, we just, we're just talking about a, 00:14:10 a payment's gonna come our way, but there's still adjustments you gotta make. Oh, absolutely. I mean, 00:14:15 you talked about seed corn earlier. Do we really need that greatest, latest, newest trait that's gonna cost us $60 a bag more to get, I, I'm, 00:14:26 I'm really questioning some of that. You know, you know, we got to do that. Do we, are we really capturing all of our opportunities? 00:14:34 I was just sitting here going through, um, looking on accounts receivable and just in the sustainability program alone for our farm 00:14:43 that's getting paid for doing things that we normally do, just our normal no-till practice. 00:14:48 And all that has nothing to do with USDA. This is just side money. Yeah. You know, it's, it's over six digits to our operation. 00:14:57 And you take that and then the government has put, you know, they have voted to, um, spend us $10 million to rub crop farmers. 00:15:06 Yeah. You put those two in together and, you know, that kind of helps the bo it helps the bottom line drastically. 00:15:14 You can't bank on that USDA money. I absolutely, I don't even, I've never put it in my budget. Never, ever, from day one, even when I knew I was going 00:15:22 to get so much money a year for certain programs, I never put it in my budget. Uh, we're actually looking at the little things. 00:15:30 We, we was looking at death, the amount of death that we're buying now we're using just under 1300 gallons a year of death fluid. 00:15:38 And currently we're paying five to $6 a gallon for it, depending on the buying it by the pallets. When we've actually been able to switch brands, 00:15:46 which is still a good quality brand, same, same fluid. It's just got a different label on it and it's $4 and something. 00:15:53 Now, if we go to bulk, we're down under, under $2 a gallon. And you say, yeah, but that's, 00:15:58 you know, that's not that much. But it's a, it is an extra five, $6,000 savings. Yeah. That is a big deal. And that's what we gotta look at. 00:16:06 And we need to be looking at, um, you know, what's the most common parts that we use? If you, if you're broke down and you order that part 00:16:15 and you pay next day shipping, you're gonna pay a minimum of, you know, a hundred to two 00:16:19 or $300 to get it there the next day. Some crazy numbers. So go ahead and get those parts on on hand. 00:16:27 Don't order 'em on just a regular stock order where you don't pay no shipping. We need to really be thinking about all this. 00:16:34 All right, so change your DEF brand and also bought it in bulk. And so you're gonna get a savings there. 00:16:40 And again, like these things are said, oh, well, how much does that amount to, well, five grand here and five grand there. 00:16:45 All of a sudden you're back to, you know, your head's above water. You talked about seed. 00:16:50 You know, uh, maybe you don't need all the traits. Kelly has made that point before that it was great when it first came out, 00:16:57 but the reality is for that 60 or $70, you could go back to conventional seed and then do some other amendments during the season 00:17:05 or a seed treatment or whatever. And so maybe it, you save 60, but you spend 20 back to make up for it. 00:17:12 But still that's 40 bucks a bag. Um, what's a bag cover? 2.2 acres, something like that. Yeah. 00:17:17 Yeah. Just under three, you know, three acres on our low population stuff. So You're talking about you threw 40 bucks a of, you know, a, 00:17:25 a unit or whatever they call it across that certain savings. What about, um, you said you don't get, 00:17:30 you don't factor in these, uh, government payments. My my read is it don't, it usually doesn't last just one year. 00:17:38 So there's gonna be some of these things around, um, this one's being announced here at before Christmas. I think by this time next year, there's more money being, 00:17:46 uh, pushed out from the government. You can't count on it. But am I wrong? Do you or do you think I'm right? 00:17:52 There's gonna be another, there'll be something else after this. You know, uh, I, I'm not, I would not be surprised Damien, 00:17:59 and I can't sit here and say that I expect it to be, but, um, I would not be surprised based on the history that you and I have experienced, it takes a while to get out 00:18:08 of this cycle that we're in. Um, however, our demand is off the charts above anything we estimated due to these low prices. 00:18:17 Yeah. Now, you know what happened in soybeans this past week, and people say, well, I thought we was at the bottom on 00:18:23 these commodities and soybeans tank lower. Yeah. Our dollar hit a two year high. The real hit a two year low. Yeah. And, and they had rain. 00:18:33 So it, you know, it was a double-edged sword. But, um, I agree with you that it's, there's a good probability now, 00:18:41 what will that program entail? What will it look like? I think a lot of that's gonna depend on when the Trump administration gets in 00:18:49 with the tariff situation, how the world reacts to the tariff. You know, the world is already, they've got 00:18:55 to play round one with him the first four years. So they know pretty much how he's plays the book and, and he is serious about keeping the United States first. 00:19:04 And I like that part. So it'll be interesting to see how this plays out. Yep. I don't think it's going to change the demand as bad 00:19:13 as some fear, because what one don't buy from us, they're gonna buy from someone else, and then whoever they are selling 00:19:19 to is gonna have to come to us. People got really worked up about that during the last time with the tariffs 00:19:24 and the trade disputes. And I said, okay, remember it's a global marketplace. So if someone is buying from Brazil, that means, uh, 00:19:32 that whoever was buying from them before, but people didn't know. No. Like I do you think 00:19:36 that somehow these countries just went without eating that they just stopped eating altogether because of the trade disputes? 00:19:42 Now, hey, one thing that I look at, and I'm not the farmer, so I'm not being critical, but you talk about mining your P's and Q's financially. 00:19:50 You and I have both worked at the Louisiana, the Louisville. I always called the Louisville Farm Show, 00:19:54 and you always remind me that it's actually called the National Farm Machinery Show, right? Yeah. But I, I call it Louisville too. 00:20:01 But when I'm on tape, they, they get on to me. They like it to be correct. So you and I have been there, and farmers love steel. 00:20:08 They love kicking the tires. They love looking at equipment. You already talked about equipment. Is this safe to say 00:20:13 that a place where it's a number two expense behind real estate, right, is machinery? It was, it was. 00:20:19 Now it's, I think now equipment has surpassed real estate on a per acre. So on a per acre, do you think 00:20:26 that farms might be over equipped because they love machinery because things were pretty good? I mean, is it time to really analyze if you were given a 00:20:35 recommendation to somebody, is it time to really say, Hey, um, I think we can get by with one less, one less this, 00:20:42 one less tractor one, you know, uh, a two year older, uh, combine? I, I don't, I mean, I don't know because I'm not 00:20:48 the guy that does the stuff. Well, I will tell you, you know, with my engineering background and uh, you know, in accounting, uh, attention 00:20:58 to detail that I do when I look on paper, I am very much over equipped. Um, I should not need two sprayers to do what we do. Right? 00:21:08 What I have ran into is the dependability of the equipment. And I don't care whose it is, 00:21:15 I don't care whose brand it is. Um, the equipment is not as reliable now as it was 15 years ago. 00:21:24 And, um, prior to the emission standards being enforced, intuit, then, uh, you know, 00:21:30 as we put more electronic components in, let's face it, guys, they, you know, fertility and, and electricity don't go good. 00:21:38 Well, they just don't go good together. You're gonna get, you know, the down the reliability of this equipment. 00:21:46 The performance when it's running is amazing. It is amazing what it'll do, but the reliability right there is causing us to be, 00:21:54 we're being forced to have extra equipment there. So that, face it, when it's harvest time, we got to go. When it's planting time, we got to go. 00:22:02 We can't sit there for two weeks and try to figure out why this piece of equipment won't run. And it's not that the dealers 00:22:09 and techs are not trying, they're trying as hard as they can, but some of this stuff can, it can be some gremlins in there. 00:22:15 It's really hard to find. So, you know, if I'm farm credit, looking at a farmer's balance sheet, I'm gonna look at it 00:22:22 and say, man, these times are tight. You don't need that equipment right now, but then come follow the year. 00:22:28 And you find out that you had all this downtime and they couldn't get it up running. And you're like, well, maybe we should have bought a cheaper 00:22:34 second piece of equipment as a backup for insurance policy. So that's a, that right there is a tough situation, Damien, 00:22:43 because I know for sure I'm heavy on equipment. Yeah. But I also know that to get the work done in time, I can't afford a, a bad day. 00:22:51 So where, where you talked about some inputs from seed scaling down on that to buying your other stuff, you're not gonna, you're not gonna scale back on machinery. 00:23:00 Uh, you can't scale back on, on human capital. You already said that you, that they probably deserve to be paid more. 00:23:05 So where all, where is there, and by the way, we're gonna be covering this, I don't know when you're watching this on our January 2nd 00:23:10 webinar, we're talking about, uh, uh, about simple tips and tricks you can do to peel, peel 20 bucks off per acre, you farm, whether it's in inputs 00:23:19 or just something around the, you know, the business we're talking about how to, how to scale back and pull some money out. 00:23:25 Um, where else are you looking? We're looking at our fields that we're farming. We're looking at soil types of land, 00:23:31 and they, there's some fields that we farm that, and average commodity prices, we make money. And, uh, in today's commodity prices, we don't make money. 00:23:39 So they're probably going to get set idled. Um, we've got some, we've got heavy wildlife issues. I, every day is another farmer calls me 00:23:49 and he's talking about the wildlife issues that we had this year with deer. And, uh, so Damien, we're actually looking at historical, 00:23:58 uh, data points on our operation center and just saying, Hey, this, yeah, we'll, we'll pay rent on this field. 00:24:05 We're gonna pay rent on it, but we're not gonna plant it. We're just going to sew grass on it and bush hog it. 00:24:10 Or maybe we can get somebody to mow it for hay and get a couple dollars off of it. Um, but the problem is, you know, 00:24:15 there's 10 acres over here that's no good. But then that same landowner's got a hundred acres or real good land. 00:24:20 Yeah. So you got you. You can't just tell him, say, well, I'm gonna take the good, I ain't gonna take the bad. 00:24:26 You end up taking all of it. But You know what actually makes me wonder? I've got 16 acres 00:24:31 that are enrolled in the conservation reserve program, and one of 'em is a 10 year, and then the tree planting is for 15 or something like this. 00:24:38 I mean, I, I I've got three different, a buffer strip for a drainage ditch is a different term. It almost makes you wonder if the US Department 00:24:46 of Agriculture, uh, there's a lot of move for environmentalism, upping the CRP, but making it easier to enroll. 00:24:55 But for shorter term, I mean, I, I think that, and I, and, and I don't, I'm with you. 00:24:59 I'm not big on the government's gonna save us and we should all, you know, go out there and put our hand. But this is something that would, it would meet the, 00:25:07 the 10 acres that the deer are beating the hell out of that you deal with anyhow. What if you'd say, Hey, we can just take it out 00:25:13 and put it in this conservation or go sew it to clover, which is good for the ground. The deer can eat that. More importantly, uh, it, 00:25:20 it idles those 10 acres and it's good for the environment. It does the whole, you know, I I, that would be a solution 00:25:26 that I would love to see come outta USDA And with our urban sprawl, I think that's something an, an area that they need to look into 00:25:33 because we're getting so many houses put in the wildlife's, getting pushed to the, to the crop land. 00:25:38 Yeah. Yeah. And, um, they're making, I mean, there's some really good productive soils that would never be eligible for CRP. 00:25:48 It's too good of soils. Yeah. But the wildlife is so bad that you cannot grow a crop on it now. 00:25:53 Right. And I think you're on to something, Damien. Those are areas that, um, if they're going to focus on something, they, they need 00:26:01 to really up the ante right there. And that would make a significant, Yeah. In other words, the, 00:26:05 the enrollment, if you've ever done it, maybe who's listening to this, sometimes it has to meet criteria of highly erodible 00:26:12 or it has to be near a riparian waterway or something like that. So if we wanted to make a little dent in this, you know, 00:26:20 stifle supply just a little bit, and then also make some environmental, just make it a little easier to enroll some CRP ground. 00:26:27 I'm trying to think of other solutions that, you know, we've, we've, we've made the, uh, ethanol thing that wasn't even a thing 20 years ago. 00:26:36 40% of your corn would go into ethanol. I think we've done about as much as we can there. Uh, I, the CRP is 00:26:43 around 26 million acres I think it is right now. So let's say you grabbed another five to 10 million, you know, that that would change things. 00:26:52 Other than that, uh, what else you got? I tell you, it's gonna have to really be mindful of all your Ps and Qs. 00:27:00 You, you're really gonna have to pay attention. This is not gonna be a year that you get to experiment with a lot of stuff and try to spend 00:27:07 and see what's going to go on. I, I still encourage somebody to have 10, 20 acres to do some trials so you don't get left behind the way. 00:27:15 This stuff changes so fast. That's Another reason why they should tune into what we're doing because we're doing the experimenting for them. 00:27:21 That's correct. That's, that's one thing that stream mag's good at is trying to create, you know, sometimes absolutely crazy stuff to try 00:27:28 to figure out if there's a ROI in it. And it's amazing, you know, some of the things that we used with the drought that we had this year, it still, you know, 00:27:38 it had a r it had a ROI to it, um, even though the yields was below, you know, below breakeven. Mm-hmm. So, you know, did it help me 00:27:51 or did it help the insurance company, I guess would be, I guess it helped the crop insurance company. But, um, you know, that's just part of it. 00:27:58 But you gotta be mindful of that. And those, those parts that are proven that you know is gonna make you money on your farm, 00:28:05 don't cut 'em out this year. 'cause you're gonna have to have it, Kevin, historically, when there's a, a downturn, 00:28:12 then there's people that exit the business and then there's some consolidation, um, that certainly during that 2014 to 2020 timeframe kind 00:28:22 of would've played well. But you were dealing with interest rates that were less than half of what they are now. 00:28:27 I have pondered whether we will see less consolidation because of the margins being where they are. The negative, as you said, even, you know, if you were, 00:28:37 even if you were in Illinois, you might, you know, whatever prairie soils you might not. But also with 8% money, 7% money, I, 00:28:44 I'm just wondering if the pace of consolidation slows, even though normally, historically that's what's happened during, uh, downturns. 00:28:52 Um, I think what we're going to see is we've got so much less opportunity to consolidate 00:28:59 because they've consolidated so heavily up to this point. Mm-hmm. So that's going to slow down obviously. 00:29:05 'cause there's not as many players out there. Um, but it's, it's going to be interesting to see how they do it. 00:29:13 And one thing that concerns me is there's so much higher profitability in other aspects of the economy. 00:29:21 It's gonna be interesting how many of 'em pull out of the ag sector and go with the other, other sectors in the economy. You 00:29:29 Mean from an investment standpoint? Because I, when people keep saying, well, Damien, you know, you're a farm person, aren't you concerned about, uh, 00:29:35 non-ag money buying agricultural real estate? And I said, uh, it's happened before. And then usually when returns start piling in somewhere 00:29:44 else, they go somewhere else. So I I I, I think that we see a downturn here. A lot of, a lot of money exit 00:29:49 to the space is I think is what you're saying. That's what I agree with. Yeah. Yeah. I agree. 00:29:55 So if you were, uh, if you were, uh, looking at this as an opportunity to expand, uh, that, that, that might be an option, 00:30:06 but is I don't, I, I'm be honest here, I don't think it's gonna happen. Also because if the government is throwing some money out 00:30:12 there to keep a lot of people, you know, at least break even then they're not, they're not in a, 00:30:17 they're not motivated to exit. Uh, well that's twofold. So if I, unless They're old, unless they're old. If 00:30:24 you're 80 years old Yeah, yeah. You'd say I'm done. Yeah. Well, I also see this as a huge opportunity 00:30:30 for young farmers right now. Um, they can go get some very low interest, uh, loans, beginning farmer loans at the FSA, um, 00:30:39 something I never took advantage of. Um, I didn't know about 'em in time, honestly. And, uh, but this is the time to buy 00:30:47 and get in if you're, if you're wanting to get in, it's, it is a buyer's market right now. 00:30:51 And, and you know, cash is queen. Um, so if you've, if you've got cash or the ability to get cash 00:30:59 and you want to expand your operation, this is the time to expand it. Um, because it's only going to, 00:31:04 your balance sheet's only gonna get better from here on out. You know, you're in, you're getting in at the bottom 00:31:09 and you don't wanna get in at the top. You wanna get in at the bottom. So you know, there's gonna be opportunity there. 00:31:16 And then you take some of us older ones that, uh, has been fighting it and some of us are going to say, Hey, you know, I'm, I'm, I only got 10, 10 crops left, 00:31:26 or 12 crops left or something. I'm not willing to risk what I've gained right now. I'm just getting out. I'm gonna take my money and run. 00:31:34 So I think we're gonna see some of that. Um, and then sadly we're going to see, um, a large, a larger number than we expect. 00:31:44 Probably. That is the, the bank's just going to tell 'em it's, we're done. We don't wanna do no more. 00:31:50 Uh, one of our large operations here in North Carolina, I just seen where they, um, the, um, you know, they've been taking over, the banks took over control 00:32:01 of their operations. I read about one in Michigan where they're being put up for sale. So it's all, you know, 00:32:08 it's sporadic across the United States, but, um, so it's, it is going to be interesting, but it is actually a buyer's market. 00:32:15 If you need equipment and you got the cash, you can make some really good deals right now. Right. You, you know, 00:32:21 the land prices is actually held really well and I think that's because of the general economy outside of ag is, uh, those investors like to buy land and so Well, 00:32:30 Yeah, I mean the inflation, uh, you know, real estate is a agricultural, real estate's always been a, a hedge against inflation where it's, 00:32:37 it's gone up almost identical to what the inflation rate has been. And I think that's why it was there. 00:32:42 Of course, if we see a decrease, if we see inflation get tamed, maybe some of that interest goes away. 00:32:48 But yeah, you're right. That seems to be holding up and you're saying it's, it is the time for a young person. So your advice to your, your kids, 00:32:54 you say now's the time. Go. Yeah. Yeah. I mean, if they, if they wanna start out on their own, 00:33:00 this is time to get in. Um, it's, and it, and actually, you know, that's how I was able to get the growth I did 00:33:07 because I come in during the LDP days and I mean, when, when you went in the bank and told 'em you wanted to farm in North Carolina 00:33:15 and you didn't have to buy our livestock or driving nails or laying brick, um, 00:33:20 they kinda laughed at you if you was gonna take, you know, when you told 'em you wanted to, was a row crop farmer. 00:33:24 So we really had to prove ourselves. But it, it didn't take much money to get in then it takes a lot more money to get in now. 00:33:30 But you don't have to have the newest and latest and greatest equipment. You can buy older stuff and get in and do quite well. 00:33:37 I like it. Alright, closing thought. Two middle aged guys sitting, or two middle aged farm guys talking about the farm economy. 00:33:43 Like I said, this is, we're gonna hear more by the time you're listening to this. There's gonna be more news on this front. 00:33:47 Like I said, we, we were literally recording this the day after this whole announcement about in the, the, the, 00:33:51 the bill was signed into law. We're talking about the farm act, which is another thing. And we're talking about a re revision of the farm builders. 00:33:58 All this is gonna evolve, but right now what we're talking about. So final thought. 00:34:03 Final thought Farm economy. Be, be positive, it's going to get better and uh, it's keep your heart in the Lord 00:34:12 and it'll all work out. May not seem like it though. It may a tough ride. Yeah, well we've been here, like I said, 00:34:20 the tough part is we're just, we're a cyclical business as much as any, you know, we're a cyclical industry. It's, and we tend to always be off 00:34:27 cycle from the main street. I mean that's, the main street went through hell and back between oh eight 00:34:32 and about oh 11 with the housing crisis and all this kinda stuff. And we were literally thriving. Like as good as it 00:34:38 Were. Oh yeah, we was a king of the hill then. Yeah. But you know, one thing we gotta remember, it just took one good crop to get the prices where they are 00:34:46 and it only takes one bad crop to get 'em back where they was. So it will be a different day tomorrow. 00:34:53 There you go. His name's Kevin Matthews. He's one of the founders of Extreme Ag. Uh, hundreds of episodes. 00:34:58 I've been doing this now for three and a half years. Go to Extreme Ag Do Farm. It's like a video library. It's all free for you to choose from. 00:35:03 If you want to go to the next level, I already told you, hey, it can become an extreme Ag member 00:35:06 for 750 bucks a year. You get direct access to guys like Kevin for a question answer platform if you wanna, you know, 00:35:12 get a little more inside their head about how to do stuff. You also get the trial data from the end of the year 00:35:17 and all the trials these guys are doing. And you also get special offers like going to Commodity Classic. 00:35:21 And you'll see us there. In fact, we'll be in the Nature's booth because nature's gonna pay 00:35:25 your way to go to Commodity Classic. We're gonna be there in their booth doing cool stuff, uh, with them. 00:35:30 Um, if you like what we do here at the, the Extreme Ag program with all the videos, these guys do all these podcasts. 00:35:35 We're also excited to tell you you about our new show. It's called The Grainery. It's shot at my farm in Indiana where I sit around with the guys round table 00:35:42 and talk about farm stuff. You know, it's real. Talk about real issues impacting you. It's personal, it's real, it's fun. 00:35:49 Bas basically you can just watch this show and you can imagine you're pulling up a chair and, and having a beer with us. 00:35:53 Uh, it's great times. Go check it out. It's the Greenery, it's new show at Extreme ag, uh, farm, like all of our stuff. 00:35:59 Also on YouTube. Go to the YouTube channel for extreme ag and hit subscribe. It don't cost nothing and it's got great stuff. 00:36:04 Till next time, thanks for being here, man. Thank you. Alright, till next time. Thanks for being here. I'm Davey Mason with Extreme Ag. That's 00:36:10 A wrap for this episode of Cutting the Curve. Make sure to check out Extreme ag.farm for more great content to help you squeeze more profit out 891 00:36:19.035 --> 00:36:20.315