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Shaggy98
Senior Advisor

Re: Should I Custom Farm?

10,000 acres, no way in hell would I ever do that. That is absolute stupidity. There is no way anyone can manage that type of an operation, I don't care how many employees they have.
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idalivered
Advisor

Re: Should I Custom Farm?

There will be some additional expenses and issues with any farm or business. Who handles the fsa and crop insurance paperwork. You can do it , I'm sure, but not convenient from"out west". If you and rsw and don have it custom farmed instead of rented you will be actively engaged in farming and have to pay social security (self employment tax) on the proceeds. Rental (passive) avoids this. Little things like tile repairs, fenceline spraying, and picking up rocks can all add to the total. Maybe a net cropshare where tenant pays all expenses and landlord recieves a % of the gross would fit you situation better. Better yet, hire me as the farm manager! My fee will be nominal,of course. good luck with your decision. sounds like an interesting enterprise for you.

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buckfarmer
Senior Contributor

Re: Should I Custom Farm?

I could manage ten thousand acres. If I had a guy like you handling the machinery and feild work and a guy like RSW handling the financial side. If all I had to do was make final decisions, help out with field work and take care of mechanical repairs. Why stop at ten thousand. I've got a neighbor that farms 65,000 acres. May need a lawyer on staff as well. And a human resource person too.
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farmerguy89
Advisor

Re: Should I Custom Farm?

At about 5000 it becomes too much for one network to handle. Have to add more groups of well trained people.

There's a 5000 acre job out here. He has to hire some fields scouted by an agronomist at this point.

You just need to find people who you would normally hire from an independent for 80-100 and pay them 20/hr w group benefits.
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rswfarms
Senior Contributor

Re: Should I Custom Farm?/FARM MANAGER ??

Farawayguy- It seems this thread has gotten pretty long with all the posts. For you to understand and get all the knowledge you need to Custom Farm is at least a 3 year process. I bought alot of my farmland back around 1986 to 1989 and cash rented it out at first to the local farmers. After cash renting it out and being more familiar with the numbers, it was obvious that I could make more money by Custom Farming over cash renting. I kinda cheated at first to speed up my learning curve, but I think it was money well spent and it helped me avoid making some big mistakes. For the 1st two years of Custom Farming I hired a Farm Manager to help me and review all the decisions that you have to make in Custom Farming. The 1st year I would sit-down with him at least 1 per month during the crop season and go over all the decisions that we had to make and just an overall review of how my total farm operation was going. I paid him by the hour, instead of a percentage of the crop sales/revenue that is common for most Farm Managers to be paid. Before I started buying farmland in 1986, I worked for a large Metals Company in Kansas City, and it was very common in the business world to hire outside advisors to help on major decisions like adding 25% more production capacity to achieve a lower per unit cost. And as you know farming it is and should just be considered a business, not a lifestyle and your Return on Investment Ratio is the indiction of how well you are performing your job duties at running a farm operation. A good ROI Ratio is really your Grade Point Average just like when we were in college, however, your farming Grade Point Average is a helluva alot more important than the one we got in college since we have a large amount of our money invested in our farm operations. But to sum up here, I hired a Farm Manager the first 2 years that I Custom Farmed and it was well spent money I feel and brought me up to speed on running a large corn and soybean operation. Perhaps this is something you should consider doing too, it was well worth the money for me and it really does speed up your learning curve.

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kraft-t
Senior Advisor

Re: Should I Custom Farm?

Actually, that might be a wise choice. But the logistics between Illinois and NC iowa might be difficult.

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farawayguy
Veteran Contributor

Re: Should I Custom Farm?/FARM MANAGER ??

I'm not sure I'd need a farm manager, unless I'm missing something. I'm assuming my custom operator would work with me for the on-the-ground decisions. Crop rotation, fertilizer, pesticices, seed, all these things, I'd expect to have conversations, but hopefully I'd be hiring someone who's good at this. As far as the government paper work, I'm pretty sure I can handle that - it's not like I'd never be back there. As for the grain marketing, I'm of the opinion that there's a lot of luck involved anyway, so I won't be over-thinking that, but I'm comfortable with it, at least conceptually. And I do have a few friends that farm back there I can ask for advice - hopefully without annoying them too much. RSW - can you tell me the kinds of things your farm manager did for you? 

 

Speaking of ROI and for those wondering why I'd take all this on, right now I'm making an after-tax return of 1.2%. That's $51,000 on $4.5 million worth of farmland (my share of the family farms). So either the land is wildly overpriced and I should sell it, buy 10 year T-bills (3% now!) and double my income, or I'm giving up too much of the income. My calculations indicate the latter (or some of both). By the way, when I first started into this thinking, corn was at $6, so you can see how I was drawn into this.

 

 

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Shaggy98
Senior Advisor

Re: Should I Custom Farm?/FARM MANAGER ??

Give it a rest Fairy Tale, we all know your talking to yourself. We're not as stupid as you think we are. Still waiting for the answers to my questions, should be easy if your a farmer like you say you are.

Picking myself off the floor only to return with a side ache.
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farawayguy
Veteran Contributor

Re: Should I Custom Farm?

I am aware of the self-employment tax issue. Definitley a factor, but not a deal killer. 

 

Regarding your comment about it being an interesting enterprise - this is a factor that I don't think folks consider, but doing this would make life a little more interesting, I think. Unless I screw it up. But we're not talking about risking the farms - mostly just our income for the year. And just on these two farms.

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farawayguy
Veteran Contributor

Re: Should I Custom Farm?

I'm reposting this from the "Congress Preview" thread for those who would otherwise miss it - in reply to Shaggy98. He accuses me of being RSW, jokingly? - I don't know.  But I know a number of folks have weighed in on this topic on this thread and I've ignored it until now.

 

>>

 

Well, if you're saying I'm RSW, I'm not. Of course I signed up the same day I asked the custom farm question - I signed up so I could ask the question. I'm not entirely sure if you two just like needling each other, or if you're even serious about what you say, but RSW has had really thoughtful comments. If he's faking it, and I can't imagine why he would do this, his advice still seems insightful. By the way, if you really want to confirm about me, just private message me, and I can give you my phone or email and we can converse. You and RSW should do the same - this message board would be the better for it.

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