An interesting idea

[hardnox604008]

As I noted earlier, the 10,000 acre farmer who could easily make $2 million this year and has made many millions during the boom will inevitably use that war chest to bludgeon me and any other competitors he can well into the future.

Here's the deal- I surrender.

Terms of surrender- $3000/acre up fron for ten years rent.

Think about it- he's already turned equipment more than needed to avoid taxes, pushed income forward etc. He can write the whole $1.8 million in rent off against his $2 million profit this year- it is like he's renting it for $180/acre after taxes!

I will take the money from that and my equipment sale, pay all his and my taxes and pay off my debts. Then I will move to Siesta Key for 10 years and revisit whether I want to farm at the end of the period!

Sounds like a plan to me.

[hardnox604008]

Think about it.

This one has some legs.

[Palouser]

You might want to think about it a bit more.  Thwe way I hear it (though I have limited experience) the sand between your toes can get tiresome, and getting up out of that low beach chair when spring break ends can be a rather dismal job if your head aches.

Then there is the curiosity about China's future. If they have a large magnitude crop failure then that $ 3,000 figure may make you an object of derision if the going price becomes $4500 and the equities market is still flat.

I recommend keeping your nose to the girindstone, staying out of jail and not looking at the various styles of bikinis.

[Blacksandfarmer]

Its funny when the BTO gets picked on. I am a young guy who started with 0 acres and have fought my way to 100 in 5 years with most of that being land I have purchased myself along the way. I get a little tiered of getting beat up working two jobs and farming on the side just to make ends meet, all while a few very large operators in my area gobble up land like its going out of style. The level of greed by some of these guys is amazing. I know full well you don't need 10,000 plus acres to make a living. I have had many days like this where I too think about surrendering to the big guy. On the other hand I am an ex soldier and surrender is not exactly in my vocabulary. Life is cruel and some times you just got to dig in and get mean..... So hostile takeover comes to mind more than surrender these day's!!!

[CIL]

I've pondereed similarly.  Sell the farm for a 70% gain.  Pay off all the debt.  Cash rent back for $1,000/ac first 3 years paid up front.

My capital gain is taxed at 15% federal plus state.  My first year cash rent chews up most of my carryover/deferred taxes including federal/state/self employment taxes to the tune of 50% plus.

The new owner's $1000/ac income is NOT subject to self employment tax either.

Not going to do it as I only own one farm but just saying...

[hardnox604008]

They can deride me all they want. That is why I'm going to Siesta Key.

There's another side that seems just as possible as the scenario you line out although I wouldn't count on either.

That is that China implodes economically and the renter gets caught in a reverse vortex tax trap.

I'm not sure where that would leave the landlord in the case of bankruptcy- probably not getting ahead like people who I know who have sold businesses and then gotten them back for a lot less. Probably a case where the court would either make a sale of the remaining rental rights at market or let the renter keep them while other creditors get stuffed.

I'm thinking the latter and that makes it even more interesting for the rentre to consider.

[hardnox604008]

Hi Blacksand,

I am somewhat serious abut the strategy I delineated.

But I suppose the greater point I was making was the truth- that the good thing about great times for crop farmers are that they are great.

The bad side is that it has put people who were extended to the max before the boom in a terribly strong competitive position.

Merely a fact. Any discussion about farm policy, ethanol whatever is now past history.

Can't beat 'em, can't exactly join 'em, can maybe skin the cat a different way and cash in a little on their good fortune.

[Palouser]

I remember the term ' Young Tigers' from the 80's that farm publications pushed hard. You were supposed to be just like them. I don't remember any of them any longer, though I do some of those who were trying to be just like them in my neighborhood. They're all gone.

It started rolling up behind them and they couldn't stop it.

[hardnox604008]

However there are some distinct differences between the '70s and tis boom.

nlewss you happened to hit a huge home run in '73 or '74, the '70s were mostly a balance sheet boom that lacked the pure stunning real profits of this one.

[Nebrfarmr]

Something similar happened to a retired neighbor.  Rented the land to a guy who put the seed in the ground, then declared bankrupcy.  Long story short, they got no rent that year, and the renter had the gall to sue them for the rights to rent from them the next year, because he had a long-term contract, and tied the whole thing up in court until it was too late to rent to anyone the next year either.  Not a pretty sight at all.