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wierd thought-the future of farming...

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SodBuster87

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The posts on the great big operators got me thinking. If these BTOs can fall and fall hard what does that say for the guys on the bottom and in the middle. As much as I despise organic its the only thing holding its own right now. Though time will tell for how long. The small guys are screwed-maybe... The only thing is the small guys are small enough to fall through the cracks. While selling 20 head of cattle or 5,000Bu. of corn is hardly making a living, money is money and anything that size is likely to go unreported. More so as the farm gets smaller. Not saying this is right and some have been caught. But I'm just acknowledging a fact of life. The in between operations are just big enough where they can get by with older, more importantly paid off equipment but because they lack volume. They loose bargaining power when selling or when buying consumables. The BTO has the above mentioned bargaining power. However they are so far behind the eight ball in terms of debt to keep running one bad year and the're gone. Not saying I have the answer, I don't but it makes a person wonder.

SodBuster
 
Organic is Just a marketing scheme but I guess if it
helps pay the bills but with lower crop yields and
poorer quality crops I don?t know if it?s worth it
 
Not taking a side because I don't want to see anybody fail really,but if it wasn't for crop insurance guaranteeing loans,could most of the larger operations exist? Not just the ones who we might think of as BTOs,but anybody who borrows more money to plant a crop than they have equity in the land and equipment that they own?

How could operations like Boersen get a loan to plant one acre without those guarantees? As fast as they grew,they had no equity in anything.

It's like I told the banker when I bought my second 80 for $600 an acre back in the early 80s. I told him that land would never pay for itself if it was all I was farming,it's the rest of the operation,the dairy cattle,the other land I owned and the land I rented,that would pay for it.
 
Not a wives tale. Friend gave me some organic bananas. Lasted me about 10 days sitting out in the kitchen where normal ones last just a few days depending on the color when purchased. Added to that they tasted better. WW is the only grocery marketer of organic so I buy them when I shop there. Not sorry.

I have NO earthly idea as to how you grow an Organic Banana but folks, apparently there IS something different about the process or the genes.
 
I do some custom organic farming for a neighbor. The year that he raises corn he does much better then conventional but over say 5 yrs. time it works out about the same. Reason being lower yields, higher operating costs, 30 ft. buffer around every field (that you don't sell crop off of) and because of necessary rotation you can only plant corn every 3 yrs. Other 2 yrs. you plant a soil building crop which you break even at best. Don't know what you mean by poorer quality crop? I can't tell the difference from my conventional crops.
 
In tough times it is easier to keep a small
operation afloat. You can bring in enough
income from other sources to make a dent.
For a BTO, other than maybe the wife
carrying the health insurance from a town
job, there isn't enough that can be brought
in from outside to make a dent.
 
I saw that also, I know it is hard for some folks to understand but there ARE farmers who farm 4 or 5 thousand acres , that have been in it for years and DO NOT have debt. Yes there have bumps and bad years but over the past thirty years I have had many very good ones also.
 
The small guys will make out OK because their cheap small machinery is paid for and low maintenance. They have a ‘real’ job somewhere else that is paying the bills. Their land is either paid for or they are paying low rent because the fields are too small for the big boys to farm.

I’m in the middle class of farmers. My machinery is paid for but I’m into the bank every year for some of the crop inputs, and it’s a little tough right now but I’m hanging on. If I was making machinery payments I would be in big trouble.

I am seeing a few retirement farm sales around here for mid-sized farmers in my age range, mid-60’s, who can’t make ends meet anymore. Their machinery is shiny and not paid for. I assume that is what is dragging them down.

The biggest farmer by far in this neck of the woods is a self made billionaire who owns and farms the land just because he wants to.
 
(quoted from post at 16:39:13 03/27/18) All BTO's buried in debt? Please provide the proof.
Click to expand...
Its a general statement. Yes I am certain you could find exceptions will a small amount of digging. But in general..........Yes..
 
Don't know about organic holding its own - guy across the road from me over the past 3 years has spent over $8 million between buying land, renting big tractors, drainage and fencing and hasn't yet sold a
crop. Maybe some subsidies involved?
 
There's rumors of the big B still fiddling around, getting some equipment. Blows my mind. If I default on my loans it'll be a cold day in you know where before anyone loaned me money.
 
(quoted from post at 18:36:10 03/27/18) Not a wives tale. Friend gave me some organic bananas. Lasted me about 10 days sitting out in the kitchen where normal ones last just a few days depending on the color when purchased. Added to that they tasted better. WW is the only grocery marketer of organic so I buy them when I shop there. Not sorry.

I have NO earthly idea as to how you grow an Organic Banana but folks, apparently there IS something different about the process or the genes.
Click to expand...

arent all bannana's hybrids?? the natives are little bitty ones...
 
I agree. I can name more than a few in my area that are on very firm financial footing. The big problem for all of us is farming is a worldwide game anymore with the US not calling the shots unlike past decades. Read the article about Kansas wheat production in the latest Successful Farming. A Cornell marketing professor predicted a fair amount about worldwide crop production while I was there during the 1980's.
 
Quota systems do not overpriced the milk, but rather provides efficient producers with cost of production factored into their return while providing a quality product at reasonable prices and matches demand to production. Competition? We have lots on this side of the border,but the system soon weeds out those less efficient, and yes we do allow non domestic production into this county. Any farmer in the world can come to this country and start milking....Just leave your guns at home....
Ben
 
Sorry but you quota is nothing but a subsidy. No one wanting to start up can afford to buy in and your gov keeps US milk out. We milked for 20 years and your system has kept many farmers going so I am not saying it is bad but it is a subsidy just like the big grain farms in the US get. Tom
 
No matter what size operation you have debt is what makes or breaks you. Most all of a businesses
cash outgo can be more or less imediately controlled with the exception of debt, interest
accumulation and payments are relentless. Some people take on large debt and time the markets right
or get lucky and expand at the right time but if they are successful long term they also pay that
debt off as quickly as possible.
 
A myth that many small and mid sized farmers LOVE to believe is that all large farms are floating in debt. IF you just look at the dollar figures then yes they have lots of debt. IF you look deeper most larger farmers have a much lower debt to asset ratio than smaller farmers. Then look even deeper and the larger farmers have a much lower percentage of farm gross needed for family living expenses.

When I was selling equipment I got to see a lot of farmer's financial numbers. ON average, the larger the farm the better managed it was. The biggest area that was done better was marketing of the crop. Now this was on average. There are very good small and large farms. I am just stating on average.

There are guys managing large farms that could be transplanted into any Fortune 500 company as CEO and make a success of it.

You see and hear of the major disasters. You hear of the flashing EGO driven guys. You do not hear much out of many operations that just hum along growing at a steady, safe pace. I personally know several 10,000 acre Iowa grain farmers that have zero debt. They will weather just about any storm much better than the rest of us.
 
It is not a subsidy....when a farmer buys quota, he buys a portion of the market. If the market does not buy his product, he is out of business. If the market shrinks, his production must shrink likewise, in spite of what he paid for his quota. Yes, it is next to impossible to start dairyinh here, that is one of the faults of the system. However, it's hard to start any type of farm here that will support a family. For example, 400 acres of paid for cash crop land here should net you about 200 dollars per acre, as a rough figure, giving you a net income of 80000 enough to live comfortably in the cold north land of high taxes. With machinery, that would be an investment of over 5 million dollars. With 5 million, I could buy a large enough dairy farm lock stock and barrell to support a family and be debt free as well, I would just have to work a lot more.
I know it's not easy to start farming anywhere, but the system does provide for a semblance of stability.
Ben
 
> Take away the US farm bill with all of direct and indirect subsidies , and then lets have this discussion.

Sure. You do understand 80% of the farm bill is food subsidies to town folk, school meals, the new version of food stamps, and other such subsidies to the poor?

Good luck with that, you heartless louse. :)

Paul
 
A lot more weeds in this area in the hay and the corn and we have to swath the grain to let the weeds dry enough to run through the combine
 
Dairy products are protected by tariffs. Trariffs are not subsidies., if they are the who are you to talk ? uS had 20% tariffs on imported dairy, 350% tariffs on Tobacco, 168% tariffs on shelled peanuts, 35% tariffs on Chinese tires, 25% tariffs on most auto parts. Seems to me, if tariffs are subsidy , then there are plenty more USA subsidies than what you are either aware of or willing to believe.
 
Dairy farmers in Canada are civil servants. Don't fool yourself. I was raised on a dairy and now farm in a non SM sector so know how the system works. Dairy in Canada has nothing to do with a real business so be careful with comments to others on business affairs. During the 80's it was farm crisis, what farm crisis, we have quota. Just could not identify with what our hog and beef farming neighbors were going through at the time.
 
(quoted from post at 19:51:07 03/27/18) . You do understand 80% of the farm bill is food subsidies to town folk, school meals, the new version of food stamps, and other such subsidies to the poor?

Good luck with that, you heartless louse. :)

Paul
Click to expand...
Very true and with a few billions (Don't know exact number) less spent on corn or potatoes each year would only hurt farmers.
Politics aside, it will be interesting what the future holds for agriculture. Will it continue to grow into bigger fewer farms or will debt, interest unpredictable weather/crops drive it full circle . Don't know but I'm going to buckle up for this ride. .......

Sod Buster
 
That's the biggest load of crap I ever heard. Comparing a dairy farmer to a civil servant??? C'mon, most civil servants in this country would not last a week on a dairy farm let alone juggle the time investment and planning involved in day to day operations. I hve lots of farm friend who were not dairy farmers who also inferred that we had a licence to print money. To them, I suggested selling their farm, buy a 100 acre dairy farm stock it with 50 cows and join the club.....no takers....guess they did not want to step down...
Ben
 
There are some government workers that do actually work hard. Most don't granted. What makes a business real is the fact that it faces market risk which Canadian dairies do not. If you have a business start up, then you must seek clients and convince them to do business with you not just buy market share. I am the son of a Canadian dairy farmer and have started two farms by scratch so yes I do know what I am talking about. The second is still in the start up phase now and it is much harder than the first as the first time around I gained equity as interest rates fell. Now the environment for a successful venture is 10x as difficult since there is no inflation produced equity.
 
SodBuster87: The trend of farms getting bigger has been going on for over one hundred and forty years here in the US. Even in the days of home steading 160 acres was hard to make a living on. So shortly there after some failed and others prospered. The ones that prospered bought the failed ones and grew. Man power and machinery limited how large the farms grew for a long time. Now that machinery makes amazing numbers of acres possible it is management that is the limiting factor now. So it will be interesting to see where things go. I do not see small farms ever getting back to the point one can make a living on them only. Hope it will/would happen but pretty much know it is not going to.
 
(quoted from post at 21:43:36 03/27/18) SodBuster87: The trend of farms getting bigger has been going on for over one hundred and forty years here in the US. Even in the days of home steading 160 acres was hard to make a living on. So shortly there after some failed and others prospered. The ones that prospered bought the failed ones and grew. Man power and machinery limited how large the farms grew for a long time. Now that machinery makes amazing numbers of acres possible it is management that is the limiting factor now. So it will be interesting to see where things go. I do not see small farms ever getting back to the point one can make a living on them only. Hope it will/would happen but pretty much know it is not going to.
Click to expand...
Well nothing is set in stone. Like I said I am buckling my seat belt for this ride. All it would take is a major policy shift politically, or massive increases in interest. Or a few other factors. A break down of the transportation infrastructure would have devastating effects on single crop farms. Alot of these big farms are so deep in debt that they are almost collapsing now. Is this likely ?Maybe-maybe not. My crystal ball is currently broken. But for small farms to come back there would have be a massive disaster. However "hobby" farms as some call them have become money makers in recent times thanks to modern tech marketing and niche markets.
 
I am a STO bit time. Basically I farm to keep my property in ag. for ad valorem tax purposes and don't do it for free. I expect to be compensated for my efforts....not a hobby operation! No doubt in my mind that BTOs have a better handle on things as a result of the volume of their operation. However, as I posted elsewhere in visiting the irs.gov site (questions from viewers section) recently I found that most of the food produced in the US is from small operations that run an average of $5k in the red on their tax returns.....depreciation included.
 
Another comment: I live within commute distance of the DFW area of N. Tx. This place is exploding in population. People are sucking up rural property as soon as it becomes available. Since prices have shot up recently to $10k an acre, most of the plots are in the 10-20 acre range. Most all of these properties are in ag. and with the laws being what they are and all, and the reasons for the folks leaving the city in the first place, most all of the new comers do ag. of some sort.

So, this sounds to me like folks returning to ag. not leaving it.
 
Nope, but this has been 6 months or so ago and I still buy them whenever I shop ww and still get the same results using products from the same sources.
 
(quoted from post at 19:51:07 03/27/18) > Take away the US farm bill with all of direct and indirect subsidies , and then lets have this discussion.

Sure. You do understand 80% of the farm bill is food subsidies to town folk, school meals, the new version of food stamps, and other such subsidies to the poor?

Good luck with that, you heartless louse. :)

Paul
Click to expand...

LOL Paul, I'm not on board with that. What I want them to do is to take that school free meal money out of social services. SNAP money too. Medidcaid too! While they are at it housing and heat assistance should come out of there too along with education assistance for the poor. In other words all assistance for the poor should come from one spot so that we, the taxpayer can at a glance see who much is really spent on various forms of welfare.

Call it truth in budget dollars!

Rick
 
There are several big farms around me that will be able to weather just about anything. They grew steadily over multiply generations. They seem to be conservative when the profit margins are good and then
expand when nobody is making money. I can make some money with a small operation because of high value crops that require a large amount of labor. These kind of small operations like mine are a very small
fraction of the total amount of food produced in this country. The big outfits will produce the bulk of the products and keep getting bigger and more efficient if they are managed right.
 
You're not harvesting them at the store though. You don't know the variety,how long ago either were harvested or how they were handled during transportation. Since bananas come from foreign countries,you don't honestly know that the organics really were grown to US organic standards or that the conventionals weren't grown organically.
 
Down below I commented to the effect that a number of BTO's are on very firm financial footing. Now to comment on the other side of the coin. There are also quite a number of BTO's that rely on investors and own very little of the equipment they run. I have seen area BTO's unravel when the investors see better alternatives for their money in the economy and pull up stakes. With other sectors of the economy out performing agriculture it becomes very difficult to replace those investors due to the inferior return in farming. Going one step further the equipment aspect does very little for the balance sheet if leasing is heavily relied upon. Some smaller operators with lesser equipment can have more to show on the balance sheet if the equipment has clear value with little or no debt against it.
One thing that has yet to be commented upon is several years of flat earnings and their effect on BTO's. As commented on in a recent SF article about declining Kansas wheat acreage shortfalls for small operators are easier covered by a job in town. A BTO would be hard pressed to cover a 100K shortfall from a job in town. As said in the same article world wide increases in the production of commodities such as wheat have made for very flat earnings. Some might be quick to say that crop insurance is the hedge for that but crop insurance for any year are based on expected commodity prices versus giving a high ceiling to work with. If I had to guess that anybody's wheat coverage is based more on 4.50-5.00 dollarsper bushel than the heady times of a few years ago where that price was double. If things play out a certain way where for a few concurrent years the BTO cannot pay his expenses then what does he do. If he goes to the bank do they say you have excellent equity or do they say we see a permanent decline in the business and start to de-value acres, equipment, etc. The things mentioned in the SF article were in substantial part predicted by a marketing professor at Cornell during the 1980's of which I took his class.
 
You're exactly right a quota is an artificial shortage that's engineered by the Gov't is nothing but a subsidy which is paid by all of the consumers of the product.
 
(quoted from post at 21:43:36 03/27/18) SodBuster87: The trend of farms getting bigger has been going on for over one hundred and forty years here in the US. Even in the days of home steading 160 acres was hard to make a living on. So shortly there after some failed and others prospered. The ones that prospered bought the failed ones and grew. Man power and machinery limited how large the farms grew for a long time. Now that machinery makes amazing numbers of acres possible it is management that is the limiting factor now. So it will be interesting to see where things go. I do not see small farms ever getting back to the point one can make a living on them only. Hope it will/would happen but pretty much know it is not going to.
Click to expand...

JD, I was reading a Successful farming magazine from somewhere around 1920. There was an article in there
chastising the big farmers. It told the readers if a neighbor is thinking about renting another 80 he should be given a good talking to. Of course today it involves more than an 80.
 
I spent a number of years in retail agricultural business. That was also a number of years ago. Your post motivated me to share some of my own insight and experiences. When I was in high school, the nation's farm economy was in the depth of that crisis (1980's). I cannot pick out the exact year, but sometime after 1985, we starting hearing about the financial restructurings that were going on back then. Our family farming operation was not in the position to get big and then go through debt restructuring, but in those years, certain large banking firms wanted out of the agricultural sector. The most prominent one in our area was FirstBank system. It was the talk of the area as to who went through this. The end result? I had been told those BTO's of that time had to declare the "write-down" as income. It was rather obvious when this happened, because most of them bought a new line up of equipment and a new pickup truck for a business deduction to help offset that income. In the retail agricultural business I was in, I got to do business with many of these people. Every one of them I knew of, who went through debt restructuring, operated under a corporate business name, rather than a sole proprietor. Some were rather humble and cautious after this. Others weren't, and went through the same thing again. My uncle, a metro banker, when I had asked him about what might be the outcome of these same people who were subject to debt write-offs, as I was curious about how my company could be "stuck" with an outstanding bill. He responded by telling me these same operators could go through it all over again after another 7 years. Some of these same BTO's did it all over again, and again. I had one customer, who set up no less than 7 corporate entities for his farming business, so he could conceivably file bankruptcy every year. I knew of some who placed land into their kids' names before declaring bankruptcy and could minimize the land they would lose, which they were overextended or over collateralized on. I have also seen where one files bankruptcy and is able to come back and buy the assets for pennies on the dollar, as a way of getting rid of debt. All I am going to offer, is if you are "large" enough, the same set of standards DO NOT apply. Below a certain threshold.................you get sold out. Above a certain threshold, there are debt restructuring tools and legal procedures that can be used, and from what I have seen, "mis-used" in order to get bigger and squash out competition. We saw this after the fallout of 2008 with "too big to fail," which is a crock of BS! Thus far, I have paid all my debts and the interest associated with that debt. I intend to continue to do so. I have wondered, though, what I could have done if I didn't have to pay all that back AND got to keep the assets! Sorry for my rant.
 
The stuff that is popular around here is the "farm to market" products. And not just food. Pumpkin patches, roadside stands, farmers markets, etc.

There is a ladies store not far from here that is full of clothing, nick nacks, wall hangings, towels etc. They all have catchy farm slogans on them. I bought my wife two towels for Christmas. One says "Locally grown, good food, thank a Farmer" The other says "If you ate today thank a Farmer" Little outline of a tractor in the middle. Women are carrying stuff out of her store like it is going out of style.

The Farmers market in Columbia MO. is going great guns. You put out anything that says Organic, Non-GMO, free range, locally grown and just double the normal price and the hippies, college professor type will pony up to buy it.

But you don't have that everywhere. Columbia is just full of the type that has the money and will pay out the nose.


My farm is paid for, I am retired from an off farm job. I am thinking about what I can grow and sell to the hippies.

Gene
 
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