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Your Math Question For The Day

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The farmland is located in Sioux County Iowa and, yes, it is a new state record.

According to the latest figures, the land in that area routinely returns 200 bushels per acre for corn and 60 bushels per acre for soybeans.

So let’s do a little figuring.  Corn closed at $7.42 yesterday on the Chicago Board of Trade. Soybeans were trading at $15.64 per bushel.

Let’s say you were to put the entire 80 acres into corn and it produces 200 bushels per acre, you’d end up with 16,000 bushels of corn.  If you then turned around and sold all that corn at $7.42 a bushel, you’d take home a check for $118,720.  Now let’s go back to what you paid for the land – $21,900 per acre.  That figures out to be $1,752,000.

Now, let’s say you were to put the entire 80 acres into soybeans and it produces 60 bushels an acre, you’d end up with 4,800 bushels of beans.  You then sold the beans for $15.64 per bushel, your take home would be $75,072.  Again, remember you paid $1,752,000 for the property.

And both of those scenarios don’t take into account the cost of putting in the crop, all the chemicals you would need, wear and tear on your equipment and the cost of harvesting the crop.

Take it one step further, under the “corn” scenario, and IF prices stayed the same (which I realize is highly unlikely), you’d have to farm that land for just shy of 15 years before you would break even.  And, again, that’s not figuring in your expenses.

Under the “bean” scenario, and again IF prices stayed the same, you’d have to farm the land for 23 years before breaking even.

I realize Iowa farmland prices have more than tripled since 2002, reaching an average of $7,878 per acre, but still…

I’ll be the first to admit, I’m not the “sharpest knife in the drawer”, but I sure hope the new owners are young in age – otherwise they’re gonna go to their grave owing someone a boatload of money!

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