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New Seed Business

I recently have gotten into the seed business and I'm currently just selling off the farm. However, I've been given a chance to expand this business into town. I've been trying to make a decision on how to make the purchase of the warehouse. I own a few hundred acres of pasture land and some cattle (which haven't been profitable for the last two years) that I have the ability to sell to cover the expense of purchasing this warehouse. My family is completely opposed to the idea of selling the land and cattle, but my instinct & my banker is telling me that the seed business is the way to go. What do you guys out there think I should do with this dilemma? 

 

Last year I lost $14,000 on the cattle/pasture and I made $25,000 profit from the seed business with expanding interest. I would have roughly $100k after the paying off debt after the sale of the cattle & land to invest into the seed business. At the same time, similar property in the area rarely comes up for sale and when it does it usually brings top dollar (very large ranchers in the area). 

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4 Replies
Veteran Advisor

Re: New Seed Business

Congratulations on your seed sales success.

I'll give my nickels worth.  First the seed business

Is constantly changing.  Will your company

Be around next year ?  

Also some company's provide financing for

Buildings seed tenders, bulk seed storage

And treatment units.

My next question... Will moving to town

Generate more sales ?  If not, why go

To town ??

Rather than tying a boat anchor around

Your neck by building or buying..why

Not just rent or lease ??  If you make

Money, you can then use it to get your

Own building.

Also, this building will require making a

Payment...then taxes !!.……if you rent

Or lease. You don't pay commercial

Taxes or insurance.  If you added the

Above up...would you be making

Any money ,?

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Contributor

Re: New Seed Business

Who is your family?  Your aunt?  Your cousin?  Your wife?  Your father/partner?

 

I get the impression you are asking for us to tell you go ahead with something you've already decided to do.,

 

You banker is out for his own interest, not yours.  

 

I suspect seed is going to be more and more like the hog and chicken business.  We've already seen some seed dealers told they WILL sell dicamba beans and nothing else.  These dealers are working for the man.

 

I'm not going to offer an opinion.  I will suggest you talk to more people, like your CPA, go out and visit several other seed dealers, some farther away.  Talk with another banker.  Talk with your University Farm Management Extension specialist.  They will help you run the numbers.

 

Do you have long term goals?  How does this fit in?  Maybe you could partner on the seed business and keep the land and cattle for a while.  There are probably other options as well.

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Honored Advisor

Re: New Seed Business

What kind of seed are you selling, if it`s something good like Channel or DeKalb that`s one thing, but if it`s Renks, then maybe stick with the cattle.  Smiley Very Happy   Sorry Renks guys, just having fun. I think you do have to look at the future potential of the seed you`re selling and your customers in the area.  If it`s older loyal 500 acre customers, that`s better than Bigshot +10,000 one`s, because they aren`t used to buying "retail" if you know what I mean.

 

You could keep the land and sell the cattle paying off debts and putting it into the seed business and rent the land out?  Maybe have a quid pro quo deal, in selling seed to the guy you rent the pasture to.  If cattle have lost money for you the last couple years, I hate to say it, but I don`t see cattle being better than the last couple years, so maybe go out on this "high note"?  

 

I will say, those that sell seed seem to always drive a nice pickup, regardless how crappy the seed they sell   Smiley Happy

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Honored Advisor

Re: New Seed Business

If your just another distribution company selling boughten seed.... your awfully late to the game.... 

If your a seed producer with your own genetics that are competitive in performance without the indebtedness to a monsanto, dow, or syngenta,  ...... you will have some success

But if your just buying from one of those companies and reselling, your getting non competitive line genetics and facing a world of competition..

 

I saw one the other day that was advertising to be a "Christian seed company".......... if your needing prayer to sell seed better reconsider.

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