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Honored Advisor
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Re: Harvest Report October 22

Hey RayJ, it was $350 BEFORE we all got in trouble.  But I could rent you some farms around Vinje for next year around $250 for next year  Smiley Wink    Lock in $3.43 next October at 5 Star , rollin` in the dough.   There`s a farm around Lake Mills $270 for 2019 plus the renter takes out this year`s crop for the owner.

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Re: Harvest Report October 22

[ Edited ]

This Manhattan Commodity Trader understands it quite well, which is why I suggested that the small farmers band together and get Congress to start a land bank that will rent farmland to you without the mark-up of the landlord's profit. That is a win-win for everybody : a) the government gets its money back and more, since the rent is their return of capital and also the revenue to pay for the costs of the program, and the appreciation of the land value is their profit; b) the small farmer gets to rent land at a lower rate than what he pays now, since what he pays now includes a profit for the landlord that will be subtracted from the rent when the government is the landlord; c) existing land owners see their land values rise as the government increases the demand for land in their area by buying farms for the program.

 

It really is the one surefire way to help cut expenses and increase profitability. But it won't happen unless Washington sees that there are a lot of votes attached to passing it. Or that they won't be able to find a good porterhouse if the guys feeding the livestock are out of business. 

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Re: Harvest Report October 22

No No No!

That is a utopian idea - not reality.

 

Here is the way your idea will actually play out in reality.....

 

The land you are hoping to buy next door finally comes up for sale.

You have a profitable operation and the money to buy it.

However you wind up bidding against the government, so you are unable to buy it, as they can infinitely outbid you.

Then, instead of renting it to you, they rent it to someone else.

Likely to someone who someone who knows how to grease palms the right way.

 

 

 

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Re: Harvest Report October 22

There is enough land being foreclosed that the government would not get into any bidding war with any private buyers. The land bank program can be structured as a buyer of last resort...any property in foreclosure that has not been bid for in 30 or 60 days is then available for purchase by the government. This type of structure would allow private buyers to continue to employ their capital while at the same time allow foreclosed property to be used for the benefit of small farmers. It also would give a second chance to the farmers who were foreclosed on, as they can stay on the land and work it for profit as tenants.

 

This is not a utopian idea for anyone who knows the various programs like this one that the Federal government id involved with. There is an entire government agency at Cabinet level - The Housing and Urban Development Agency - that does this kind of land bank programs across the US. Now they need a Housing and Farm Development Agency to carry their success in providing housing to poor individuals onto the farms to give small farmers a break on their expenses and allow them to profit for their work through a land bank system. 

 

Its the only way I can see of making a significant dent in the expenses of the small farmer, and finally getting them out of the #1 position of bankruptcy filings every year. I don't understand why anyone who would benefit from such a program would be against it ... its why I have written the phrase about cuting off one's nose to spite one's face. 

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Re: Harvest Report October 22

Rayfcom, sorry but your plan won't work. Because farmland isn't anywhere near cashflowing and rarely ever does. So even getting a "big shot high rent" would be a money losing proposition, congress, taxpayers would never go for it.

And how do you sell "adding to the deficit AND raising my food bill" to the public? To make any kind of dent, it would take 10 million acres at $10,000/acre so $100 billion,....and if rent is going for $300/acre, the govt would rent it to "deserving farmers " for $100?

We see bigshots' kids already abusing the beginning farmer programs the way it is. Poor little Johnny, his old man farms 10,000 and he wants to "strike out on his own" with cheap interest ...and now cheap rent? No thanks.
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Re: Harvest Report October 22

[ Edited ]

Well first of all, Congress and taxpayers definitely will go for it because the program pays for itself and gives the government a profit. As I wrote, they get the monthly rent to pay their expenses to administer the program, and they get the increased value of the land when they sell it years down the road. This is what the government already does with low income housing, so its not a novel idea for them. 

 

Next, the $300 to $350 per acre that you presently pay in rent has about $100 a month going into the landlord's pocket as pure profit. It may even be more depending on how he financed his purchase, what utilities he picks up, what his property taxes are, and what the terms of the lease are. For the sake of discussion, let's assume the lowest of numbers, $100 of profit a month per acre. For a $10,000 investment in an acre of land, the landlord will want at least a 5% annual cash return, or he could take the same money and buy a high grade Corporate bond at a discount and earn the 5% per year in interest as well as get a capital gain at maturity. That 5% is $40 per month per acre. The landlord also is going to want his mortgage interest paid, which comes out to another $40 per month per acre for every $10,000 borrowed to buy the land. 

 

So a Federal Land Bank program is going to knock somewhere between $40 and $80 per month per acre off of your expenses, which is a reduction in your land costs of about 10-25% per year. And that's just one item in your expenses, imagine if the small farmers all banded together and bought their supplies in bulk, that would knock another 10% off the expenses for supplies. Each item of savings seems small, but if you put two or three items together it comes out to significant savings. Enough for a lot of small farmers to make the difference between staying in business or filing for bankruptcy.

 

The best part is the farmers don't need to do anything but work together for their common interests. You need someone to step up and lead the charge, to create an organization for the benefit of small farmers that will push to get these kinds of measures implemented. Like what the founders of AARP did for older people. These ideas and others can be accomplished, it just takes a positive attitude and an agreement to stand together to get the benefits you deserve by standing together.

 

I really don't care because I don't have a horse in the race. But I'll bet that every small farmer knows someone who didn't make it, and I'll bet that most small farmers worry that it could be them next if just a few conditions don't go right. You should not have to live under that kind of worry, especially considering how important your work is.

 

For me, I cringe when I see businesses that give money away, I spent a good portion of my life buying these kinds of businesses, straightening their finances out, and selling them for a profit. I don't care what kind of business it is, there almost always are ways to reduce expenses and increase profitability while maintaining quality. The plots may be different depending on the kind of business it is, but the theme remains the same. 

 

Like I said, I don't have a dog in the race, and I don't intend to get into the farming business at my age, But I have to say that for the younger farmers in the business, there are ways to improve the part of your business that's not in the field, and I hope you take the initiative to bring them and the resultant profits to your businesses.

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Frequent Contributor
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Re: Harvest Report October 22

[ Edited ]

Yes, Numero Uno, Number 1, Pole Position. Measured by the number of businesses in a profession filing for bankruptcy protection relative to the number of businesses in the profession, so as to evaluate business performance rather than individual finance and to make equivalent judgments across varying types of businesses. 

 

The links you provided were for personal bankruptcies, not for businesses. Chapter 7 and Chapter 13 in the Federal bankruptcy code. The part of the code most farmers use to file is Chapter 12 because it affords terms especially written to help small farmers who file as business entities so as not to ruin their personal creditiworthiness and in many cases (if the use of a good accountant is employed)  allows the farmer to keep his farm house or any other house he may own rather than to lose it to bankruptcy creditors. 

 

As you can see in the analysis of the issue in the link below, farming businesses in the first quarter of 2018 accounted for about 70% of all Chapter 12 bankruptcy filings, which is been typical of the rate of farm bankruptcies during the last decade or more. The percentage of farming businesses that wind up in bankruptcy is the highest of all profession, save perhaps for restaurants.

 

https://www.fb.org/market-intel/bankruptcies-higher-across-farm-country

 

The bottom line as any honest farm owner will tell you is that in a business environment where costs of land use and production continue to rise while revenues per unit (i.e., prices for the farmers' products) continue falling, it is very challenging just to break even. There is little that can be done on the pricing side, as small farmers have chosen to produce as much as possible in order to meet their production costs and that has resulted in over-supply.

 

Accordingly, the only way to make small farm businesses profitable and financially healthy is to figure out new ways to reduce production costs. 

 

That's what you and every other small farm business owner should be focusing on instead of searching for web links in a valiant but nonetheless utterly fruitless attempt to prove me wrong, even to the point of citing the wrong links.

Veteran Advisor
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Re: Harvest Report October 22

It's not a contest. Was just wondering about your statement about farm bankruptcies.  No need to be a jerk about it.

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Re: Harvest Report October 22

The  key  number  being  3.5   per  10,000   -  -   -

 

On  the  other  hand  there  being  an  example  in  the  Great  Lakes  region  on  procedure,   and  %  comparison's  being  extremely  valueless  -  -   -