The corporate farms can do it courtesy of massive scale leverage and typically inexpensive borrowing costs.
The average person might pay 4.5% to 7% for that $400,000 property. A sizable corporation can borrow for 20 years at half those rates.
Better yet, the big corporation has cash reserves and cash flow from their big existing operation, and can buy the property outright. That property then yields, say, 5% per year on the cash invested - which obliterates what all corporations are getting on cash or cash equivalents.
The corporate farm can redirect 100% of that property's production toward paying for the property and farming costs, without harming itself in the process. If done correctly this becomes a perpetually expanding machine, the same premise that has led to consolidation in other previously highly fractured industries. Warren Buffett (among others) is presently attempting to do this in auto dealerships for example.
It's the same reason Costco can operate quite successfully on a 2.x% operating profit margin, whereas most businesses will tip over rapidly with that slim of a buffer.
The small farmer will constantly struggle to not drown by comparison.
The average person might pay 4.5% to 7% for that $400,000 property. A sizable corporation can borrow for 20 years at half those rates.
Better yet, the big corporation has cash reserves and cash flow from their big existing operation, and can buy the property outright. That property then yields, say, 5% per year on the cash invested - which obliterates what all corporations are getting on cash or cash equivalents.
The corporate farm can redirect 100% of that property's production toward paying for the property and farming costs, without harming itself in the process. If done correctly this becomes a perpetually expanding machine, the same premise that has led to consolidation in other previously highly fractured industries. Warren Buffett (among others) is presently attempting to do this in auto dealerships for example.
It's the same reason Costco can operate quite successfully on a 2.x% operating profit margin, whereas most businesses will tip over rapidly with that slim of a buffer.
The small farmer will constantly struggle to not drown by comparison.