How to expand??

dmiller

Member
So... the age old questions.

Do you keep doing what you're doing and try to save for land vs. invest in larger equipment so more land can be leased/worked in the same amount of time on the side of your full time job.

My wife keeps asking me when will I be satisfied. I keep saying when I can quit my job and farm full time.

Opinions????
 
Does it pencil out that buying farm land will still pay for itself where you are? It hasn't here for the last five years.

You could try explaining to your wife that she will get the proceeds from selling the all land and equipment when you pass on, but don't be too surprised if she still asks "and when will that be?".
 
What the right thing to do changes with the business climate your in. Right now equipment will be a better buy before any land purchases. Here is my reason for saying this.

Land is at record high prices right now. The price of land has started to slip back but it will be a slow thing to happen. Being ready to buy land in 4-5 years will more than likely be better than buying today.

Equipment has been at record prices as well but its value will fall faster. The larger farmers mostly have pretty late model lineups of equipment. So when they have to tighten their belts it will effect the equipment market first.

An example of this is corn planters right now. I bought a real nice 16 row planter for a 1/3 of what it would have brought a year ago. The demand for larger used equipment has already taken a huge hit in price.

As for quitting your job and farming full time. I got to do that when I was about ready to retire. It will be real hard to make a good living on a farm in the next few years if the crop prices stay low. It will take a while for the inputs to adjust to the new reality of lower crop prices. You need a consistent income for your family. Todays farming makes doing that real hard unless you already have the capitol to get up to speed.
 
No farmland doesn't pencil. It is my understanding that for most parts of the country it hasn't since the 70's.
We are only dreaming of a few acres for a homesite/farmstead (barn, machine shed etc)that would be ours instead of rented.
 
In 40 some years as a wage earner, my observation is that farming doesn't pay for a farm &(here's the kicker) a living too.
 
That's kinda' how I feel but I can't seem to make it happen. The past few years I have expanded quite rapidly in my opinion all of it going back into expansion and machinery. To the point now where I work about 20 hours a week on my "farm" (hay, wheat, hogs, and a few yearling heifers)and an average of 55 hours a week on my job (HS Ag teacher, some weeks FFA takes more time than others).
It seems to me like the way to expand is to look for a long term lease on a decent size piece of ground now that I have machinery to work it.
 
I've been in the blacklands of Texas all my life and have observed that the big farmers who actually farm and make a real good living all either inherited the land from family, or, purchased the land with inherited money, or, purchased the land with big money made in business ventures. The latter two we call "gentlemen farmers" as opposed to the real professional farmers who run inherited family farms on which they grew up etc. A few of the more energetic small acreage operators have done well via mortgaging the property to buy equipment to do custom ag service work. 16 hour days, etc., but they love it. They then rent as much land as possible and make a little on it too.
Good farm land is just too expensive to purchase and then try to farm and make a decent profit after land payments. A better plan in my area is renting pasture/grazing land and investing in cattle. My father built up a herd over 20 years this way while holding a full time job in town. He retired from the job at 62 and enjoyed his ranching until 75. When he passed on in '94, he left my mother in real good financial shape.
 
One of the keys here is that machinery is not an investment unless you are making more money on it over maintenance, repairs and depreciation. Lot of people loose sight of that. Overall a farm can make money but some equipment may be costing more than it earns. For example a grinder mixer that get used once a year may not really be worth keeping even if paid for just because it looses value each year. So does the cost of prepared feed minus the value of the grain being ground, fuel and tractor use ECT make it profitable to keep or should a guy get rid of it and just buy prepared feed? There is no stock answer to that because each operation is different. On the other hand buying land at current prices can kill you should we slip into another recession. Are you going to be able to make the payments? Again that is different for each farmer. Right now I think keep debt down is going to be the breaking point for many. Those with reasonable debt will weather the storm while those who extended themselves because of prices the last few year are going to be hurting. And it goes in a circle. Grain is down while beef is up. Another could of years and it will change.

Rick
 
If you wanted to be a farmer so bad, why did you "waste" all that time, energy, and $$ to go to college, study, and pass exams to become an Ag teacher?? I'll bet I can guess, here goes..because teaching provides security, a decent wage, good healthcare, good retirement, and more time off than virtually any other job, therefore making the perfect occupation for farming part time. Am I right? Look, farming loses it's luster real fast when you have to rely on it for your sole income. My advice is to try and find a little farming niche that is as low input and high profit as possible and be happy with your job and farming on the side.
 
One got to be young when jumping into farming when one is stiI fuII of pizz and vinegar and abIe to hoId a fuIItime job on the side to generate the shortfaII in farm income needed to make a go of it.
It 's no use trying to buiId up a farm when one hits retirement age unIess one has the cash to buy it outright,cause most peopIe won't Iive Iong enough to get to the profit stage.
And if one has the cash to do it it wouId be stupid to go waste it on a farm and then work ones azz off to keep from going bankrupt.
It took me 30+ years of strugging to finaIIy make a comfortabIe Iiving from the farm onIy and my farm/ranch is a pretty good size at 1800 acre.
i can't see anybody these days couId even make a poor Iiving on just a handfuII acres.

PS, i started from scratch and i did not inherit a singe doIIar
 
My BIL was a teacher for 32 years. He bought small and worked it up from there. The farm rarely added a dollar to his income and sometimes ate part of his teacher check. But after 30 years he has over 800 acres paid for and some nice equipment to farm it with. He retired from teaching last year and now draws KPERS and farms full time. In a couple more years he'll also draw Social Security (if its till around) and still farm full time (he's now renting land).
 
Teaching is a rewarding and good career, don't get me wrong. I just have always dreamed of being self employed and working in the fields. If things continue as they are heading I will be very similar to your brother in law. I will be able to find a small place of my own, and have equipment and time when I retire. Just afraid by then I will not want to keep doing it.
 
I can rent cheaper than I can own and I don't have a lot of capitol tied up in real estate. I've been on the same rented place for 21 years.
 

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