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Farmers have too much money

FWIW, from a guy I know who has gotten further wealthy selling a lot of things at  very nice prices to farmers over the last 6 years.

 

His point, there is such a shocking amount of money around that it simply has to have some severe negative consequences somewhere down the road.

 

I asked him then, why don't you sell your business and cash out then?  He said that he thought it probably had a bit further to run and he has brought a son into the business anyway. So he's just getting as solid as he can and resisting spending money on large capital projects.

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21 Replies

Re: Farmers have too much money

Forgot what I thought was most interesting in the conversation. In regards to his resisitng large capital expenditures he said that "there are worse things than paying taxes."

 

Interesting insofar as I would be stupid not to respect his opinion and also that the volume and margins that he's enjoyed have certainly been amped by people trying to avoid taxes.

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Senior Contributor

Re: Farmers have too much money

I think this latest boom is going to run the small operations out for good, they just can't compete with the cash and assets the big boys have worked up these last five years. Your friend does make a good point about taxes, I would rather pay taxes than work for the equipment companies, cash is still king and you still gotta pay for that new paint.

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Re: Farmers have too much money

That is my conclusion and why I'll stick to my guns that there is no broad public purpose served by continuance of any of the traditional farm programs, crop insurance subsidies etc.

 

Which doesn't mean they won't continue and the guys who are getting them won't keep coming to the coffee shop and complaining about the gubmint.

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Senior Advisor

Re: Farmers have too much money

They aint got anything to cvomplain about , so they complain that the other guy gets more..

 

 

You really mean rasslin' aint real?

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Honored Advisor

Re: Farmers have too much money

The real danger is twofold in my mind:

 

Frst, that the farmer himself will be lulled into thinking this is thway it will be from here on out.  Nistory is eifw with evidence that booms turn into busts.  Timing is crucial 

 

Second, th general public opinion, based upon the perception now popular in the news media, is that all farmers are rich fat cats who have been proppoed up with Joe Plumber's tax bucks.  That cannot help when you are hoping to maintain some sort of safety net, whether program payments or crop insurance. 

 

The elements of a perfect storm could be brewing.  Let's hope that wiser heads prevail.  Everyone can feel like the smartest guy in the game today. 

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Senior Contributor

Re: Farmers have too much money

I agree with your friend, and I find myself in the same boat.  Irrigated quarters are approaching one million per quarter around here.  I'd be fibbing if I said the thought hasn't crossed my mind on more than one occasion of selling out.  However, just like your friend I find myself bringing a son into the operation.  It's just like my dad found himself in a similar situation back in 1982 when land prices were running north of 2000 an acre only to see them fall to below 600 an acre within four years.   

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Veteran Contributor

Re: Farmers have too much money

Well... having witnessed the eighties shake out and the shenanigans that bankers played in their role, anything is possible.

 The flush with cash farmers may just have to hire mercenaries to protect them and their crops. Lawlessness may return to the heartland as the "haves" become few and far between. What would it take to wreck a too big too fail operation? Labor will be the Achilles heel of these operations. Better pay your help well, so that loyalty will not be an issue.  Is the money tree well rooted and able to continue to bear fruit for several years with no income?

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Senior Advisor

Re: Farmers have too much money

I agree with one of your statements and disagree with another one cowfarmer.  I whole heartedly agree that cash is king and it is easier to spend the banks money than it is your hard earned money.  I disagree on the smaller producer getting washed away, at least I feel that way around my area.  Most producers around my area are anywhere from 500 to 1500 acres with only a few above 1500.  I fall into the smaller category at the present time.  Most of the big boys are not rolling the extra money into replacement equipment, they are pocketing the cash and buying land.  The interesting thing, none of the big operators except one have a legacy to pass the business on to, and they are all in their mid 60's (don't lynch me, I'm not calling that old).  What will happen to those operations?  My opinion is some of the smaller operators who are operating debt free will have some big opportunities in the not so distant future.

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Advisor

Re: Farmers have too much money

That's the big issue, trying to avoid paying taxes.  When that mindset works its way into their system, money is no object, just tax avoidance.  That mindset is a signal for everybody that sells new paint to charge full fare and then some.  It is amazing that people cannot think about capital costs being excessive when they need to get'er done.

 

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