Honors article one - Kaylin Spaeth Ag Econ 230 Honors...

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Kaylin Spaeth Ag Econ 230 Honors Project In Ag Econ 230 throughout out the first half of the semester the topic about the importance of understanding marginal analysis and knowing the limits for a firm were discussed. The article, “Bearish Signals= Prepare for Shrinking Margins” by Daniel Looker ([A] ARICULTURE.COM March 24, 2014), discussed why this is important for the agricultural industry. The article highlighted what has happened in the past, what USDA estimates for the future, and what agriculturalists should be doing right now. Looker started off the article by providing facts about the crisis agriculture faced in the 1980s. Far too many people were in deep debt and had very little assets to back up the debt. Farmers didn’t take into consideration the marginal analysis for their farms, so they continued to produce when they were actually starting to lose profits. When they started losing profits it caused them to go into more debt, but still didn’t have the assets to back it up.
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Unformatted text preview: The point of the article is for farmers to learn from the mistakes that were made in the 1980s and analyze their margins and understand their limits. It also suggests that farmers should try to have a current ratio of two in case they ever find themselves in a debt related situation. These lessons will be crucial in the next few years based on the future forecasts from the USDA. The USDA is estimating that corn prices will be dropping, with this year’s average price being around $4.50 which is around the break-even point for many farmers. In 2015-16 the price is expected to be around $3.30 and in 2023 coming back up to $4.40. Many times the USDA predictions are incorrect, but this shows that it is still vital for producers to have a plan and understand the margins of production. The second half of Ag Econ will continue to emphasize the importance of analyzing the different aspects of production for costs and profits....
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  • Spring '12
  • ToddHubbs
  • Economics, Austrian School, Ag Econ

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