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Old 10-29-2009, 09:21 PM
 
Location: NOCO
535 posts, read 1,408,699 times
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Its hard to push into larger business with land speculation and all, if you make money off the land, and your a lower-rung farmer, you don't have access to the capital the large-scale companies do. The only safe way I can think of for someone to increase scale would be creating some sort of a deal with neighbors involving you doing their work with your implements and getting a cut, eventually progressing to you being the natural person the land would go to when/if they deside to move. If neighbors pass it on to kids, its likely the kids aren't in agriculture and will sell it for speculation.
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Old 10-30-2009, 05:55 AM
 
1,297 posts, read 3,158,802 times
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After 35 years of farming, my experience shows that being resilient is far better then being diversified. The truth is, farming tends to run in a 7 year cycle as far as I can tell, and from what I have learned in life it seems out of those 7 years, 1 will be sub-par. 4 will be just above break-even, one will be profitable, and you will have one exceptionally good year. I have never known this cycle to be broken, though the years do not necessarily fall in those years consistently. You might have one extremely profitable year, followed by one really lousy year, or any combination thereof.

Being diversified does help, but the advice I find that is consistent on this is that diversification works well up to 3 products, after that it is just too hard to get a real grip on. I mean if you are trying to raise horses and sell the breeding stock, raise sheep for wool and lambs, grow vegetables, process lavender, and run a small goat soap making business, the disparity is going to kill you. There is no way you can adequately spend your time chasing the operational, marketing and financial aspects of so many different commodities. That is why they suggest 3 different commodities to target.

In my case I am doing well because I use this formula. Typically when one commodity dips in price, the other two commodities stay high. I have 3 commodities on my farm so while this year the dairy cow leasing will probably be a bust from farmers unable to pay their lease, lamb prices are doing well. Forest Product prices are low, but there is a market still. So the 3 sides of my farm are thus:

1. I raise sheep
2. I harvest a lot of forest products
3. I lease a lot of my arable land for dairy cow feed

Note: There is a 4th element and that is foster parenting, but that is something the wife and I both do, and its not considered income anyway. It does keep the cash flow side of things going however.

Cash flow is more important than anything really. You can literally have thousands of dollars in assets but unless you can quickly liquefy them into cash, your farm can literally go under due to poor cash flow. That is why I feel for the corn and wheat farmers, I at least have sheep and cows I can sell if I need money, but those poor farmers have to wait for their crops to mature first. I do feel for them, but then again they feel for me when I am out in -45.2 below weather feeding sheep. (LOL)
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Old 10-30-2009, 09:05 AM
 
9,807 posts, read 13,686,634 times
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------" I have sheep and cows I can sell if I need money "--

When did you get cows ?


Also, many farmers don't have that option----farmers with a mortgage.

Since the livestock are collateral, the banker has the sayso in their sale.


Renting out farmland has never been a real money maker.

Investors buy farmland and rent it out to cover their costs but they invest because the value of farmland goes up.
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Old 10-30-2009, 09:11 AM
 
9,807 posts, read 13,686,634 times
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---"after 35 years of farming, my experience shows-----"

You are only 35 years old.

I doubt you were making decisions about farming for--35 years--
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Old 10-30-2009, 11:33 AM
 
1,297 posts, read 3,158,802 times
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Quote:
Originally Posted by marmac View Post
------" I have sheep and cows I can sell if I need money "--

When did you get cows ? Also, many farmers don't have that option----farmers with a mortgage. Since the livestock are collateral, the banker has the say so in their sale.

Renting out farmland has never been a real money maker.

Investors buy farmland and rent it out to cover their costs but they invest because the value of farmland goes up.
I've always had cows. What do you think protects my sheep from coyotes? Actually its true, I pull a few bull calf's off the dairy farm (since they are worth like 4 bucks after all the fees are paid) and run them with my sheep. I do burn their horns off, but to keep them "aggressive" if you will, do not cut them. Its pretty much their size that keeps the coyotes at bay, but if approached the bulls will and have charged telling the coyote to head elsewhere for a quick meal. The dual grazing works well because the cows and sheep do not pick up the same diseases like foot rot or parasites so that works well, but the best part is, next years steaks are protecting my sheep this year. That is, I take the beef I raised and put it in my freezer.

As for the mortgage, I think that is true. The big dairy farm in the family is looking to buy a foreclosed upon farm but one of the major sticking points is that they want collateral placed on ALL the cows and not just the cows that will be added to make the added milk production profitable. We do not like that as we want to be able to cut the rope and come back home if things don't work out. We do have plenty of equipment payments I assure you, but we very seldom get a mortgage for land. Its hard enough to pay the taxes on the land let alone a mortgage to boot.

That last statement ties in with the next point of yours which is leasing land to farmers. You are right to some degree about leasing land be of any real value. Here the typical lease rate is $6 dollars per acre, while taxes cost you $10 per acre. I get a little more for mine because its got the best soil in Maine and so the corn grows well and the grass ground is high protein grasses like orchard grass timothy, clover and alfalfa making the value higher. Its makes me some profit, but the truth is, I would lease it out even if I did not get a dime for it. That is because without the farmland exemption, I would really be paying high property taxes, so its better to lease it out. Well that and the fact that we all have to eat as well...the farmers do need land to farm to kick the food out onto the national food chain. I am hoping some day the sheep do well enough so I can ease off on the logging and let the sheep help pay the property taxes instead though since leasing the land does not really help much.
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