1. Profits Weather – Profit – Clouds Hills Community Center
January 26, 2005
Michael Duffy

2. Outline Background / Current Situation Land Costs of Production
Profits or Income
Questions

4. Iowa Farmland 91 percent of land is in farms
68 percent of land is harvested
62 percent of the land and 68 percent of the land in farms are in corn or soybeans
91 percent of the harvested acres are corn or soybeans
Iowa farmland valued at approximately $73B

19. Estimated Returns to Land

20. Capitalization Rate 2002 land taxes $10 land management fee
ISU Extension Estimated Costs of Production, Land Values, and Cash Rents
Government payment data from Environmental Working Group

26. Land Compared to Dow Jones
Yearly Dow Jones Industrial dividend reported by Dow Jones
USDA/Economic Research Service rent values
ISU Extension land values
Assume $1,000 invested with returns reinvested
Land tax is only ownership cost assumed

33. Are we setting ourselves up for another fall?

34. Different Financial Situation
More land without debt
Less land held under contract
Different reasons why we are here

47. Land Rents and Rental Arrangements

54. Costs of Production

61. Profits or Income

68. Options Get big, survive low margins with volume
Increase efficiency in production/marketing or both
Alternative marketing approaches
Alternative enterprises
Extra income

69. Conclusions Considerable uncertainty in the short run
How budget deficit is handled will have an impact of land values and Iowa in general
What happens with government farm programs will influence profitability
US balance of trade will be important to watch

70. Conclusions
There are options and alternatives to consider for farmers of all ages
Iowa’s land ownership will change considerably over the next few decades
Iowa needs to expand its agricultural base
Iowa is the primer agricultural state, how we farm says who we are and whether or not Iowa is a desirable place to live

71. Thank you! For more information contact me; mduffy@iastate.edu
(515)

73. Strategies Decide what you want Inventory what you have
Determine how best to combine what you have to achieve what you want

74. Strategies Keep an open mind Be willing to make changes
Maintain diversity
Mange crops for highest profits, not yields
Manage livestock for lowest cost per pound
Marketing
Value added products

75. Questions to ask Why do I want to farm?
What is agriculture as I envision it?
What are the options available to me?
What can I learn from my neighbors?
What can we do?
Never quit asking questions