Small farm reprieve...
As I lay awake last night trying to figure out how to make crown molding fit on a downward curving section of ceiling (don't ask), I started doing some farm arithmetic. Using rough numbers, of course, it dawned on me that smaller [usually inherited] farms could now be something other than a source of extra income for the owners.
As prices have risen, so have margins. We're taking over twice the gross profit acre from our farm - total revenue minus variable costs (fer, seed, chem, fuel, rent) - than just a couple of years ago. And that is with much higher rents.
Farmers rightfully point out that rents are rising to shrink that margin, but c'mon - owners are not taking all the increase by a long shot. (Shiny Metal sales makes this evident) In fact, the split of gross profit to owner and operator is closer to even than it has been for some time, by my figures. More importantly, the combined return is now a 2+ advantage.
The upshot is not just more income from a small amount of rented acres, but a whopping increase for owner-operators of small farms, especially if you inherited say 200 acres free and clear. And many of these might have serviceable equipment from Dad that can be run for years more with little machinery costs.
Suddenly 200-500 acre operations are earning a respectable living wage. Thanks to low inflation, that number hasn't risen like other costs. This changes the consolidation dynamic, as the pressure for outside income drops drastically. For those close to retirement, it also means scaling back to owned land looks like a great way to keep going with far less hassle/effort and still bring in ample income.
I obviously overlooked the 1-2 punch and underestimated how rapidly and far income levels would rise for both owners and operators, and what the combination of those streams would mean on a small scale. One possible conclusion is we could see a slowing of consolidation for some areas and operators who now are much farther from the edge, and for whom rising rents are not just a cost, but an added bonus.