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Contributor

forget about thinking the market owes you a profit

it doesnt. The key to survival will be all about cashflow. That will be all that matters in the short run.  Have large amounts of working capital.

10 Replies
Advisor

Ya baby hedger is here

Let them complain about guberment conspiracy and low prices. We can talk about hard core marketing and making money.
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Senior Contributor

Re: Ya baby hedger is here

Well we will just see if you can keep it to that!

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Veteran Contributor

Re: forget about thinking the market owes you a profit

If prices fall as many say they will fall working capital on all farms will have taken  30 to 50% reduction for the year, If costs continue to rise as I fear they may were going to also see some more working capital erosion in value for next year. I also fear working capital for many farms will also see reduction when deferred taxes farmers have put off by buying machinery hits home in this year or next comes into play. I saw this in eighties when farms were losing money but having to pay high income taxes further sucking cash away from working capital. The thing i see this time around is market is dealing with much more volatile farm sector than one in the eighties where we had much more government involvement and support. This time i just don't see much involvement by government and it will be interesting what lenders and farmers do when things won't cashflow. Also agribusiness is in for shock too when sales start drying up or there isn't cash to purchase or pay what has been used.  The market has caught me by surprise i didn't think it would change this fast in past it took couple of years to move like it has done now and i fear this could get real ugly before we start correcting.

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Senior Contributor

Re: forget about thinking the market owes you a profit

I have been hearing this babble since 2009.  More money has been made NOT buying into the doom and gloom in the last 5 years than I ever could expect.  Having said all this, knew it couldn't last forever, so if things go in the toilet for awhile, hopefully I have accumulated enough working capital to weather the storm.  If not I have other skills which are in demand, or I can scrape by doing whatever it takes to legally make a buck.  Not the end of the world.  Health, family and friends are more important anyway.

Senior Advisor

Re: forget about thinking the market owes you a profit

You nailed it northnd.  I've said it a few times on this site about diversification.  People kept bragging about ripping out that pastureand and CRP or removing that fence to get an extra row or two planted.

 

Kind of reminds me of a scene or saying from the "Jurassic Park" movie.  We spend so much time asking ourselves could it be done that we never ask ourselves should it be done?

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Honored Advisor

Re: forget about thinking the market owes you a profit

Well, we all operate in our own little bubbles and have to do what makes sense to us individually.  If 2 years ago planting a 20 acre pasture to corn when it was $7 made economic sense, that is what a person should do.  With of course the knowledge that "everyone else will probably be doing the same" not to mention other countries and endusers having incentives to find alternatives and have a even more "just in time inventory". 

 

Years ago the FFA had a essay contest on "Why Farmers are Price Takers and not Price Makers"? I`d love to go back and read the finalist`s papers again.  The NFO tried to get farmer to cut production and have collective bargaining.  But us Americans aren`t wired that way, it seems just like labor unions there gets to be corruption.

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Highlighted
Veteran Contributor

Re: forget about thinking the market owes you a profit

Some of my NFO neighbors kind of like NFO. They have been sellling grain a few months back for forward delivery. Usually have a business marketing plan to follow that protects some of their sales.

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Veteran Contributor

Re: forget about thinking the market owes you a profit

so do you think your markets owe you a profit??????

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Honored Advisor

Re: forget about thinking the market owes you a profit

What's old is new again.

 

I knew many that thought it was all about cash flow in the late 70's early 80's , they were all out of business by 86. 

 

IT IS ALL ABOUT PROFIT. 

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