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Advisor

Re: Big Tract Operators

Outside of the timeliness factor, it's not as simple as saying one can more efficiently plant 24 rows at a time with the same cost to labor.  You have to factor in the cost of the 24 rows versus the 8 rows, or the difference between 125K+ and 45K+/-.  Depending on whether it's new versus used, the numbers will tell another side to the story. 

 

Fyi, my capital costs for harvesting grain, including repairs on an older machine run about a quarter of the costs of new machinery when based on a per acre per year, using a seven year payout.  And that's not adding repair costs that are bound to happen on the new one.  I can even pay more for labor and still operate cheaper than with a new machine.  The key is maintaining a rigid maintenance program and keeping breakdowns to a minimum.

 

A friend in another state trades combines every year.  He puts on fewer hours than I do, covering about 600-800 more acres, but my best guess is my per acre cost is very competitive, if not lower than his.

 

Efficiency is the focus, but there's more than one way to achieve it.

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Honored Advisor

Re: Big Tract Operators

I certainly agree that conservatism in equipment purchasing can be very wise.  Still, I have noted that as my faciltites are paid off, which equates to equipment for crop producers, the biggest expense line item ileft s for labor...and I feel that we have hired very judiciously.  

 

We have been able to be so tight on buying other people's time because we worked hard ourselves, and the facilities do a lot with the labor input, comparatively speaking.  I hate delegating past a certain point and being dependent upon someone else showing up for work.  Still some things have to be done that we just cannot do very well  these days. 

 

If you an invest the extra equipment money, and have never to worry about having a hired hand, would you do that? 

 

We have had to face it that we are getting a bit long in the tooth to do it all, and have it done well enough anymore.  You time will eventually come....

 

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Honored Advisor

Re: BTO?

It is probably as much a regional differecne in terminology as anything, but I never heard of a BTO in my life, until I started reading posts on this page.  We had what we considered, somewhat derisively, "big shots" at farming. 

 

I have to say the one that most comes to mind is my husband's nearest neighbor back home in VA. He is a land hog, pure and simple.  We had to go deeply into hog production, which we could have fit onto our land base, since there was not a scrap in two counties safe from his predatory  practices.  He was hugely instrumental in the resistance to our expansion plans in the early 1990s, even though his home was nowhere near our farm, and he'd never had any complaints. 

 

Unlike your perception, we saw that he had crop go to waste every year, because they never got harvest done in time.  He is no example of anything I would want to be or do.  Efficient is the last word I would apply to him. 

 

In so many ways, he did us a favor.  We had to get better and more creative, instead of just growing bigger.  Our decision to buy another place and build a big operation put us in the living situation we enjoy today...not anybody's kid, not owing to anyone, not always looking up to see if that was a raptor's shadow crossing over us. 

 

I had always felt that the BTO sentiments I perceived here applied about equally to our Big Shot neighbor.  The Big Tract Operator was a refreshing new perspective...it feels a LOT like what we have tried to do here, with a farm at least twice as large as other growers in our category. 

 

I am sure some people resented us, for building this big, in retrospect.  None of them wanted the challenges we have faced here, though...so no pain, no gain, I guess.  No regrets, no apologies. 

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Advisor

Re: BTO?

Kay, aren't you the  largest nursery operation in north carolina?

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Senior Contributor

Re: BTO?

This is getting to be too many posts without a one liner.
If your cab of your tractor is filthy, and you just trade it for a new one instead of cleanjng it, you may be a BTO.
If you gave never heard of or dislike the term BTO, you are most likely a BTO.
If you break down in a field a few miles from home, and walk back to the barnlot without ever stepping off land you farm, you could be a BTO. (I'd like to have that someday!)
If you have a less than 10 year old tractor tucked away in the barn just for a spare, definitely a BTO.
If your 2 year old powerstroke is your 'work truck' and your new powerstroke is for going out to eat on the weekends and driving to get groceries, you guessed it- BTO.
If your equipment has more folding points than an occordian. Probably BTO.
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Senior Advisor

Re: Big Tract Operators

One of the largest land owners in two counties is buried next to my father---interesting thing both need and have equal amounts now ---

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Senior Contributor

Re: Big Tract Operators

Well that's true about getting your hands on land, I was going to do that a few years back on a parcel I was going to bid it at break even for me, with 5 year average corn yield, but I was still out bid by $60/ac, I also wasn't the lowest either.   I would have been all right  probably bidding at his level cause we had some why above average yield that year and corn price went back up,  that was for the 2009 season. 

 

Do you think Rent values will stay at their current levels if and when land values fall or interest rates raise?  

 

I knew a kid when I was in college that they had enough acres of corn that he would call the district seed corn guys up and say I went this many bushels at this price, take it or leave.   Someone always came through at his price.  

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Senior Advisor

Re: Big Tract Operators

I don't know about todays cash rents but durmg the 80s recession/depression cash rents did not really reflect the down turn in the farm economy. There was still profits available but only for those that were financially healthy. Land values dropped alot but rental rates held pretty strong.

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Advisor

Re: Big Tract Operators

Yes, I would do that.  My threshold for doing that, however, may be higher than some one else's and it reflects in my decisions whether or not to update equiipment.  I began my career in ag with absolutely no working capital and vigorously protect what I've gained over the years, perhaps more than I should, but this style has helped me to survive the ups and downs of the economic cycle.

 

And yes, my time has come and  I'm getting "long in the tooth" so I have changed some ways of doing business.  I am more inclined to hire people to assist with harvest rather than slugging it out by myself.  But I also have purchased bigger equipment that will enable me to get things done quicker than before, without additional help.  Rather than run two smaller combines, I've upgraded to one larger machine that will increase my capacity enough to satisfy not only my harvest demand but several other customers as well.  However, even with that increased cost and capacity, I am not willing to spend 350-400K for that privilege, but will spend only a fraction of that amount. 

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Senior Advisor

Re: BTO?

If your grease gun is like new, you probably never used it because you trade combines annually.

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