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Honored Advisor

Farm bankruptcies

Since it`s the weekend, I don`t think it`ll clutter up the marketing page too much for a separate post.  The farm bankruptcy rate is or has been inconsequential because of the nature of the business and the fact most farms are sole proprietaries, so living expenses and every other personal spending could send the farm into bankruptcy.  Liberals will love this, but if a family member has high medical expense that health insurance doesn`t cover, the farm business could go broke.  Or Two week Hawaii vacations or mink coats and diamond rings for the high maintenance misses, all kinds of stuff.

 

There`s a saying that in the restaurant business, it has to go broke 4 or 5 times before a new owner has purchased the equipment cheap enough that it cashflows....that`s just the nature of the business.   Farming maybe isn`t that bad, but there`s a lot of factors in why a farm goes under, a common one is probably that you weren`t born into a wealthy enough family  Smiley Happy

 

And farming has changed (under statement of the year) it used to be, if you had a strong back and weak mind, you could muddle your way through...not that way anymore.   As a matter of fact, a strong back might be a disadvantage in modern agriculture, you need a strong mind to deal with people to delegate, delegate, delegate the $15/hr grunt work done.  Deal with landlords, input suppliers, mechanics, dealerships, grain merchandizers.   And hire yahoos to run the machinery and know how to motivate them. 

 

But we`ve all known a guy in the community that could`ve retired the day he was born, but he decided to take over the family farm operation and went broke in a short time.  Or the guy that was just "given" a cosigned loan at the bank from dad and he parlayed it into a successful big time operation.   Get in a Monopoly game with some people and they just have the nack and have hotels on Boardwalk while others run into trouble trying to land on Reading railroad.  

 

A old guy told me when corn was $7 that "This $7 corn will break more farmers than $2 corn did" ...it could be he`ll turn out right, the fat lady isn`t on the stage yet.

56 Replies
Senior Contributor

Re: Farm bankruptcies

That would be a great intro to a movie about farming life, sorta like a fictional documentary that follows a family through several generations of running a farm. Sam Elliot would narrate it just like he did in the beginning of The Big Lebowski. 

Senior Contributor

Re: Farm bankruptcies

just let Obnoxious and Comrade Boris from the forum get together with their coffee shop crew and imaginations and I am sure they will come up with some plots that Hollyweird will love.

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Honored Advisor

Re: Farm bankruptcies

If you read the local papers "courthouse news" there isn`t an epidemic of farm bankruptcies in Iowa and Minnesota.  If a guy is pulling a 12 row planter with a 8100 last year, he pulled it this year and he`ll pull it next year on the same farms.  The Rochester Agri news paper doesn`t have "bankruptcy auction!" sale bills as in the 1980`s when it was 6,8 pages of sales.   Maybe some places have more farm liquidations than other locales, maybe certain types of farms are more prone to going broke.  

 

This might all start changing next year if our $7.50 beans go down to "$5.95 beans" .   Around here due to the weather, 40bpa beans or lower are not uncommon...well $7.50 X 40 bushel is $300 gross per acre, that covers your rent and your seed.  No chemical no diesel no fertilizer.  So maybe there will again be 6 pages of auctions in the Agri News a year or 2 from now.

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Senior Contributor

Re: Farm bankruptcies

Have you heard about what's going on in Wisconsin in the dairy sub-industry ? There's going to be more cows receiving unemployment checks than people. 

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Senior Contributor

Re: Farm bankruptcies

The last farm movies I saw were a) The Postman Always Rings Twice with Nicholson and a very sexy Jessica Lange and b) Hoosiers.

 

I think its time for another farm movie or tv series, sort of a mix between a documentary, a reality show, and a novel that has all of the aspects that stimulate imaginations. 

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Veteran Advisor

Re: Farm bankruptcies

I   distinctly  remember  in  early  October,  some   EXPERTS   exclaimed  the  DOW  was  headed  for  30,000  -  I  guess  right  now  there  is  a  detour  ?   

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Senior Contributor

Re: Farm bankruptcies

Most analysts and economists are terrible, I know because I have been around them for the last 30 something years. What they do is like driving a car forward while looking in the rear view mirror. I wish they were always wrong instead of sometimes wrong, because you can make a lot of money off of someone who is always wrong.

 

I haven't liked the stock market since it got above 14,000, because its been rising off the sugar high of free money for the institutions and tax breaks from the government. Those dynamics are changing now, which is why you're seeing the change in sentiment and the drop in prices. If you recall, I warned in late-September in conjunction with my skepticism about corn prices, that I thought we would see an October surprise, and now that's happened.

 

But also remember another thing, for every dollar lost in financial and commodity markets, someone is making that dollar. That's why its known as a zero sum game. So while a whole lot of people can be wrong about a market, there still are some people who are correct, and those are the ones you find and follow. Sure its not easy, but there's no good fairy that's going to come down from the sky and hand you a check, you have to do your own homework and search for advisers with proven track records. And even they might not be correct all the time. I had a winning year in 2014, a loser in 2015, and three winners since. The important thing is that the loss was small and the winners were larger than the loser. Its sort of like a pro baseball player, he gets into the Hall of Fame by failing in 70% of his at bats. 

 

There are a good many advisers who know their game and can make you money, but you have to do the work to find them. There's a lot of ways to do it, but you have to get the ball rolling by making some phone calls and asking other people in your area who do what you do if they have found anyone good. Someone somewhere who you know will turn you onto someone good, heck everyone on earth is connected by something like 6 degrees of separation.

 

 

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Senior Contributor

Re: Farm bankruptcies

One thing about the late 70 early 80 there was a farm on about every section today about one every 6 sections there will be bankrupt farmers small town businesses and we’re going to probably going to lose a lot of small towns as Paul Harvey would say and now for the rest of the story. Stay tuned
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Honored Advisor

Re: Farm bankruptcies

Ray, they say dairy farms have it so bad, yet they expand, expand expand sure is taking them a long time to go broke.   Note the October 2018 date on this story, that Lewiston Minnesota is a hot bed for dairy expansion, I see it first hand.  And I could post similar stories for Wabasha county Minnesota and southwest Minnesota.   Sure it`s "boo hoo-hoo" for public consumption, but reality they expand as quietly as possible.

 

https://www.pca.state.mn.us/news/dairy-proposing-major-expansion-winona-county  

 

 

Dairy proposing major expansion in Winona County

Contact: Cathy Rofshus, 507-206-2608

Daley Farms of Lewiston, the largest feedlot in Winona County, is proposing a major expansion of its dairy operation, according to an Environmental Assessment Worksheet prepared by the Minnesota Pollution Control Agency (MPCA). The worksheet is open for public comment through Oct. 31 at 4:30 p.m.

The agency will hold an informational meeting on the proposal starting with an open house at 6 p.m. Oct. 16 at the Lewiston Community Center, 75 Rice St. Presentations explaining the proposal, MPCA environmental review and feedlot permitting will begin at 6:30 p.m., followed by time for questions from the public.

State agencies use the Environmental Assessment Worksheet to help decide whether a project requires a more extensive Environmental Impact Statement. The worksheet covers site location details, nearby resources and other elements, including wells, soil types, water use, manure management, air and odor emissions, and traffic.

Ben Daley, a partner in the dairy operation, proposes to increase the dairy herd from 1,728 cows and calves to 4,628 total. The MPCA and other state agencies use a measurement called an Animal Unit to equalize manure output from different types of animals. Animal Units at Daley Farms would increase from 2,275 to 5,968. Daley Farms owns and operates three dairy sites in Utica Township, Winona County. Daley intends to expand its existing dairy at one site, close the second site, and install open-lot runoff controls at the third site. The expansion at the main site would include a total confinement barn with 3,000 dairy cows, a rotary milking parlor, a manure storage basin, a feed storage pad, and stormwater runoff controls.

There are 29 homes within 1 mile of the facility and 13 feedlots within a 3-mile radius.

The expanded dairy would generate about 46 million gallons of manure and wastewater a year. The project site currently contains four manure basins with 22 million gallons of available storage. Daley would install one more manure basin, with 13.6 million gallons of available storage, as part of the project. In total, the existing and proposed manure basins would have storage capacity for 35.6 million gallons, enough for 281 days of operations at the main site.

Daley Farms would remove the manure in spring and fall, injecting it into cropland as fertilizer following an MPCA-approved manure management plan requiring at least 4,083 acres. More than 4,100 acres of cropland are available for land application among 42 manure application sites. Some of the sites have homes or recreational facilities nearby. Several of the sites have water features within the fields or nearby.

The project site and several manure application sites are near or within the drinking water supply management areas for the cities of Utica and Lewiston.

Several of the manure application sites include karst features such as sinkholes. The proposer would need to follow setbacks and other requirements in the manure management plan to protect sensitive features.

To reduce the chance of nitrogen leaching to groundwater, Daley Farms has agreed to do one or more of the following:

  • Delay manure applications in the fall until soil temperature is below 50 degrees
  • Plant cover crops when manure is applied early in the fall before soil temperatures are below 50 degrees and weather and field conditions are conducive for seeding a cover crop
  • Applying manure in the spring

The facility and manure application sites are all within the Root River or Mississippi River-Winona watersheds.

According to a study of air emissions from the expanded facility, it would meet air quality standards and odor guidelines. This study also took into account the surrounding feedlots and cumulative effects.

To access the complete worksheet for this project, go to the MPCA's Environmental Assessment Worksheets webpage. It’s also available by calling MPCA project manager Kim Grosenheider at 651-757-2170.

The proposed feedlot requires federal, state and county permits. The MPCA would issue an individual permit for the project under the National Pollution Disposal Elimination System (NPDES). The permit is also open for public comment through Oct. 31 at 4:30 p.m. The public notice is available on the MPCA Public Notices webpage. For a copy of the permit application or other information, contact MPCA permit writer Mark Gernes at 507-206-2643, mark.p.gernes@state.mn.us, or MPCA, 18 Wood Lake Dr. SE, Rochester, MN 55904.

To comment on both the environmental assessment worksheet and the permit, citizens may use this weblink: http://survey.mn.gov/s.asp?k=153730433478. Instead of using the weblink, they may send comments by mail to Kim Grosenheider, MPCA, 520 Lafayette Road N., St. Paul, MN 55155-4194.

In addition to the MPCA permit, this project will require a zoning variance from Winona County, which prohibits feedlot sites in excess of 1,500 Animal Units. When Winona County adopted its limit on Animal Units, it allowed existing feedlots over that the limit to continue at the same size. This means the county grandfathered in Daley Farms at 2,275 Animal Units. Because Daley is now proposing to increase in size, the dairy must apply for and receive a zoning variance from Winona County for the project.

The expansion would also require a water appropriation permit from the Minnesota Dept. of Natural Resources for two additional livestock watering wells that would each draw about 30 million gallons of water per year. That would bring the dairy’s total well water use – from its two existing wells and two additional wells — to 92 million gallons a year.

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