Equipment and time is passing me by!!!

A good friend came over this afternoon. He was just visiting me as we both are baching it right now. With the women away we both thought we would see what kind of trouble we could get into. LMAO

He was upset with his sons. He has pulled out of the daily farming as his heath is failing pretty quick. Real bad declining eye sight being the most trouble.

The sons just took delivery on a new combine and three new tractors. The trade-ins where not four years old. He told me they gave more for the trade difference than he did for his farm. He bought the farm in 1978 so he did not steal it.

He wanted to go look at the equipment and drug me along. LOL I do like looking at "new" stuff. I just don't want to have to pay for it.

The combine is a JD 680R machine. We could not figure out half of the controls. We guess that you set the machine from the cab?? Any grain off the shoe is going right out the chopper/spreader. It looks like there are cameras to look into the shoe while it is running???? I am not sure.

The one tractor we got up in was a JD 8285R. There again we did not know what half the controls did. We just know that it cost BIG money. LOL

I have not sold "new" equipment since 2005. It surprised me how much the line has changed and how out of date I am on the systems/controls.

When we got back to my house we both where kind of bummed out. Here we where life long farmers and the new stuff would be hard for us to operate. That is hard to get your head around. I am not just talking about the GPS stuff. The general controls are confusing to me now. I am not sure how to get that tractor into a forward gear. I sure would not want to try to drive it out of the shed in close quarters. I would be terrified of hitting/running over something.

We both where talking about how we really wondered what the future would hold for our sons.

He is worried about his spending so much on equipment when prices are falling. They are farming about 3500 acres with some livestock. Can the two of them make a living on that without any outside income??? Are the high cash rents going to break them too???

I worry that I what I taught my sons may not be the best thing in todays world. I never have borrowed money for equipment. I started out with junk and worked my way up, always paying for it as I went. The newest thing we own in the equipment line is the two JD 9660 combines. They bought them wrecked so they do not have 50% of what they would have cost on a dealer's lot. Is this the right way to go??? Are the guys that are trading often doing better long term???

I have also leaned hard on the boys to not pay the high cash rents on crop land. I know this has chaffed them some and they have not been able to pickup acres like they wanted too. I am just concerned about the longer term cash flow per acre. The high rents only work with full corn, good yields, and higher prices. Anything else will not even show a profit on paper.

Three of the four have outside jobs. I told them to do that for now as they can build their balance sheet faster and safer this way. I would rather they not be farming at all compared to going bankrupt farming full time.

Just some thoughts.

1) The fact that the machinery has passed me by is unsettling to me.

2) The numbers are staggering on what it takes to farm these days.

3) How is this all going to play out??? Are we going to crash and burn like in the 1930s or 1980s in farming???

What do you guys think/see going on.

Sure the equipment and the way of farming has really changed in our generation, but one thing that has not changed is arithmetic!

China's GDP is over 30% of the world trade market, USA is about 15%. China is experianceing 7 to 8 % yearly gains and invests $1.50 for every dollar gained...and they will be faltering this year to about 4% because of lack of substancial funds. So when the world trade falls, every country's economy will also fall right along with it.

JD.....Snap!
We is gettin too old for farmin!.....
Sam

I'm betting a lot of farmers back in the day had the same thoughts you did when they traded their horses in for some mechanical beast.

yes i to have been passed by guy went to school with thought i couldnt farm right with my machinery he married right fil bought him a farm uncle sugar gave him big checks became head of farm bureau after he got sold on courthouse steps went to driving truck. many guys in this neighborhood had farms givin to them ones even got a big machine shed equiped with bar and many have been sold out. my farms almost paid for never had to much to do with govt. fought then blackmailed dad into getting farm and still farming low imput (rotational graze instead of mechanical harvest haul manure instead of buy fertilizer buy only what i need dont worry about the newest fad) still feeding cattle still driving my new tractor (1965 vintage hey its newer than me) and really making some guys mad because they cant figure how i do it and they cant

cant answer about the equiptment,but as old as you and I are,everything is passing us by! lol

It is tough because young kids didn't live through the 80's and why it made so many folks gun shy. I am probably the generation between you and your sons. I remember the 80's and what it did to farmers. I will fight tooth and nail to never have to borrow for farming. The land and pickup are on payments. That's enough for me.

The neighbor and I were just talking about it. You have two options. Either stay right in the thick of technology and not let the loans give you ulcers or you farm with paid for machinery and be happy with yields that fall behind others.

The new kids just expect to have payments on everything. That would break my heart everyday. I know that they can really do some amazing things with all of the gadgets. I'm just not willing to worry everyday whether the markets will be "up" so that I can pay for all of the things I use to make my living each day.

If you are farming with the older stuff you are behind. You are also in a little of a bind because the newest technology has so many sensors that it does not age well. Those of us who buy used end up hating technology because we never get it when it worked right - we have it after it is 10 years old and the wiring is cobbled up.

I've made peace with making enough money to sustain the farm and not being on the cutting edge. I don't have any kids and the nieces and nephews don't want to farm - it ends with me anyway. I like being in the dirt. Farming the old way makes me the most happy. I do just enough crops for the animals - I'm not growing wheat to send to Uganda.

Random thoughts. You were discussing on here around a year ago that you fellows made a big move on some high priced ground. I think the top priority is to get the debt paid off ASAP and as long as the lack of technology is not compromising production I would not worry about updating equipment. When I say compromise I don't mean plant 10 more acres a day than you used to or the same with harvest. An upgrade for you to be worthwhile should increase yield by at least 5 percent or more in my mind.
As far as high rent goes sometimes there is not a whole lot of choice in the matter and the best you can do is not get locked in long term in a situation where you recognize a lot of things need to break right for a profit. It's a gamble either way as far as losing an opportunity to make money or lose money. There has always been people that will pencil out budgets where they make 10 to 20 dollars per acre if things go close to optimum. Most of the guys here have the benefit in being in a very stable situation financially where there is already enough money to keep dad and sons households in SUV's when they turn down a landlord that wants top dollar all the time. They think they are the dog wagging the tail on rent but the reality has always been rental rates has readily moved regardless.

Sure would like to see the numbers on some of these new kids and their buying new Equipment all the time.

Twenty years ago the big farmers were the guy with 4 or 5 hundred acres and the little guy working at a factory and farming 80 to 100 was the small guy. Now the bigger guys are farming 4 thousand + and the part timers are farming or a thousand. One thing I see is after the tobacco buy out here in Tennessee the smaller farms seemed to go real farmers are just getting bigger and bigger. Just posted on here the other day about a guy here in the county ADDING on to his hog operation, a 4 million dollar hog house . The equipment thing is just following everything else more complicated but supposed to be better.

My brother and I was talking the other day about land. I had some pretty good offers from neighbors wanting me to by their land. This was in the 80's and the land was what some of my neighbors had to sell to stay afloat. I quess I wasn't a risk taker.
One neighbor had a 300 cow calf herd and finish out the calves as fats. Ended up he had to sell his home place and some good bottom ground and move on his dads place. His folks built a house and moved to town. He is still farming, but renting a lot of his ground now.
The wife wants me to get out of farming, I am just to stubborn to quit.

How old are the boys?
Do they know what they are doing?
If corn prices drop 15% will they have to hand over the equipment to the creditor?

BTW: I am not a farmer, only a fella with common sense.

I've had many of the same thoughts, questions, and concerns. I don't have any good answers. And I have a very unsettled feeling about the whole thing.
The smiling young man in the JD commercial says it all when he claims he can fix your combine from 100 miles away! Last I knew, under all that new paint and electronics, there was still a mechanical machine.
I have had some debt in the past. But with the crops and prices of the last few years, not only have I updated my machinery, I have retired all debt. I can still find a new enough tractor or combine to buy out of cash flow. (If sec. 179 really doesn't come back, I've got to do something different!)
A combine and three tractors, brand new, all at once! That just doesn't even seem right.
If we are fortunate enough to have a grandson want to take over, as long as I'm alive, debt will remain minimal, so that the ability to withstand whatever comes along is maximized.

I wouldn't say it's passing us by.I would say it just changes so fast we can't keep up.I think it all boils down to is you don't have to wait anymore.
It's all about money and the fact you can borrow it all you want.When we were young we saved to buy something.Now all you do is call the bank and they give it to you.I don't but I know a lot that dr you lease it wear it out and lease another one.We live in a give me society and that's not a good thing.
My dad and I taught both my sons old school ways.When they got in school technology took over and left us in the dirt.They still tell me on occasion to come to the 21st century.
We might not be as smart about what happens now but they got no idea what could be ahead because it's gonna keep changing and they will have to adapt just like we did.Some will make it some won't,but it's always been that way.
My oldest is a electricion by trade married into a farm family and is involved with some of the operation.My youngest is in HVAC and has no interest in agriculture what so ever.I wanted them to do what they wanted and not what I did.
Look at it like this JD,time and technology are gonna keep movin.Just hold on and enjoy the ride.

If you don't care about walking away from it all, the business advisor would say don't use your own money.

Its not my way of doing things. Walking away and letting the bank take it all burns a lot of bridges as not everyone gets paid.

Wilie: The boys are late thirties and early forties in age. They are good farmers. I mean that they do a good job with the crops and all. Their places look well kept and all.

The concern is that my friend started these boys way up the ladder. He was tight and worked like a slave an built a fine operation.

His biggest worry is that inflation has eroded his equity compared to the gross.

Example:

Just five years ago 3000 acres would have a gross of maybe $1 million. So if he owned assets worth that million he was golden.

Now the 3000 acres could gross $3 million and his assets are only $2 million. Now there could be a million short fall.

I know this is a very simplistic example but it is the heart of the matter. The equity you have could vanish very fast with todays prices. One bad crop could do it even with insurance. The margins this year are razor thin on most of the rented ground.

Lets say you lose $200 per acre on 3000 acres. That kind of lose would be very easy to do with the total cost per acre being right at $800 to plant an acre of corn with rent included. That is $600,000. That is years worth of profit.

Kind of scary times.

In my opinion electronics on farm equipment has gone way beyond their point of practical useful return for their cost.What can these machines do that the ones they traded in couldn't in terms of
$$$ returned on the same crop in the same field?
Probably nothing.Back in the 80's it was guys just like the ones you described that went broke the ones with the older paid for equipment might not have been living the high life but they didn't get sold out.Every farmer knows low prices are coming just like high prices will eventually come around.Everyone should have at least one fall back option when it comes to making a living.

In my 50s now coming from a large extended farm family and owned then sold farm ground at a profit. I conclude the following - the only way to farm and not work a regular job is to have another successful business that is not seasonal, farm ground is a good retirement program, if you don't love to farm then stay away from it all together too much work, farmers farming with junk equipment seldom file bankruptcy

The last time I checked corn and soybean seed does not care how old the equipment is. I spend more on fertilizer and lime than I ever will equipment.

Oh $300 rent is only the first 70 bushels at $4.25 if a guy could average that price next year... Leaves $450 left to pay for everything else. After inputs $100 to pay self + hands and those 3 new tractors+combine. No more direct payment knocks 50k in the pocket off most of these big farms. I'd say its a real good thing your boys didn't pay the high rents. Some of these guys are going to be in for a reality check. All of a sudden farming in the 400 to 1000 range with a nice line of mostly payed off 6 to 12 row equipment might be the cool thing.

Sold machinery to boys 6 yrs. ago, they farm my land 50/50,told them to share the risk, all older machinery that gets the job done. High cash rents will hurt these younger farmers.

Don['t worry, there will be a lot of cheap, barely used, equipment come up for sale in another 2-3 years.

If some of these guys make it that long.

if things crash there will be plenty of good used equipment for sale cheap compared to prices paid for the last few years,don't know that I want any of those electronic wonders,as long as they are working so good but let one fail then get out your checkbook a expect to pay through the nose for a nothing part that took at least 2 technicians not mechanics a couple day's to find while you desperately need it,was at a shop the other day mechanic was replacing a wire inside a joy stick control with 4 micro switches said it cost 700 dollars for the assy.,in reality it might have contained 20 dollars worth of parts

Here they are paying 50-60 an acre for rent. Fields run 20-160 acres. Kinda sandy and to break 200 BPA on corn it's got be irrigated and inputs alone are running about 350 an acre. Add in fuel, depreciation and the electricity/fuel to run the pumps. With corn at current prices I don't expect them to be spending a lot of money on new equipment this year. If they do they could be digging a hole they can't get out of.

Rick

There really has to be an adjustment here. The world will not pay $4 corn, people will eat less or produce more the world over at those prices. Never mind the 7 or 8 dollar corn we had for a short time....

We can't afford $350 a bag seed corn, don't care how good the traits and breeding is in it. $125 to $150 an acre to the seed company doesn't work at $3 corn, just doesn't.

Fuel prices are going to stay high, with the low dollar.

Some farmers will make it through the adjustment fine.

I'd sure hate to be an equipment dealer. Everyone in farming bought up and bought new in the last 5 years, there is a whole lot of excess equipment out there. Times get lean, and no one has to go to the dealer for 3-5 years.

That will be very, very lean times for dealers. When the mega stores fold, what does that leave for us to get parts from?

Around me most farmers run 300-600 acres of row crops and have either an 8-5 job or else trucking or other second job. I think they are in the best shape to get through.

Those with the mega farms as the sole income, well when it blows up it blows up big, how do you recover, you just have to walk away. And done.

Paul

More than that, it is just straight up stealing to walk away.

I despise that our society comes up with a way to get around paying our debts. Debts are debts whether the law sees them as such or not.

I think that anyone that stands still will have time or technology passing them by.

Look at it this way....
Do you really thing you could make a go in any type of farming today using your grandfathers bushels per acre; acres one man can handle. You could even say the same thing about milk per cow or cows milked by one person.
I would assume your answer is NO.
So how can you expect your grandkids to make it in farming using your bushels per acre; acres one man can handle.

There may be a spot for a small farmer using outdated equipment; but just like the big box stores have run main street small town store owners out of business the BTO farmers will run small time farmers out little by little.
What does a small time farmer have to sell that a BTO can not offer. It sure is not quality of product. The only thing I can think of is a small operator can farm small tracks of land better than a BTO.

There was a piece on the AG show a few weeks back about tractors that drive themselves and equipment that reads the health of the plant as it passes over it to put down the exact amount of fertilize or spray that each plant needed rather than working on a field average.
They showed 1 guy running a lead tractor. 2 other tractors were just following the lead tractor so 1 operator was doing the work of 3 people.
You have to wonder (while this new equipment may cost mega bucks) how is a farmer to compete with a neighbor that is doing the work of 3 people and saving cost on fertilizer and spray by only using what is required.

I know it's not cool to be the guy with all the old equipment but I'm all for owning old equipment and lets spend our money on soil tests, nutrients and good seed. If a guy is making money hand over fist then tell him to buy some land.

A guy can own 5 old combines and 5 scrapped ones for parts cheaper than he can own one new one. If one breaks down just jump off and get on another one. Perhaps a high houred machine has more breakdowns and is of lower capacity but who cares if you have a pile of them. Farmers are no different towards new equipment than teenagers are with new cars. Its a fun thing and a pride thing to show your "prosperity" to the neighbors. It will almost always be cheaper to drive what you have rather than trade.

A guy can also own a couple or three 4760 or 4960 Deere tractors cheaper than he can own a new 8000R tractor of similar capabilities. The new equipment has a guy tied to a dealership. Other than an electronic gauge cluster the old ones will not be obsolete for many years to come.

I just don't see new equipment ever paying off. Corn doesn't care if it was planted with a $250,000 planter or a $30,000 planter.

Let Deere worry about it, & sit back & watch. I wouldn't have done what they did; but I don't farm 3500 acres. Its rare in my area to see a farm that big go bankrupt! As for new equipment... I think manufactures don't realize the more You add to a machine; the more likely it is to not work like it should. Give me 3 IH 1066's, or 1466's, or 3 JD 4520's, something like that. I could probably do almost as much in the same amount of time, & a heck of a lot cheaper too!!! I have had more trouble with new equipment than with equipment from the 70's, & 80's!

Since there are so many variables on pricing on everything involved from inputs to yield to the prices paid for the crop. it becomes VERY easy and tempting to ignore the accountant especially when accounting is done in house. Denial and/or unbridled optimism and sometimes the "we're to big to fail" or "what else would we do" scenario. We all know where it's headed eventually but most of us won't be here to see it in it's finality.

I don't know how guys can sleep at night. In debt all their lives buying the big dollar new stuff with bank money knowing they can't pay it all off with the returns from their crops. I guess they figure as long as they make the payments and live good, being in debt is part of the business. I hate to owe anyone money.

There will be plenty of used equipment for sale in a couple of years,but,it will not be cheap.

from experience...


If you are out 1 year, you are out for good if you can't catch up.


If your house is paid for and your farm is paid for, it still won't buy a new one.


I am creeping to 2004 by this November. By November 2016 I will be at new. if I don't understand it, that is my fault for wanting what I don't understand.


Let's just hope it keeps going like this. I don't want to understand the 2018 models. I want them to dazzle me, and make me money. In the end, making money doing what you love is the goal.

If I can make money I am going to keep going.

If I loose money, I am going to keep going until I finally get ruined and have to work at Burger king. I won't have any hard feelings. If I can do it, I will do it better than anyone.




You are baching it and you didn't mention anything about too tall tina and the happy hips dancers? You must be in need of some young guns to set you straight. Don't forget what brought you to the party.

JD you"re just bummed because the new stuff has so much strange adjustments.
Remember the basic way the equipment works hasn"t changed. Corn is still stripped off the cob the same basic way and beans come out of the pods the same way. All the new stuff is to make it easier for the operator to set the machine up; BUT is it? I contend you have to get out of the cab and look at the what"s on the ground behind the machine to decide just how to set it up. There"s a gentleman around here that really knows how to fix equipment but he doesn"t know how to set them up. Every time he says "OK you"re good to go" I"ll start then get out look at the ground behind and into the tank then make a few adjustments and repeat until it"s combining clean with as close to nothing on the ground as possible. The field doesn"t turn green 2 weeks later. New equipment doesn"t work like that.
I didn"t have the previlege of starting like you did--not a bad thing just the way it was. My job move from Washington State to Washington DC and 100 miles from my Grandfather"s farm. My Aunt, owned it, needed someone to farm it so I decided to. Bought some old equipment and my second cousin gave advice and i borrowed other equipment or hired out work till I could purchase my own. Learned what I could do and what I couldn"t and 4 years later bought my own place, still 100 miles away. My cousin taught me well and I also learned by listening and watching the older farmers and younger ones. I"ve watched young guys get big ideas buy big equipment, pay high rents, hire people to do the work and ride around giving direction--and go bankrupt in less then 5 years. I watched a younger farmer from a successful farm run his equipment dirty and not repaired, listened to a good mechanic complain about the work to keep that stuff running and then see it burned.
Read the latest Progressive Farmer there is an article about a farmer in my area (Northern Neck of Virginia) and how good he is doing. That article only hints at the back story.

I think you taught you your sons the right way. Maybe they can purchase new equipment but Ild bet they don"t just blindly trust all the sensors.

Amen to the fancier the equipment the less that works! To tell you the truth even some of the stuff from the 70's had stuff that doesn't work on mine now and I wish was never on there because I don't need it and it just bothers me that its broke. Like combines, I'd take a reliable new "6600" any day if I could get it brand new with only threshing updates. I want to save the percent of crop that the new ones do, but I'd be happy with the 6600 capacity and comfort. Figure its a job and I don't need to be overly comfortable and no reason I can't run a little later at night on corn.

I am sure some here will see your rental rates and get super excited about moving to your neighborhood as a "deal" could be had. People do not realize that some of this ground is highly variable in terms of productivity versus the loamy deep prairie soils. Some ground around here can give you 15 bushel beans or 50 bushel beans without an extreme such as we saw in 2012. We see very little rent of 300 dollars an acre or more.

If I remember correctly, when we lived in Manchester in 1978 farm land was selling for $3,300 an acre, which most people thought at the time was too high a price. I'm sure your neighbor is aware that the new equipment may take away the land that he worked so hard to pay for.

Your friends dilemma reminded me of the old saying: "Shirtsleeves to shirtsleeves in 3 generations". Sometimes it happens in only 2 generations. I've seen it happen many, many times. A lot of the "next generation" can not handle having a good start handed to them. I only know of one family in our farm neighborhood that the 3rd generation hung on to it and did well - but the 4th generation in that family is going to lose it!

Maybe the next generation should be deprived until they figure out how to claw their own way up in the world and then hang on to it!

Working in the equipment industry, I saw a lot of retail contracts for equipment that I knew the buyer would never be able to pay for the way things were with the farm economy back then. However, they wanted the equipment and wouldn't listen to any advice that they were getting themselves in financial trouble.

100 acre farmers wanting to have the same $200K equipment as the neighboring BTO"s. That dog won"t hunt (for long).

Only thing there is, you can spend $60,000 each on three tractors that will do the job of those three, $300,000 tractors, and the difference will cover more man-hours for hired help than the more "modern" guy can ever save.

No crash. Balance sheets are too strong particularly those buying land because the banks have made this a requirement. Also revenue crop insurance is a great socialist plan to keep most farming. However implement dealers might eventually take a beating when the roll-over stuff no longer is attractive and they are stuck with a bunch of machines they can only sell at a loss.

Hope that S series combine pans out for them. The guys around here that bought them have now traded for CIH combines. They have all kinds of trouble with them, and poor harvesting quality as well. The guy 1 mile south of me has run Deere machines for many years, but one harvest with that new S670 was enough to get him to switch to red. What a shocker that was!