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OT young guy's rant

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Rich Iowa

12-31-2005 13:30:48




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I"ve been watching land prices for a while now, allways going up. Lately I"ve noticed they have leveled off a bit here in Iowa. With these prices, I don"t see any way a young person, like myself, can get into farming anymore. Many times I"ve thought about just selling the equipment I have, make a down payment on a small house in a small town, and spend my time at the bar. But if I did that, I know I"d be bored and unhappy. I love being outside working the land; plowing, disking, cultivating, harvesting, baling hay, working with animals, etc. I think alot of you guys/gals will agree when I say there"s nothing like watching a Red-tailed Hawk swooping down and catching a rabbit while I"m mowing hay, or scaring pheasants or deer out of corn in the fall.

I"ve thought of just getting 10-20 acres, but that isn"t enough land for me to work. I would love to farm 300+ acres, but I"d settle for 80-160 acres, enough to raise hogs on pasture, corn, oats, hay, and a small beef herd. I just don"t see how anyone trying to get into agriculture can make a go for it these days. And it"s not just land prices, there is fuel, fertilizer, steel, lumber, everything is getting expensive. I can"t afford to farm, but there"s nothing else I"d rather do all my life. Majority of my free time is somehow related to farming whether I"m working on my old broke down equipment, or thinking about something farm related. I have read many old farm books from the 1920s-1960s on many differant subjects; building fences, production of swine, cattle, and poultry, tillage practices, etc. Of course most of these methods are no longer in use nor practical, but it"s a starting point.

I don"t know what"s gonna happen in my life time, but with the help of the Lord, hard work, and alot of luck, I hope I can be doing what I love the most, farming, even if it means using horses. OK, I"m done ranting for now, until something gets me started again. Hope every one have a safe and happy new year, Rich from central Iowa

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Rich Iowa

01-02-2006 10:23:52




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
Thanks to all who replied. Started off as a rant, but a lot of advise & ideas were thrown out on the table. I"ll be looking in on quite a few of them. The hogs I will someday raise will be on pasture or in hoop buildings, any cattle and poultry on pasture as well.

As I was reading some of your post, I remember reading somewhere (probably on this website) that land is a good investment, but it"s smarter to invest in items that"ll make you money; livestock, any necessary machinery, and so on.

I"m going to get in touch with my local FSA, extension office, and maybe even an accountant of some sorts, and start looking at land/ farms to get a better idea on what I should be looking at. It doesn"t help that right now I"m living in Dallas County, the fastest growing county in Iowa, and in the top 10 fastest growing counties in the nation. With the western sprawl of Des Moines, land prices are going thru the roof. Thanks again everyone for the ideas and encouragement.

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Ben in KS

01-01-2006 15:22:55




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
Neb. Cowman has it right. Like animals/livestock? Learn as much as you can about rotational grazing. Crops? learn what it takes to organically certify your farm andd how to sell what you grow. You can't make money growing what everyone else is. #2 yellow corn or hard red winter wheat on 100 acres is not gonna pay your interest on expensive land; but certified organic specialty seed might!! Do lots of research, the internet is a great tool. good luck and God bless your endeavors. Ben

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Rich Griffin

01-01-2006 12:34:29




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
I just heard this morning where there was some land here in west centreal Iowa that sold for $3900 per acre. This not even close to a city but does lay good. Pretty hard to make any mony with corn,soybeans at the price they are to pay for this land.



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barnrat

01-01-2006 08:06:16




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
I started farming full time 5 years ago when I was 24 with a young herd of jerseys that I bought on the cheap as calves years before, while I saved every penny busting my butt fixin tractors at a local dealership and working for my dad to pay him for raising my heifers. 2 years before I started farming I found the perfect farm to rent, but had to hagle with FSA to get a loan to buy machinery and to equip and make the place profitable. Get a wife and put her name at the top of the gov't loan paperwork, you'll have no trouble getting approved. Now I milk about 50-70 head and put up all my own feed on 160 acres. I turn a small profit every year and am on track to buy the farm in 2007 for about 300k. I do hope land prices continue to rise after I purchase the farm as it will make a nice retirement package. Some advice would be if your gonna have livestock graze them it makes an incredible difference in your bottom line. Also don't get too excited about machinery. I started with all 2 cylinder JD tractors that have mostly gotten me by untill I was able to replace some of them. Don't be afraid of calling a custom operator to do some or all of your field work. Consultants(vet, crop, nutritionist, extension agent) and neighbors are valuable resources keep them handy and working for you.

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Aaron Ford

01-01-2006 05:39:16




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
I was told that the best way to end up with a small fortune by farming is to start with a big fortune... I am looking for 80 acres or so myself. Raisin' kids takes alot of ground. Kinda like to let 'em see where it all comes from.



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joblo

01-01-2006 04:53:33




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
It amazes me how some people think these high land prices can NEVER get lower. First off never say NEVER. The 80's only happened 20 years ago, and it's simply amazing how everyone forgets and pushes it aside and says it will NEVER happen again.



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thejdman01

12-31-2005 19:09:51




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
I must disagree with JMS. Around here land prices have been sky rocketing. Chicago suburbs, swamp ground needing tons of work before buildable is bringing 250,000 dollars per acre for the land itself(dont ask me whose got htat kind of money then put up a billion dolllar office building but anyways). I cannot imagine no matter where you are in the country that land prices would go down in value unless they decided to dumpnuclear waste next door or something happend of the nature. If your a younger person i would strongly advise you buy land as I feel it will do nothing but appreciate in value, maybe a nice nest egg for when your older. I agree tha tbuying feed is probably cheaper however as far as renting the land or buying, i would say go buy if you can afford it. Around here the land rents for way to much too so saying renting is cheaper esp when your giving your money to somone else not always the way to go. Ag land once bought wont cost you that much to have (taxes yes there high too high but relativly wont cost you much to have. As I said if your younger buy. If you were in your 40's 50's litte money (just put the kids through college) you pry wont live long enough to really see a huge appreciation in land value renting would be the way to go. Just make sure the home acrage has plenty of room for expansion. You may buy a house and a barn 1 pole building and you think wow perfect. then 10 years from now you got all of your toys, you want 2 pole barns, 2 barns, and a shop and your out of room. Just my 2 cents have a good one.

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JMS/MN

01-01-2006 21:24:40




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 Re: OT young guy's rant in reply to thejdman01, 12-31-2005 19:09:51  
I've always enjoyed your posts, but I'm wondering which of my points you disagree with- since I offered several, according to the various options of the poster. If he likes land, then he should buy whatever he can finance, and deal with the repercussions of fluctuating grain markets. If he likes animals, he should concentrate on that, typically owning enough land and buildings for at least a headquarters for that type of operation. The other option for many beginners is to find some type of niche market to get into- and those options are endless, especially close to major metro areas.

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JMS/MN

12-31-2005 18:41:42




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
If you like working with animals more than growing crops- buy the feed!!!!Think about it- major companies growing turkeys, chickens, hogs, beef, eggs- do they own land? Why not- because they know farmers will bust their butts working to make land payments, subsidizing the farm to keep ownership, and sell the crop under cost of production. Because we like doing what we do. If you still want to own land, it is always too exspensive for the average farmer to buy. Seth is right- renting land gives you a small margin of profit. I've rented land for over 30 years- always figured a 30-50 dollar per acre margin, without figuring real total costs, like machinery, part of which would be charged to the livestock operation. But I like land more than animals, so always justified the situation. Pure dollar wise-----cheaper to buy the feed. But if you start running any land, you are in a never-ending spiral. Years ago, university experts told us that we don't need to own assets, just control them- ie, rent, lease, etc. Food companies do that- they don't own land, they just buy the commodities cheaply and hire someone to feed them. SF magazine likes stories about young farmers feeding gazillion birds, etc. They think they are farming. They are just shoveling xxIT for a different banker! If you have experience in dairy, like working 24/7/365- might be the thing for you by buying the feed. Best return on investment. Or a variety of niche markets for whatever you like to produce. Remember to consider family wishes, assets, needs when you embark on a lifelong journey, and best of luck.

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JMS/MN

12-31-2005 18:48:48




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 Re: OT young guy's rant in reply to JMS/MN, 12-31-2005 18:41:42  
One other point about land prices, compared to the 80s. Back then lenders were more eager to finance on collaterall, optimism, etc. They were greedy, and lost their butts, including Federal Land Bank, etc. Now, local prices are higher, fueled by 1031 exchanges, etc., but lenders are more reluctant to stick their necks out, so I don't expect a land crash like we witnessed in the late 80s, even though land prices tend to be cyclical. Every generation has a different mix of inputs.

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Blue guy

12-31-2005 18:38:54




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
Rich, I remember seeing something in the successful farming magazine a while back. The article stated about a law or one that was proposed? about capital gains taxes. A new and upcoming farmer(like yourself) could buy a farm and the owner would not have to pay the taxes. That should get some landowners attention that was getting out anyway. If a seller can save alot of money that might help you on the asking price$. Some retiring farmers would rather see their land continued to be farmed instead of busted up with houses.
Maybe somebody else will chime in with more info.
Good luck.

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Seth_IA

12-31-2005 17:51:00




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
Your definatly not alone on this one. I have the same kinds of problems. Running land debt out 40 years may make the payment workable, but you will never get out from under the debt. Despite what some say land prices can and will likely fall. Look at the '80s. There was a very interesting artical in Successful Farming a couple of months ago about farmers who own very little in order to keep their asset turnover ratio looking great. The problem with this idea is that in my area(marshall/story counties) land to rent is in very short supply. As I can't drag myself to take out a 40 year lone I am always trying to get to know old farmers and hoping to someday find an investor looking for land. So far I am not bating very well. I am having a little luck renting small peices that noboddy else wants.

My new venture is starting a custom baling business which I hope will be a good way to get my foot in the door and built assets without alot of price risk. I also started building a ewe flock when I was ten. This has proved to be useful for cash flow. Economy of scale and keeping fixed cost low per unit are very important in making a profit. I would not be able to do what I do with out barrowing tractors from my father and uncle. I swap labor for use. Neither farm enough to pay me, but me using their tractors cost them very litle, and they get help when they need it. It seems to be a great deal for all of us. Right now I could not afford to buy decent tractor, like JD 4430. I am tying up enough money in good hay machinery and other stuff, which neither of them own. The margin looks better in the custom business than on the production side. I usually figure that you make about $30/acre on rented ground and row crops. Hay looks beter in my area depending on the package. My ewes usually make about $30/head. You do the math. It takes about 1000 acres of row crops or ewes to make even close to a decent living. I would like to expand the sheep, but that would require a major upgrade of facilities, which I don't own and couldn't afford anyway. A friend and I are planning to start a tractor painting business since there is great demand around here. He has the shop, I got the skill. Hopfully that will provide a little extra cash flow too. Even with all these venture I don't have enough irons in the fire to make any serious money.

Trying farm and go to college gets interesting, but farming is what I want to do and college is buying me a little time, which will shortly be running out. A good friend of mine who is about your age, is planning to go back since he has no resources to start farming and his coop job is getting him nowhere fast. He hopes to get a better job and be able to afford his farming addiction someday. If anybody has any great ideas I'd love to know them. It seems to me to be all up hill!

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Nebraska Cowman

12-31-2005 17:21:37




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
Quit tying to do like everybody else. Think "outside the box" You can rent land cheaper than you can own it. And think specialty crops. There ain't no money in corn. And if I was a young man I'd take a hard look at Brasil and Argentina. Diversify. Do things that take advantage of your labor and talents and don't get over-invested in shiny new equipment.



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Mark - IN.

12-31-2005 23:40:41




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 Re: OT young guy's rant in reply to Nebraska Cowman, 12-31-2005 17:21:37  
Happy New Year. Man, you are outside of the box on that one, and I mean it in a good way. Leasing land? Yep, not a bad idea. In another country or even continent? Might be something to that. Certainly not one of my "in the box" thoughts. I've become stagnant in time.

The other day was doing a phone repair in a courthouse, and out of a courtroom walks an attorney on his cell. He's bitchin out his secretary for dropping the ball on his and his family's 3 week vacation to Austria. Mind you, this courthouse is in a rural Illinois county with 1000+ acre farms, at a minimum. I'm watchin this guy and remembering skiing the glaciers in Austria when I was stationed in Germany, and only because the Army paid my way to Germany. Most folks, myself included think in terms of taking a vacation from the Midwest to Florida, or Hawaii if leaving the continental US. And here's this guy bitchin out his secretary for flubbing up one of his probably countless vacations to Europe, Asia, Africa, and you get the point, and he's basically doing it from the middle of a frozen corn field.

Leasing land in a foriegn country? Oh to be young again and know what you do now. Not a bad thought. Sometimes, "outside of the box" aint a bad thing. I'm guessing that folks don't rise to the top thinking "inside of the box". I certainly haven't.

Thanks, Mark

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Leland

12-31-2005 16:45:33




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
Simple answer it's called 1031 around here a guys sells 80 acres for a kazillion dollars then runs out and buys what ever farm land in bumf^ck nowhere to avoid taxes that is you youngins problem .



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thejdman01

12-31-2005 19:18:08




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 Re: OT young guy's rant in reply to Leland, 12-31-2005 16:45:33  
Leland you are absoulutly correct. A local farmer around here does land trades all the time, he is fortunate enough to own land near chicago and will trade land worth 200,000 and acre,and sell 10 acres for 100 out in iowa and keeps doing it. Another guy I know is personally backed by a firm of lawyers in Chicago, every year new tractors semi's new 1000 bushel grain carts every year. The farm is just a subsidy of the company and they want to show a LOSS on the farming to offset there income and being lawyers they and professional cheats. One thing I have to say to anyone young it dontesnt matter waht you take home everyweek. Retirement and health insurance are what you need to look at not an hourly wage.

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WyoDave

12-31-2005 16:08:19




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
I"m 23, and I just started farming for a living 2 years ago. Its not easy, but can be done. First of all go talk to your local Farm Service Agency. I got financed for 40 years on land at 4% fixed. Also your operating loan will be much better there also. Beware, you will have to jump through hoops so be patient. I"m farming about 700 acres of crop land and running cattle with that. To make it work, I had to lease land. The land I bought will make the land payment and the leased land makes the equipment payment. Somewhere in there I scrape enough off to eat and put a roof over my head, but its not fancy. Also I farm next to my father, so he loans me a lot of less commonly used equipment that I still need from time to time. If you really want to farm, all you have to do is work at it. It can be done but its a big committment.
David

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buickanddeere

12-31-2005 15:27:29




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
What is happeneing here with wealth and land is what has been going on for generations is Europe. It's still possible but more difficult than it used to be to build a fortune from scratch. Money and property is become old money and old family property which is inherited.



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BobMo

12-31-2005 14:53:38




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
Rich, there's absolutely wrong with what your dreaming about unfortunately at this point its a dream except for the few things you have accumulated. Your objective now should be to make the dream become reality. I empathize with you. The biggest problem is that all of what you want unless you inherit it takes a long time. There are many programs available to beginning farmers through your local USGA office and that’s where I’d start if I were you. You need to talk to them and see what you can qualify for. If you don’t want to do that start small with hogs and a few cattle and farm some rented ground. It may not be the most ideal but the truth is you have to start somewhere. Your USGA and University Extension Service can both help you on that. Good luck

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Allan in NE

12-31-2005 15:24:11




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 Re: OT young guy's rant in reply to BobMo, 12-31-2005 14:53:38  
Bob's right,

They won't do it for us old feeble guys, but if you're young, walk in there with your hand out and you'll be in the farmin' business in no time.

I know of a kid over in Wyoming who just got out of school. Heck, he bought up half a county using government money, built a house and stocked the darn barns. Using govt money to operate on too.

If you wanna farm, you can farm and they 'taint making any more ground, nor is it gonna get any cheaper either.

Just make sure it is what you want to do 'cause there just is no money in farmin'. :<(

Allan

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Winger

12-31-2005 14:20:05




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
That poor rabbit .... and that nasty Red-Tailed Hawk. You must learn to be more sympathetic to those animals or you will become very much like most of us here on YT that love nothing more than killing, killing, killing. Especially if it is someone who is a different color or religion or thinks differently than we do.



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RN

12-31-2005 16:19:20




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 Re: OT young guy's rant in reply to Winger , 12-31-2005 14:20:05  
Winger: This post should be at OT forum- stir up the board again.



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billyiron

12-31-2005 14:02:53




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 Re: OT young guy's rant in reply to Rich Iowa, 12-31-2005 13:30:48  
It dont get much better for us old farts either,,,,billy



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