Got to thinking today while baleing...How many bushels/acres of corn,beans/hay..... does it take to pay for all that new iron?...LOTS. Then I thought that even though I'm a SMALL operator(think 'pennies'),My old 'junk' is mine. Paid for.I dont have to grow a bazillion acres/.bushels just to pay for that new iron.I juast have to pay 'expences'. Anything extra is mine,not an equipment dealers.All of a sudden I thought "right on/Cool/Awsome/Good for me......."I dont have to worry about those BIG payments. I'd say I,ve done OK after all....I dont feel so bad about being a 'poor boy' farming with junk!
- Thread starter DeltaRed
- Start date
Steve
Some easy math on equipment.
New combine and headers, $350,000
five annual payments, $70,000 each year.
Last year about 11500 bushels of corn to make the payment. Or the gross off of 57.5 acres of corn if it yields 200 BPA
This year, 24,000 bushels of corn or the entire gross off of 120 acres of 200 BPA corn.
The new large equipment market will be much softer for the next few years.
As for the wisdom of keeping equipment you can afford. That has always been a big part of the successful farmer's life style.
Some easy math on equipment.
New combine and headers, $350,000
five annual payments, $70,000 each year.
Last year about 11500 bushels of corn to make the payment. Or the gross off of 57.5 acres of corn if it yields 200 BPA
This year, 24,000 bushels of corn or the entire gross off of 120 acres of 200 BPA corn.
The new large equipment market will be much softer for the next few years.
As for the wisdom of keeping equipment you can afford. That has always been a big part of the successful farmer's life style.
Some of the BTO's are too big for the banks to let fail. Others will fall by the wayside. I'm just a small guy in my first year. OK I lost money due to lack of knowledge. I'm OK with that. It is a learning experience. If I fail I'm not going to have to leave the farm. I'm not that far in. I know a couple of guys around here that are a lot larger than me who may have to toss in the towel. Bad situation, Politics as in the past are in part to blame but chasing last years prices is to.
Rick
Northvale - PA
Member
interestingly, the BTO around me is now currently using an older combine with a 6 row corn head. Last year it was a newer 8 row machine. Something going on there, obviously. If the price of corn has caused them to switch so fast, are they just living pay check to pay check, on a much larger scale? Anyone think feed, parts, fertilizer, chemicals and seed will significantly drop in price this winter?
Pair-a-dice farm
Well-known Member
I'm a small to mid sized cattle farmer that operates out of my hip pocket with used and old equipment. One thing to remember is that somebody had to buy it new before I could buy it used.
gene bender
Well-known Member
With the rite off allowed on tax and you trade every couple yrs with free interest it all figures. Brother had a 3yr old JD they wanted 5500 for new warranty but he could trade for 7500 so you just trade. Also tons are leased or rented by the hr. You cant farm too many acres with old stuff and do a good job lots of ways to get the job done. Local dealer in a small town near me had a list of just used combines i added them up and came up with a figure of excess 3 mill setting there and that doesent count the tractors. When will the madness end no wonder JD laid off 1000 just here in IOWA 400 at combine plant.
JD Seller. I like your basic description in easy to follow terms and "gross" return. What has me scratching my head is, my research says the average production cost for corn is about $4.50/bu. Early this week the elevator was paying $2.99.
Wouldn't it be interesting if farmers could buy their supplies and equipment for less than the cost to manufacture.
Wouldn't it be interesting if farmers could buy their supplies and equipment for less than the cost to manufacture.
It would be interesting to hear what the BTO think the next few years will hold. There has been a lot of steel bins go up in this county the last two years. The BTO's are looking for more land to buy and are moving into our county. God did not bless this county with 250 bushel corn type of dirt. I am seeing more milo this year, is that a BTO's crop?
It is a vicious circle for the BTO.
You buy a new bigger combine. To pay for it you add more land and help.
With the extra help you need more income so add more land.
Now you have too much land for that combine so you buy another one or a bigger one.
Now to pay for them you need more land and along with that comes more machinery.
I still say the most efficient farms are the ones run by one person doing the most acres he can by himself with the machinery he can afford.
I'm at that limit. If I had much more I would have to have a full time hired help. I have 3 son in laws that help after work and take a day off now and then to help.
I owe on one used mx240 that as at 2% interest. I was going to trade combines this year till I got sticker shock. Instead I put 4000$ in parts in mine and will run it a couple more years.
One guy can run almost a 1000 acres with a little part time help.
I know of guys running over 10,000 acres with 3 full time truck drivers. Along with the other hired help to run the 3 combines and grain carts.
Gary
You buy a new bigger combine. To pay for it you add more land and help.
With the extra help you need more income so add more land.
Now you have too much land for that combine so you buy another one or a bigger one.
Now to pay for them you need more land and along with that comes more machinery.
I still say the most efficient farms are the ones run by one person doing the most acres he can by himself with the machinery he can afford.
I'm at that limit. If I had much more I would have to have a full time hired help. I have 3 son in laws that help after work and take a day off now and then to help.
I owe on one used mx240 that as at 2% interest. I was going to trade combines this year till I got sticker shock. Instead I put 4000$ in parts in mine and will run it a couple more years.
One guy can run almost a 1000 acres with a little part time help.
I know of guys running over 10,000 acres with 3 full time truck drivers. Along with the other hired help to run the 3 combines and grain carts.
Gary
Gambles
Well-known Member
A year ago, were were doing some remodel work at a John Deere dealership. I happen to know the head salesman and he told me that there was a BTO that came in every year to buy a new combine. The BTO lived 100 miles away, but bought here because he didn't want the local crowd to know that he was continually getting deeper into debt with Mothere Deere financing and didn't want the local farmers to know it. The salesman was wondering how long Mother Deere was going to put up with it and when she was going to put a stop to it. I haven't talked to the salesman before this year's harvest, but at $2-something/bushel corn, this might be the year.
It's so true, as has been said by others, the best way to run any business is to have enough capital to own most of your assets. If you need to borrow to buy your seed and fertilizer you are in a deep hole before your crop even sprouts. For most farmers we would be as well off if we spent the seed money on lottery tickets instead of putting it in the ground and praying for a good crop and a good price for our crops. At least with the lottery you stand a chance of winning once in a while.
I believe that if you buy your inputs for next years crop, or bank the money to do so, as soon as you get your money for the current crop you start out ahead and have a better chance of pulling through if the crop fails or the markets collapse.
I am only a small farmer [hobby farmer] and I have planted 60 acres of corn and the price is way down but I planted it using my old equipment and the same goes for the harvesting. No I won't make any money but I won't lose any either because I have no creditors waiting for their money. The money I get is mine and I can choose to spend it as I please. Buy next years crop inputs or go on a trip.
I believe that if you buy your inputs for next years crop, or bank the money to do so, as soon as you get your money for the current crop you start out ahead and have a better chance of pulling through if the crop fails or the markets collapse.
I am only a small farmer [hobby farmer] and I have planted 60 acres of corn and the price is way down but I planted it using my old equipment and the same goes for the harvesting. No I won't make any money but I won't lose any either because I have no creditors waiting for their money. The money I get is mine and I can choose to spend it as I please. Buy next years crop inputs or go on a trip.
gtractorfan
Well-known Member
Gross is one thing but net is what counts!
gtractorfan
Well-known Member
This picture makes me think of the old time slower paced kind of farming. I like it well enough I have it as my current screensaver.
I am not a crop producer but am self employed in a profession that is in close relation to farming for thirty + years and what I see is those who have chose to be a BTO don't really care if they are upside down in debt . its not their money , there is no crime in bankruptcy , and many of them continue to operate after bankruptcy , and from what I have witnessed from those around me. wealth is not earned from hard work it is stolen from many when one person goes bankrupt.
Random thoughts. The area bin builder/ leg/ dryer dealer has been expanding like he is getting money off a printing press. BTO's will give up new bins (even if they have a need) before they will give up new tractors and combines. The majority of BTO's here will be safe in low prices as they have other financial interests to keep themselves afloat which will not help a small guy such as myself. The Mennonites here will keep land overbid compared to its realistic return. The old rule of bidding based on return is pretty well dead. It's all about empire building and finding a place for junior to call his "own" even though dad or grandpa wrote the check.
Actually here BTO's are putting up bins like mad because they can't afford to sell at current prices. A nephew works for a bin company. They are working 10 to 12 hour days 6-7 day week. What I see is guys setting on their corn and beans and all of them waiting for the price to go up. Then they will start hauling so long before they are going to have to sell. Some will be OK like mad forcing the prices down again. They can only store it but others are going to be lucky to survive IMO. Heck a lot of them the bank actually owns the grain in their bins.
Rick
Rick
Interesting as to how things vary across the country. Bin erectors are very limited here (basically one dealer) so if you did not get your bin set up earlier you have a very poor chance of getting anything done now. I would say 60 percent of the BTO's here have strong off farm ventures so they are in no hurry to move product. The problem is as was said in Farm Journal carryover is going to be significant where it has not been the previous few years. The markets have adjusted in the last couple of weeks to offer prices that might tempt some not to wait when compared to the "support" prices in the new farm program when factoring in basis. I don't see a lot of upperward movement unless a big foreign buyer (China) comes in.
I do expect to see a couple of casualties locally plus some of the more crazy rent bids to go away. Just found out that one "outsider" who bid away 50 plus acres in the neighborhood pretty much did it at cost as yields are off due to a cool wet growing season.
I do expect to see a couple of casualties locally plus some of the more crazy rent bids to go away. Just found out that one "outsider" who bid away 50 plus acres in the neighborhood pretty much did it at cost as yields are off due to a cool wet growing season.
Bob Bancroft
Well-known Member
- Location
- Aurora NY
Who is your area bin builder?
notjustair
Well-known Member
I'm in the same boat. 1000 acres is doable as long as you are working smart. I also use older machines. It's not that I don't have debt, but I sure won't have debt on multiple pieces of equipment. A 30 year old disk works fine and so does the 20 year old 9500 combine. I was working on it yesterday when the local show off drove his new combine by pulling a 900 foot header on a trailer. I'm not sure of many fields around here that thing would even be efficient in. Kinda like a city guy with a riding mower. He's going to spend his whole week turning around. I like doing most machinery repairs. So long as nothing grenades when I am trying to get beans out I will be fine with what I have. I've got about 350 acres of beans for the old girl to do and then a 40 of milo. Oh, and then fertilize and get in the wheat. Maybe I do need some hands around here!
Bob Bancroft
Well-known Member
- Location
- Aurora NY
The reason I ask- I have been using Agri-Fab, from Pavilion. I've heard they sold to Martin. NOT what we needed!
Oldtanker just hang on. It takes a while for any new business, farming or otherwise, to get profitable. I posted below that I had 60 plus acres in corn [very small operation] but I started several years ago with as few as 10 acres and slowly grew to the 60 plus. I have never lost money on my corn but have little profit to show in some years. And yet, here I am, still planting crops and enjoying it. GOOD LUCK.
Stan - Florida
Well-known Member
A sensible approach to the farming situation - I think you're doing it right, for sure.
Hope the harvest is coming along OK.
Stan
Hope the harvest is coming along OK.
Stan
TomH in PA
Well-known Member
I don't know, but probably not as many as you think. Tax incentives and depreciation, plus no downtime are worth a lot.
Had a conversation a few years ago who was working as a parts man for heavy equipment. He said that the family had gone broke trying to be BTO's in Iowa. He couldn't understand how that had happened as they used only new JD green tractors and equipment.
I didn't give him my opinion.
I didn't give him my opinion.
todd hamilton
Member
$450.00 per acre to put crop in ground. 200 bushel corn at $2.00 returns $400.00. Farmer math 
Brown Swiss
Well-known Member
This reminds me of Minnie Pearl off Hee Haw, she said her brother was buying hay for a dollar a bale and selling it for a dollar a bale, he said he wasn't making money so he bought a bigger truck!
How big do you have to be before you are too big to fail? Stamp Farms was farming 27,000 acres (claimed to be farming 46,000) when Wells Fargo pulled the plug on them.
AgWeb : Stamp Farms
AgWeb : Stamp Farms
flying belgian
Well-known Member
Pa would never buy a piece of equip. he could not pay cash for. If he didn't have the cash, he did not need it. Always said "I got done last year, why wouldn't I get done this year?"
I have no idea of an answer to your question, especially as it relates to equipment and farming. That said, I can say that over the past 8 years or so I have watched the majority of BIG the construction/clearing companies around me go out of business because they were hemorrhaging money paying for brand new equipment when the bottom fell out of the market. On the other hand the mid sized, and smaller outfits that were using older, paid off or mostly paid for, equipment are still around and getting the work the BIG guys used to be getting.
There is only two reasons a farmer should buy new equipment once he is established, to realize a big increase in efficiency or production with a clear path to pay for itself or for tax avoidance, its always better to do business than it is to pay in to the black hole of the federal treasury.
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