Selling? Cash Rent Payment Due March 1

[westernia80]

There is no official date.  Have some due on March 1, but also have some due to the State of Iowa DNR on April 1. (or whenever get around to they sending out the bill)  I do have "a wall" of 6000 bu to go to Cargill in March but it goes to pay off the 2015 operating note, not '16 rents.

[OKdon]

Mike, what ever is negotiated is proper. Most of us plan ahead accoriding to how our various obligations come due. It's not just the cash rent but other obligations as well. taxes, realestate taxes, seed, fertilizer and chemicals. I'm self financing but I often have to plan sales ahead or defer payments into the next year to correspond to looming expenses.

I find it quite preferrable to make business decisions based on their merit rather than the whims of banker but that is not easy for a start up business, but i do think self financing should be an objective of most farmers. But then that is just my opinion. Others may find that using borrowed capital allows you to use cheap money for operating and your own money for investment. Perhaps there is merely a difference in our life status.

[smokeyjay]

Just an observation, recently a well known market watcher mentioned that the only segment that actually owns commodities are farmers. Everybody else are either short or buying as needed. That said, depending on whether one's finances are good, bad or otherwise, a deadline may also be irrelevant or significant. We will soon find out which it is. 

[marketeye]

smokeyjay,

Good to hear from you. Could you explain further? I'm not sure I am following your point. Are you saying that because farmers own physical crop that their deadlines for bank loans and cash rent payments, and other bills don't matter? thanks.

Mike

[smokeyjay]

Good to hear from you as well!  No, my observations are purely analytical. Payments and deadlines matter. However, a well financed operation manages cash flow, not based on deadlines.  There may be exceptions, but not the rule. Being aware of deadlines and preparing in advance is one thing, but using cash for toys not in a budget or impulse buying, that creates problems. Paying rents that leaves no room for crisis events like market corrections is another trouble maker. Working capital must be sufficient to withstand these events, or the farm is in trouble. 

A side note... If farmers are the only players holding the bulk of unsold grain, it can go either way.  The unknown is how global players are handling their needs, or their own grain.   You may have read that Canada surpassed the US in wheat exports and Russia is predicted to take that spot in 2017.  We have a global glut right now, so, this time may not be the right time to own grain. 

Hope this helps. 

[OKdon]

If they haven't terminated before sept 1. they are probably stuck with the 2015 lease rate. In Iowa that is the case