(800) 853-2651
SHOP NOW

Farm economy

K

Kickinbull

Member
This fall I have been around a few farms from field days to looking at equip. or livestock and I have noticed that for farms with stock it still doesn't appear to be "rolling in the clover". With high cattle prices and high milk prices I kind of expected to see some things getting fixed or replaced. It doesn't seem to be the case. It's still just getting by.Just my observation when off the ridge.
 
Inputs went up to match the super high corn prices and never came down much. I would expect a lot of operations are running at break even or maybe a little below.
 
I dare say that it takes more than just a short up swing in milk and cattle price to clean up past bills, and pay forward things like seed and fert, for next year. Borrowed money in lean years must be paid back in good years. Bruce
 
Well I personally know several dairy farmers that where losing over 100K per month a few years ago when feed costs where sky high and milk prices had not kept up.

It is going to take them years of good prices to recover to where they were. Many will not make it.

The one fellow has a 800 cow herd. He was debt free 5 years ago. Now he owns as much as he did when he bought the farm. The trouble is he is 60 years old not 30.

The beef cow rangers have had the same issue with high replacement cost and feed/equipment cost through the roof. Also high grain prices drove up land cost even for pasture ground.

There is going to be a recovery time before many livestock farmers are able to UPDATE things.
 
(quoted from post at 17:34:56 11/16/14) This fall I have been around a few farms from field days to looking at equip. or livestock and I have noticed that for farms with stock it still doesn't appear to be "rolling in the clover". With high cattle prices and high milk prices I kind of expected to see some things getting fixed or replaced. It doesn't seem to be the case. It's still just getting by.Just my observation when off the ridge.
Click to expand...

Prices of beef is pretty good but when you factor in the rate of inflation it's not that great. In our area it's pretty plain to see who has had the most good years. East of here is mostly row crop, rice, corn, soybeans and cotton. To the west is mostly cattle, timber and chickens, The eastern side has homes that range in the half to 1 million range with fancy cars and boats in the paved driveways. The western side has some nice homes but nothing in comparison they are mostly older homes. There was a lot of government money spent on the eastern side.
 
Watch all the inputs such as seed, fertilizer, machinery costs leap when the prices go up but they sure don't drop when the market prices drop. Then when world politics make or break our economy we see how we are nothing but pawns being played with.
 
Cattle are good right now but don't forget we are using any extra profit to recover from 3 years or drought. In 2012 it was pretty widespread. Hay was $200 a ton or better if you could get it and grain prices were high too. You could well imagine if you did not get a paycheck for two years.
 
(quoted from post at 15:34:43 11/16/14) Watch all the inputs such as seed, fertilizer, machinery costs leap when the prices go up but they sure don't drop when the market prices drop. Then when world politics make or break our economy we see how we are nothing but pawns being played with.
Click to expand...

I wouldn't call us pawns. pawns have absolutely no choice in anything. We can choose to farm or not farm. Heck we can even choose to work or not work.
Hardly a pawn.

rick
 
Lot's of reasons.

Before anyone goes from zero to big dollars, they gotta get back to zero. It's been a rough few years leading up to this. Time to pay down debt before going on a spending spree.

Many cattle operations are still herd building after selling down to the lowest numbers since the '30's. Can't sell everything standing....

And even with the high beef prices, it's just been relatively recently that feed cost has dropped back to reality. High prices don't always mean high profits.

And most importantly, just because there is money coming in, that doesn't mean you have to run right out and spend it all. It may be a prudent move to see if these high prices hold. May just be short run up.
 
I can't compIain and i ain't worried for the next coupIe years either
i got IittIe debt Ieft, this years biIIs are paid for, i got pIenty hay in the stack for the winter,..i have enough money in the bank to Iast me tiII spring.
Iast years caIves(Iong yearIings now) are stiII in the pasture and gonna be soId after new year.
This years caIves are stiII on the cow and next years caIves are aIready in the oven.

The trick is to work smarter.....not harder.
One can't borrow oneseIf out of debt either.
 
The cows don't care what the facilities look like. I have been in the cattle business virtually all my life and never lost a dollar on a cow that lived to produce two calves or more but I rarely spend anything on facilities or equipment except what is required to offset taxable income.
 
I remember you posted about the Dairy farmer a year or two ago, why would he feed cows an expensive high production ration to produce money losing milk to put himself in such a predicament?, why didn't he just drop the ration to corn silage and alfalfa hay or whatever he had grown himself instead of going for top production? I would say his pencil is not to sharp, he sounds like the kind of farmer that pulls the farm credit system down and ultimately need loan ''forgiveness'' etc. A farmer has to be a businessman first.
 
Lots of farms are just trying to recover all the money they have lost over the last several years. Same old cycle. Just about the time you get caught up the prices go into the crapper and you start all over again.
 
Many of these newer "large dairies" Have production contracts. If they do not fill the contracts they have to "buy" milk to replace what they did not produce.

Also they are like a lot of grain farmers. They believe that prices will "save" them if they have top production.

Look at the guys giving $500 per acre cash rents. There is no way it pencils out but they are doing it.

Six hundred acres to the north of me just changed tenants. The "new" rent is for $450 a year for four years. There is absolutely ZERO profit in that deal but there where three guys bidding to farm that ground. All are fools.
 
I cant speak to everyone but in my case I see these cattle prices kind of like our turn at $7 corn. They will be gone sooner than anyone anticipates. At cattle meetings I still notice that Im one of the youngest in the room and Im closer to 50 than 40. I'll still spend money on things with a 20 year life span, if the return is shorter than that. Long investments, I cant see it. I'm winding down a bit too, and know a lot of guys who are. Not out, just down. I can run 150 momma cows, was at 57 this morning, now at 52, and plan to be at 37 to stay by spring. Over half my cows are over 10 and buying cows at these prices is like buying a combine and needing $7 corn to make the interest payment.

Plus, so many other things have changed. There are more cows and the horse industry, at least the high end that I target has picked up. People are spending, more in horses than cows. We built more custom fence, painted more fence, and rennovated more barns this year than in the last 8 years combined. But, so far its all on horse farms.
 
I am small time beef operator. Yes there is money in cattle right now. I think it will be good for awhile but who knows. It could be short lived too. I think for the most part, everyones numbers are down. They might be getting big money out of the ones they sell, but are not selling as many. It takes some pretty good income to re-invest back into your heard to get it built back up. I think thats what alot of people are doing right now. In my area, land is selling really high. Anyone that has expanded in recent years acre wise, is probly throwing every dollar they can get a hold of towards the land they bought.
 

Everything is so high now that the better milk prices aren't making as much difference as they might. The economy still stinks. No one around here has money to spend outside of a few cardealers and bankers.
 
Some times livestock farms get spruced up after the livestock is sold off and the owner has extra time available. Until then the business is the top priority.
 
(quoted from post at 17:14:36 11/19/14) A smart farmer with revenue protection insurance should never just barely get by.
Click to expand...
Just a reminder that insurance companies are in business to make money, and to do that they have to charge enough in premiums to cover what they figure they might have to pay out, plus cover their operating costs, salaries, officer perks, and still make a healthy profit to cover the unexpected disaster, plus shareholder dividends. This isn't "free money". Someone, somewhere, has paid in, be that other farmers, or the taxpayers. That later might be wrong, as at the current debt, it's now our grandchildren as taxpayers who will end up footing the bill to cover our losses, with interest.

There are a lot of smart farmers who look at the premiums for 'revenue protection', what percentage the policy will pay out and for what reasons, and with the pencil sharpened at both ends, do the math and say "no thanks". It all depends on how much room you have to fund insurance plus all your other inputs for the season, how you want to place your bets on how what you raise will turn out and how the market might be when you have to sell it.
 
(quoted from post at 11:40:01 11/21/14)
(quoted from post at 17:14:36 11/19/14) A smart farmer with revenue protection insurance should never just barely get by.
Click to expand...
Just a reminder that insurance companies are in business to make money, and to do that they have to charge enough in premiums to cover what they figure they might have to pay out, plus cover their operating costs, salaries, officer perks, and still make a healthy profit to cover the unexpected disaster, plus shareholder dividends. This isn't "free money". Someone, somewhere, has paid in, be that other farmers, or the taxpayers. That later might be wrong, as at the current debt, it's now our grandchildren as taxpayers who will end up footing the bill to cover our losses, with interest.

There are a lot of smart farmers who look at the premiums for 'revenue protection', what percentage the policy will pay out and for what reasons, and with the pencil sharpened at both ends, do the math and say "no thanks". It all depends on how much room you have to fund insurance plus all your other inputs for the season, how you want to place your bets on how what you raise will turn out and how the market might be when you have to sell it.
Click to expand...

With all due respect, you are wrong about the insurance companies. The SRA (Standard Reinsurance Agreement) that the ins. companies have with the Feds (RMA-USDA) can allow them to make money even in bad loss years. IF, they have done their fund placements right.

The rules of normal insurance do not apply to MPCI. It resembles "real" insurance in name only.

The companies you refer to do not set the premiums, they do not make any of the loss adjusting rules, they do not make any of the underwriting rules, and they do not make any policy language or anything. The USDA does all that. Then the USDA offers the crop ins. companies a "take it or leave it" SRA. The companies do have some input through NCIS, their trade group, but not a huge amount.

If there is anything at all you do not like about crop insurance, do not blame it on insurance companies. Oh, and in most all instances, what you think are insurance companies are not. Rain and Hail, NAU, RCIS, etc. They are all "Managing General Agents" Not real insurance companies. They have to get a Front company to back their required reinsurance, companies like Wells Fargo, etc.

The Farm Bureau groups are for the most part the only ones that actually own their own Reinsurance company. May be one or two more, not sure.

There are only 12-14 MGA's that have SRA's with the govt.

I heard that the John Deere folks were bailing out of crop ins. they had lost money the last 5 years. They needed to stick to making tractors.

Gene
 
(quoted from post at 21:33:39 11/21/14)
In other words, they are subsidized?
Click to expand...

Yes, there has always been a subsidy in crop insurance. Some where back they were instructed to be "actuarially sound"
Meaning crop ins. would pay it's own way.

But the many government employees that work for the Risk Management Agency have to be paid, so eventually all that government oversight and rules and regs. have to be paid for.
It is way over my head. If somehow private enterprise were allowed to run it like real insurance, a lot of costs could be cut. Would that eliminate the need for a subsidy? Dont know. Basically, crop ins. is way overpriced to pay for the Feds meddeling, that is built into the premium, then a subsidy is put in place.

Problem is, they have always said the potential dollar outlay needed in the event of a nationwide crop disaster is more than private insurance companies could handle, therfore the need for the government.

But it's the same for all the rich folks in condos on the coast and Federal flood ins.

Figures can lie and lyers can figure.
 
You must log in or register to reply here.

Similar threads

K
Jacobson G10 Help
Replies
6
Views
429
mhb@ufe
M
F
IH 484 Loader Tractor
2 3
Replies
47
Views
2K
MARK ROBKE
M
olgentdc
Too Much at 65
2
Replies
31
Views
3K
Roger Tomfohrde
R
olgentdc
Too Much at 65
Replies
0
Views
312
olgentdc
olgentdc
P
300 RC won't reach rated rpm.
Replies
7
Views
1K
D Slater
D
Tractor Parts Tractor Manuals

We sell tractor parts! We have the parts you need to repair your tractor - the right parts. Our low prices and years of research make us your best choice when you need parts. Shop Online Today.

Copyright © 1997-2024 Yesterday's Tractor Co.

All Rights Reserved. Reproduction of any part of this website, including design and content, without written permission is strictly prohibited. Trade Marks and Trade Names contained and used in this Website are those of others, and are used in this Website in a descriptive sense to refer to the products of others. Use of this Web site constitutes acceptance of our User Agreement and Privacy Policy TRADEMARK DISCLAIMER: Tradenames and Trademarks referred to within Yesterday's Tractor Co. products and within the Yesterday's Tractor Co. websites are the property of their respective trademark holders. None of these trademark holders are affiliated with Yesterday's Tractor Co., our products, or our website nor are we sponsored by them. John Deere and its logos are the registered trademarks of the John Deere Corporation. Agco, Agco Allis, White, Massey Ferguson and their logos are the registered trademarks of AGCO Corporation. Case, Case-IH, Farmall, International Harvester, New Holland and their logos are registered trademarks of CNH Global N.V.

Yesterday's Tractors - Antique Tractor Headquarters
Website Accessibility Policy

Back
Top