Discussion Board - Starting from scratch

The big advantage I have is a college degree and 20 years of savings.

If at all possible find something else you like to do to pay the bills and get an education. THEN 5 years down the road start your farm. I think your $70,000 equipment estimate is a little more than you really need for starting 100 acres, you can always grow that later. That being said don't make the mistake I did and wait 20 years, I wish I had started 10 years ago.

I DON'T MEAN TO DISCOURAGE YOU AND DON'T GIVE UP! BUT I think your overall quality of life will be better for the long haul if you get a little education and financial foundation under you before starting. Believe me, I know how hard it can be to wait. However, my business training has paid off in spades when it comes to talking with the lenders-and I got much better rates by having a decent off the farm income.

I have documented my starting process and started putting it all into book form. The link at the bottom will get you the first couple chapters-if you are interested I would be willing to send you the rest in exchance for some input and proofreading.

If you want to see some pictures of me farming with my old stuff (Less than $20,000 of equipment for 160 acres)-check out my website at www.paul-julia.com.

I would love to share any info I can with a young guy such as yourself to prevent making some of the stupid mistakes I have made.

Best if Luck to you!

Paul

• Starting Farm Book

PS: You really know your stuff.

Ryan

Hay for me has been profitable. Been at it for years. Square bales for the horse market has been clearing better than $250 per acre per year over 5 years (first couple years are breakeven at best) and at times way better than that. I couldnt hardly gross that out of corn or beans. Main differnece is marketing. With hay you are dealing directly with the consumer in most cases. Takes a lot of people skills.

Hay well lets see. DO you have a market for it? How Many cuttings can you make? How are you going to Make it? Equipment?

Cost to plant for me in western PA for 3 acres is right around 1000.00, Now that field lasts me about 7 years.

Yeild is around 4 ton at 100 that is 400.00 . Cost just to bale is around 30 cents a bale 40-50 lbs. small square bales. equipment up keep .16 a bale. 2nd. year Things get better 4-5 tons 120 a ton 480 - 600 fert - 100 .

3 yr same a second 4th things are starting to get low for alfalfa hay but we have native orchard grass that takes over, you can no-
till it, once it get started look out. It will take over make sure you blow off the equipment from one field to the next.

Yeild on th 4-7 year are of a mixed hay , using only 34-
0-0 fetilizer at 50 lbs. every time it needs some. Yeiding around 4 tons at 70-100 at ton . 280-400. but only 100-200 lbs. of 34-0-0 .

You may get allot better yeilds look at your area. We are looking at 3- maybe 4 cuttings and hard for us to get started early just not the right weather , we have to cut 1st wee of june to get 4 nice cuttings . If you have the equipment maybe and a good market like horse people , but we have been baling for along time and still learning .

Good luck

Teddy

100 acres
$2500 per acre
$250,000 In Land
$70,000 In equipment
$320,000 total debt

and it'd take somewhere around 20 years to get paid off..... .does this sound reasonable? Also after reading a few articles I take it it might be a good idea just to buy some land, and rent it out for awhile til' I can save up some money, then buy my equiment? As for people to help me, I was considering maybe going into this together with my brother, that way I could get stuff paid off alot fast, also my dad would probably be more then willing to help (He helps my grampal farm his 3 acres he has to feed his 5 or 6 cows.) Oh, also, i know this sounds weird to me, but would if be even reasonable to think that the bank would give me a no down-pay ment loan that big? Should I start out with just a little ground and try to build up? Does anyone know of a website with articles that would help me out with the kind of question's I have?

I have farmed part time. It is really hard to make money in todays market.

A question, how much additional land do you plan to rent in your operation and what about money for annual costs (fuel, seed, chemicals, fertilizer).

I also agree with paul on the down payment. Thats why I bought cows first (I didnt have much money and the stockyards manager would front me the cows for 50% of the profit). For sure I'd say that short of some of the beginning farmer programs you'd have to take a variable interest rate and that can kill you on this much debt.

As 'constructive criticism', $70K in depreciable equipment cost for 100 acres is extremely high. You have to make over $125 per acre per year profit just to pay the equipment off (5-7 year note on depreciable assets). Land will need another $200 profit per acre per year to pay it off (with 0 down). That means you have to make $325 an acre a year just to make your payments. Now on 200 bushel corn at $3 a bushel with a sharp pencil on input costs you can just about break even. First big break down, or drought, or $1.75 corn and thats it.

I simply dont see enough profit in corn and beans that are trucked off the farm to make it work, even without the machinery cost (generally speaking its better to 'walk' it off the farm in an animal than truck it off)

My costs are too high too (my total machinery overhead is about $70,000), but are spread over 300 acres. I had to work on shares when I didnt have any money, then had to borrow money when I had a little money, and finally could pay cash as I went. Good luck!

There are beginning farmer programs that can help. Be ware tho, some really tie you down as to what you can do, they might offer lower down but you will feel like you are in a prison sentence, not owner of any property....

Now, what will you plan to grow, and what markets do you have? What will you raise, how much will it cost to raise it, and how much will you get when you sell it?

What are you figuring for equipment needed?

You are not planning to ever see any cash from this 100 acres until it's paid for, right?

Tough questions, but hearing your thoughts first can go a long way to see if it will work for you...

-->Paul

Like I bale hay and deliver it, if I can get a person to deliver it and I make more than I spend to do it I'm ahead, two ways money and time.

If you need a combineing done and you can pay someone to doit for you, 1st you don't need the cost of the combined and its up keep, and your time.

If you are working too many hours and too hard you may get sick like I did, doing ok now but had to rethink allot.

You need to see what is working and all ways looking to find a new better mouse trap. Look for profit about 100-200 an acre. Maybe buy and sell equipment side income. Do custom work. Cut firewood, I cut field edges and sell the wood. Do some hauling. There are allot of side jobs that you may find that can make you money that are farm related. Remember only so many hours in a day. Weather is ever changing, too wet too dry.

Best of luck

Teddy

Spend your money on things that will make you money. I rented land and leased/rented equipment first. I bought cows and kept putting my money into cows until I had a herd that was making me money. When I had to buy equipment I bought junk, prettied it up, used it a year, sold it and bought better. I didnt buy land until I had some decent equipment and it was paid for, and really good cows that were paid for. Then I bought land and paid for it while letting the cows and equipment depreciate. When the land was paid for then I upgraded the equipment, then the cows. Started in my early teens, been at it over 20 years and just now getting 'set'. Always worked off the farm, sometimes 2-3 jobs. Tried to save 20% of the gross no matter how little I made. Had to put off a lot of things, didnt get married until my late 20's not kids til I was well over 30.

If you have a piece of equipment that's costing more than it returns...SHIP IT!

If you have a "practice" that hurts your profits...QUIT IT!

Be ever vigilant for new and better ways to do things. Be ready to drop your "old ways" like a bad habit when something better comes along. (BUT only when something BETTER shows up. Don't switch from one thing to another, just to break even. You take a risk, with no return)

GO TO SCHOOL! You can NEVER know too much. Read, listen, and ask questions.

And my final piece of free advice (that's worth exactly what you paid for it) Be an inovator. I've always been a big fan of Muhammed Ali. I'm not a fight fan at all. What I always admired about him was his ability to take the rules of the game to the limit. When everyone else started to catch him, he just re-wrote the rules. He made everyone else chase him. Think outside the box. You'll never reach beyond the next guy if you think just like everyone else. And like it or not, farming is a VERY competitive business.

Good luck with whatever you do in life. John