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To further expand this out since someone wanted to throw AI trash math at this, a REALLY good year for a farmer is a 10% return on input from fertilizer, seed,
by AngryData 1y ago
To further expand this out since someone wanted to throw AI trash math at this, a REALLY good year for a farmer is a 10% return on input from fertilizer, seed, and equipment maintenance, usually it isn't that high and many farms average only a 2-3% margin over time but ill stick with 10%. Current average wheat prices are 9.3 cents per pound, while the cheapest flour you can get from walmart is 48 cents per pound, so 1/5th of that.
So provided the farm makes no investments on equipment or expansion, has a great year to get near maximum possible returns and all of that ends up as payment for labor, there is zero spoilage or waste, and you buy the cheapest possible flour, 10% x 1/5th = 2% is the highest possible amount of money you can expect from your flour purchase to go towards farmer's labor. If we use more realistic averages of farm profits it drops down to 1% or less, and if you include the costs of buying and upgrading farm equipment like any successful farm has had to do to stay alive throughout the last 40 years it drops even lower.
And if you look at the amount of land that a farmer needs to own (or god forbid rent) it looks like an even shittier deal for the farmer. At the US average of 40 bushels of wheat produced per acre planted, with a price of $5.55 per bushel, you get $222 per acre. With 90% of that going towards material input costs (its actually negative return on investment at that price but lets just assume 10% margin for the farmer's sake), that is only $22.2 per acre for the farmer, so in order for a farmer to earn $60,000 per year at that rate, they would need to farm about 2,700 acres of wheat, thats over 4 square miles. If we drop to only 5% margins, which is still better than most farms would ever expect, thats about 9 square miles of wheat they have to work. And you can double that again if you go for the more realistic expected margins of 2-3 percent. So unless you have a full 4 mile x 4 mile block of arable land, plus all the equipment needed to farm it, you couldn't really survive off anything less than a 4 mile sided square of wheat planting.