Land Ownership

[grassfarmer]

A point that often comes up in the discussions on cow/calf profitability is the burden of interest and land payments. It sounds to me like there are far fewer people here who actually have bought and paid for, or inherited, their landbase than in the UK where I came from.
Why? are none of the people who were given title to a quarter way back still farming them ? What proportion of ranchers actually own their landbase today, and I'm not talking about leased land here.
Just curious so I can understand the industry better.

[dalek]

I don't know about the west, but here in Ontario it depends where you are. In much of Southwestern Ontario, land rents are over $150 per acre per year and buying land is out of reach for most. Here, similar land with similar yields could be bought outright for $800-1200 per acre and our rent for the land we rent varies from $0-17 per acre, yet southwestern farmers keep bidding rents up and then complaining that they need more subsidies to cover their costs.

[cowman]

The land where I live is very expensive. I inherited all except for one quarter I bought as a young man in a sweet heart deal from my uncle. I won't get rich selling it as I intend to give it all to my son(already signed some over). My mother and father bought all their land right after the war very cheap. My father farmed that land on crutches the first couple of years as he was shot up pretty bad in Germany. He had a lot of help from his brothers,father and uncles. He was crippled all his life from his war wounds but was about the hardest worker I ever knew.
Now working hard is okay but I've always liked to get paid for my efforts. And farming doesn't really pay all that well in comparison to a lot of other things. Which is why I believe we see so few young people involved anymore. When a young man can make a hundred grand a year drilling on a big rig why would he want to starve growing grain or cattle? He can have the fancy pickup, take the vacation to Mexico, have all the toys! And he doesn't need a couple of million in assets!

[countryguy]

Cowman,I know this is not the right way of thinking but looking at your land values today and looking at what was paid for it,would you not consider that apreciation in value enough of a return that you don't have to figure a return into your numbers?I mean owners of such land got rich(net worth wise)by simply doing nothing.

[kato]

We did the impossible. Bought it all, and inherited nothing. We bought it from family, so didn't get too ripped on the price, but it took us years and years to finally get some paid off, and safely in our own name.

We have one quarter that we have bought three times now. Had it almost paid off all three times, then hit some kind of financial wall, and bought it over again. We call it the equity quarter. The last time we bought it was in the price crash of 1995, and it is almost paid for again. Who knows? Maybe we will buy it again in the spring?

Land in our neighbourhood just doesn't change hands very often. The price is higher every time, when it does, though.

[smcgrath76]

Interesting thread, as we are going through the throws of this in our operation ourselves. Nothing you can grow on a quarter will pay the mortgage (except maybe marajuana - assuming the government doesn't open it up and put in into the CWB) with the local prices. Land is largely locked up and any strategically located land or land for rent is hard to find.
Two questions:
How do you afford to live while you are building your equity?
If we rely on land values to finance our retirement/etc. then are we really farmers, or just real estate investors who need a hobby until we turn over our land base?
Additionally, for family operations looking to turn over the farm to the next generation (many farms are in this spot) the land base is the retirement fund. Effectively many farmers may be asking their children to finance their retirement by paying an appreciated market value for land that cannot produce enough to pay the mortgage.
I see this as a huge problem when I look at the average age of farmers, and how they plan to finance retirement.

[cowman]

Sean: You have brought up some excellent points. It is something everyone of us asks himself. I guess I approach this from a viewpoint that is not built on necesssity of a retirement! I will not live a long time but I'll never forget my fathers words when he signed land over to me..."This is not yours! You are the one who gets to take care of it until you pass it on. We didn't come here to be slaves! We will be free men!" Flowery stuff... but I bought into it!
Sometimes this old garbage from the old country can be passed down for generations! Maybe a good thing?

[achiliak]

Retirement!

What is it?

My Dad has been in the throes of "farm transfer" for a few years (he is early 70's, I am mid 30's). At first I resented him always being around, still do sometimes. Then I had kids, a desire to do a few other things like travel locally and explore other ideas for farming. With my Dad always around, he will take the kids and patiently teach them things that I do not have the time for, he will cover for us and do chores if we want to go somewhere for a day or two, and he is still teaching us the good gardening skills he has. He also really helps to develope the ideas into workable scenarios with a smaller liklihood of failure. In a word, he is indispensable. If he "retired" to any other place, we would not have him here to help our lives. I also think he is happiest doing exactly what he has done all his life.

As for land values, what they sell for and what they are worth are two very separate figures that are getting farther and farther apart each year, just like the spread between the interest you pay and the interest you earn.

[cowman]

countryguy: Without a doubt! The price my dad paid for this land was about $26/acre in 1945! Today it is worth about $2500 /acre! Not too shabby an investment! Besides for that it provided him with the means to expand and raise six kids and end up quite well off. My mother was able to turn the land over without selling it and still live well.
achiliak: You are oh so right about the market value of land and what it is worth by what it can produce. With the cost/price squeeze there is very little land that can ever really pay for itself...at least in my part of Alberta! I think that is why we are starting to see more things like market gardens and berry growing here. Which is a good thing...I sure like those type of operations over pig barns!
Unfortunately we also have a very short growing season and not very stable weather. Froze hard here the last week and it was very dry all summer.

[cropduster]

And for the view of your next set of competitors go to agbrazil.com .Land values on this continent are going to be shaken up and/or we as ag producers are going to continue to be marginalized.