Intersting turn in the rent/land aditudes!!

The high rent fellows are starting to fracture. My sons do a lot of custom farming or custom work. They have picked up 800 acres since the first of March. All of that is from fellows that had high crash rents that did not get paid and the contracts voided. The renters have started to have their banks shut off the money over a certain level. So the cash rent price is starting down some.

Now for the price of land selling. I know of four farms for sale right now. They are all priced at over $7500 an acre. They would have broke $10K just two years ago but are still on the market at $7500 right now. The one that ahs sold recently brought $5500 but is not the best ground. So the bloom seems to be off the crazy high price of land too.

Same here . I know of two farms for sale near me . A One hundred acre farm ,with old house , but good land , $8,000. per acre . No offers. And The second farm , two hundred acres , with a new house at $10,000 per acre , no bites there either.

(quoted from post at 09:37:26 04/03/16) Same here . I know of two farms for sale near me . A One hundred acre farm ,with old house , but good land , $8,000. per acre . No offers. And The second farm , two hundred acres , with a new house at $10,000 per acre , no bites there either.

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Got a place near me, over 300 acres, over 200 tillable, compared to the soil in the Red River Valley or much of IA pretty poor, 45 BPA beans if you put in enough fertilizer. One OK building on the farmstead and it isn't the house. They are asking just south of 600,000. Been on the market for almost a year.

My banker here said they have no one that they are cutting off this year but if prices stay the same he says next spring there are a few who won't get operation loans.

I'm not confident in the debt load some of the local guys are carrying right now. Lets just say there are no vacations in their planning right now.

Rick

Bruce I have a bet with a couple of old friends that two of the farms for sale will sell for half the original asking price. The glory days of high grain prices are over for now. It maybe another generation before those prices are seen again. The late 1970s grain prices effected a entire generation's view of what grain would bring. many base their marketing on those few years of high price for many years after those prices where a dream. I look at the 12 and 24 month out look and then base my marketing off those real life numbers. Not what it brought two years ago. This farming business is not hitting home runs but just keep knocking out those singles all year long if you can. Too many swinging for the fences and they will be busted soon. I personally know three high flyers that got their wings clipped this spring. If they do not watch things close then they will be gone next year.

I think you and I would get along well in our way of looking at farming. Update some in the good times but keep things sane. You replaced some needed iron and did a reasonable expansion. These will serve you well in the years to come.

I only know of one fellow clear shut off. Most of the ones are just getting Caps put on what the banks will lend on. Meaning they can give the high rents but the cash will have to come out of their own pockets not the banks. Plus the bank want theirs back first. LOL

I have been watching what some of the "BTO's" as well as the "Wanna Be BTO's" have been doing. Some continue to buy land at unrealistic prices, while others are stuck in multi-year rental contracts that will only produce a negative bottom line. Just lost a tract this year on account of some issues completely not related to the farm itself, but that is another story. Have a small operation with a decent line of equipment that could allow me to cover substantially more acres than I do now. My job in town is too lucrative to give up at this time and go full time farming, and that is much of the reason why I am sitting tight. I also have two children still living at home and college costs to deal with, too. I have been repeatedly offered a tract of land near where I live, but again, I am not going to take on this tract of land when I know the rental agreement, particularly the cost per acre. I am more than happy to see this "neighborhood south end of a north facing horse" bleed red ink on that tract for the next 3 years. I am concerned about all these very young people who just entered the farming business, where their fathers have worked to help make a place for them, and it did work well for them over most of the past half dozen years, and now things look rather bleak. I did learn a valuable lesson many years ago. The time to get into something (like farming) is when there is a mass exodus out. I suspect there will be opportunity, but it will take a bit of time to ride this thing out. My banker friends have continually told me they are telling their customers to trim at least $100 per acre from their cost of production. The landowners are not quite ready to let that much revenue go, and the costs of inputs have not diminished much either. I am not sure what these people are going to cut.

There still going to need land to rent but sometimes you wonder who's fault it is the banker was willing to give money when times were good but times get tough who gets stuck?
I'm thankful that when I got good rent I put the majority of it back in the farm. I'm sure I will still get good rent as the farm is worth it . One thing I have confidence in is that the renter is willing to look at opportunities to increase the value of his product instead of just beans he sells seed beans he is also under 40.
My situation is also different having no family and not much expense .
I have always said it's not what you make it's what you spend

Read in a farm magazine that the government economists said that a few years ago, the big operators got $1 back for every 54 cents that they spent to produce a crop. Last year, they spent 99 cents to get a $1 return. The economists estimate that in 2016 that the BTO will have to spend $1.11 to get a $1 return. I'm just quoting; don't blame it on me.

Not surprising as the checking accounts are not as fat as they were a few years ago. Some guys will still employ a strategy in that regardless of how disproportionate the checking account is to the acreage for sale they will throw every thing including the kitchen sink to get it so nobody else will. The only problem with that is at some point they get to pay the appropriate property tax levy on that tract.

12-13 dollar milk is slowing down the smaller dairy guys here. A couple years of those prices will slow down the mega dairies. My problem locally is quite a number of landlords are well insulated from the general economy so they will have visions of 2010-2014 commodity prices dancing in their heads for a while yet. Our ground locally is not worth the money envisioned as it is 150 bushel corn/ 40 bushel soybeans in a good year. It's going to take a lot to clear grain and milk inventory so I don't buy the bull market talk if any is out there. Milk could stay where it is at for quite a long time if we compare to past cycles.

If it's good land, those two places would have been sold here before the last nail was driven into the for sale sign. Still some land moving at 12000 per acre. Go figure..... ben

I don't know that you can blame the banker too much. If their customer is going to compete at all then they have to take on the old money farmer, the crooked money farmer, the big business farmer (machinery or fertilizer dealer), and the new inheritance farmer to name a few.

I'm curious... are your sons then custom farming for the landlords, or did they rent from them? If they rented it, how much less did they pay than the prior tenant?

My sympathy goes with the guys who are just trying to put groceries on the table for themselves and their families. The trouble around here is that corn and soybeans aren't really the major money makers. Potatoes,dry edible beans,sugar beets and dairy are where most of the BTOs make their money. They have money to back them up and keep them going. I'm just tired of seeing friends and neighbors go out of business. It's down right depressing every time ones quits.

The new big time BTO that took over some land here last year is working around 125,000 acres. As fast as that expansion has taken place,just the equipment and labor costs have to have him drowning in red ink,but he has Amway money behind him,so I don't expect to see him disappear too soon,unless the DeVos family wises up and decides they've written that operation off their taxes long enough.

My sons are custom farming the ground as the land owners still think they will get rich with the "high" commodity prices. The one fellow was offered $350 cash and got mad about it. He had been getting $525. He will be lucky to clear $150-200 if corn stays at $3. He should have just rented it for the $350.

That's good. Kids get revenue with minimal risk, and the landlord gets a lesson.

$350 is $200 more than I pay for anything here. Guess I'm glad to live where we do.

I was thinking about my neighborhood there is as you say old money and sometimes I've seen money loaned not because of a person abilities but instead because they had the best name or story. Different times I have tried to borrow money and because I was on my own and ran with old equipment farmed organic didn't use government money I was turned down . My neighbors could spend money like water buy new equipment on every government program there is and they have no problem. One neighbor had 100000 written off his bill and they have loaned him money to buy two more farm's since. I've seen the right people who lost farm's and me in spite of no ability to borrow money still hanging on it still hard to believe that after all these years and the farm paid for I can't still borrow apparently I'm not a yet a correct farmer.

(quoted from post at 11:09:59 04/03/16) I don't know that you can blame the banker too much. If their customer is going to compete at all then they have to take on the old money farmer, the crooked money farmer, the big business farmer (machinery or fertilizer dealer), and the new inheritance farmer to name a few.

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I'm not blaming the banker. My BIL told the guy who does his taxes where to go. The accountant wants him to be in debt on the farm all the time for tax porpoises. BIL hates debt. I know other guys who follow that advice to lower their tax bill. In the end it's the individual who makes the decision. Like with the housing melt down. No one forced anyone at gun point to buy a house they really couldn't afford. No one farces a farmer to amass debt load. Like with anyone, if you can't balance that debt load you can't pay for it and credit gets shut off.

Rick

The accountant wants him to be in debt on the farm all the time for tax [b:655f667735]porpoises[/b:655f667735].

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Yeah, but tax porpoises aren't nearly as annoying as the welfare dolphins :wink:

Back in early 2000s, we took over the farm from my folks, remodeled the house, etc. Was way more debt than I liked, but way less than most people our age were into for just a home mortgage. Paid it all off in less then 11 years, started with the college tuitions and upgrading equipment.

About that same time, the 40 acre open ground right next door sold at auction to a local car lot wheeler/dealer with a farm background. 40 acres for $6K per. He tried to perc it and build houses, then threatened to put in a dirt bike track, but eventually just rented it to the same guy. About 3 years ago the for sale sign went up at $12K per acre. Seems he wanted to cash out to build a new dealership. It still sits there, the sign has fallen off, but not sold. None of the three BTOs have jumped on the land, it is marginal at best. But being next door, it has always intrigued me. Right now, I can't justify offering him even what he paid for it back then- I don't even use all the land I own now, what do I need another 40 for? And even at $150 per acre rent (high for our area), I can't see it pencilling out

Connie: The custom farming actually works good for the land owner and my sons.

Most land owners are in a high tax bracket. So they can fully deduct the cost of all the hired farming operations directly against the current income. Where if they own the equipment they would have to depreciate it over time.

Then on my sons side they can have direct income to help pay for their equipment with less risk that cropping larger acres of ground. It works for both with good communication. Some of their customers have been doing this for over 10 years. Mostly older fellows that want to still be involved in farming their ground but do not want to update equipment or have the labor to do it themselves.

My son was fortunate to have started farming when the price of milk was high and established himself without going to the banks. At this point he is doing okay, but he is being VERY careful about non-production expenses. He also planned is start realizing full well that $28 milk (or anything close to it) was not going to last.

I don't farm right as you all have noticed with my messages here and at NAT.

I'm way too small.

Have pretty much kept out of debt.

Was pretty funny in February going to a bank for a loan on that land the neighbor sold me, walk in the door not knowing anything much about loans and not having much loan history. I brought a few papers along with me I hear bankers like to see, just random tho. While I've done business with the bank in the past I only had a $50 account there the past few years, no real experience with that back. Went to thrm because our neighbor was using thrm and liked them, and it made the extremely tight timeline we had easier if I used the same bank.... Our neighbors put in good words for us I guess.

After about 45 minutes he put his pencil down and just started chatting with me, not taking notes any more.

When I left the loan wasn't going to be a problem it would be under 5% (ended up 4.5), they have an investment branch if we wanted to visit with them, they also have personal loans if we need some funds from time to time to bridge across time periods, and so forth.

It went better than I thought it would. Didnt know what to expect. I realize my skimpy paperwork would have to prove out over the next couple of weeks, but sure was fast and easy to get a loan, bout an hour and a handshake.

I'm thinking of putting oats on half of what we bought, clearly a wrong crop to put on corn/bean land. And my big tractor was in the shop missing an engine at the time this was going on. Also, the place my wife works was put up for sale, never know what happens there.

Life is good.

Paul

I have seen a neighbor BTO go through a process of "restructuring" twice, coming back stronger each time, buying more land and putting himself deeper into debt each time. Probably will not happen again..........................he has a rich son-in-law who will "help himself" by "helping him," is what our neighborhood suspects. The FFA creed, when I was in high school, started out, "I believe in the future of farming." In our neighborhood, as it was some of the kids of the BTO's who were officers in the local FFA chapter, the cynic's take on the FFA creed was, "I believe in the future of forgiven debt!" Yes, I am a bit of a cynic. Some may ask why. I will tell you why! I wanted to farm since I was old enough to drive a tractor (early 1970's). I put a lot of my spare time into working on the family farm as a kid, an adolescent, and as an adult. There was not enough there to make it work for me, particularly when there was a very difficult family partnership with other family members involved. I now do farm on a part time basis, as I had to wait until my father and his siblings split the operation up and my father retired. These same BTO's, who went through debt restructuring and forgiveness, now have sons who have taken over and hell bent on swallowing up every piece of real estate they can get their hands on by either renting, or buying, or having a "silent backer" purchase the land so they can either custom farm it or rent it. My dad chose NOT to go up to his neck in debt, banking on a debt restructuring. He borrowed money, and he paid it back, just as I have done and will continue to do. I have been actively managing my farm and actively operating it. I have a good, well kept, and low houred lineup of equipment, that I managed to acquire over the past 9 years. I was fortunate to have the good grain prices to be able to do this. I may not ever be able to increase the size of my operation substantially, but I WILL be in the position to take on more if/when the opportunity presents itself, or I decide that I am done working my full time job in town. I really don't have much time or sympathy for the vast majority of the BTO's. I don't buy their line of BS in how they had to expand their operations, using the tactics they resorted to, in order to sustain their operation. Too many have been driven by greed and arrogance.

I'm happy with our cropshare arrangement; 2/3 to the lessee and 1/3 split among my sisters and me.

Well said ny 986

Not starting to change around here yet (South Western Ontario). We are $200-$500/acre cash rent around here. The $200/acre ground is wet marginal ground that would produce 30 bushel beans on a really good year. The $500/acre ground is organic that the organic guys want a 10 year lease on. Most of the land falls somewhere in the middle around $300 to $350.

Land rent and ground prices are staying about the same in my area...$75-125 per acre rents 125-150 bushel corn,30-40 bushel bean,and 50-60 bushel wheat ground...I did hear of 2000 acres being rented 30 miles north of me for $175 per acre..

Good tillable ground goes for $3,000-4,000 per acre and is creeping up some....Things never got crazy in this area..

The bto I worked for for the last 5 1/2 years is looking for more land, from what I hear. I'm pretty sure he is going to lose 2000 rented acres unless he pays out the nose for it. The landowner found out that after 5 years there, I still qualified for subsidised housing, and they haven't been getting along lately anyhow.

Others in the area are paying what I was making plus a vehicle, rent, and cell phone, and one is running 30 cattle cost-free for their hired man. His cousin is paying his hired man, who started a few months before I did, $7 an hour more with 40 hrs a week guaranteed, plus a truck to drive.

But we couldn't get engine brakes, trailer brakes, and cracked trailer frames fixed because it might cost too much. And I didn't grease fifth wheels enough, though the one that took all the work this winter is the one with the trailer that can carry 100,000 pounds of grain, and on occasion has, by volume.

I was getting 2-3 hours a day the last month I was there, the guy I worked with was working 8-9 hour days on salary.

And he wonders why he can't find help. Paying 12 an hour while everyone around you is starting at 15 is pretty much going to guarantee you won't. When the mechanic they hired left 2 years ago, they missed out on a couple guys who went elsewhere, because someone else offered them pasture space for their dozen cows they had.

It's like they don't even want the guys working for them to get ahead, because we might be more competition for them someday.

I was told by one of the biggest guys in the area that he doesn't really know me but from what others have told him I'd be worth 50 a year just to have another hand around, but he can't justify it with $3 corn, with $5 corn he'd have put me on in a heartbeat.

I really wish the people who never really had much to say to me til they found out I was looking for work elsewhere, would have told me some of the things they have told me now that I'm no longer there, about 3 years ago.

It's funny, I've had 2 guys I've delivered distillers to, tell me in the exact same words, what they thought of me, sticking it out there as long as I did.

This reminds me, he still owes me $500 for a parts truck I sold him because I don't have any place to put it now. Only been a month.

yea to much like late 70s early 80s where is this going to end? i lots lots of btos are in for a bitter lesson.

(quoted from post at 13:19:15 04/04/16) .... I really wish the people who never really had much to say to me til they found out I was looking for work elsewhere, would have told me some of the things they have told me now that I'm no longer there, about 3 years ago.

It's funny, I've had 2 guys I've delivered distillers to, tell me in the exact same words, what they thought of me, sticking it out there as long as I did.

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T in NE, we had a similar situation, folks being quiet and wondering about us and not saying anything. Not an employment situation but a mentor of sorts for our small llama raising and showing operation. We stuck with her when others started to not have anything to do with her and when we finally had a big blow up with her people would then ask why it took so long for us to smarten up. She was basically using us and some others for her own purposes and talking smack and telling lies about others. Afterward I heard back that she said some very unkind things about me personally when I was running for the Board of Directors for our national registry. Now no one in our industry has anything to do with her, she's driven off all the friends she ever had. In a way she was the BTO of our industry that got a comeuppance when llama prices fell and she drove off her friends.