Expansion?

[cowman]

A neighbor phoned me the other day to chew the fat and pick my brain(no smart comments please!). He has about 100 cows and is always scratching for pasture. He used to be a pretty big grain farmer but got sick of working for nothing and diversified into cattle and export timothy about ten years ago. When the drought and BSE came along he bought a small oil related business and he has done very well with it.
He still has 600 acres in crop land but intends to move out of grain and increase his cow numbers. He figures he may not make any money but at least he will not be losing as much as grain farming!
I told him I thought it was not a good idea. I suggested he consider renting out his crop land and concentrating on his real money maker...the frac business! 600 acres at $60/acre is $36,000 in his pocket with no risk and no work! He is still fairly young and hasn't got too lazy yet, but I tried to tell him the time will come(all too soon) when he might not want to work as hard?
I am always amazed that people want to buy themselves more work for little return? Any piece of land put up for rent or sale immediately draws a feeding frenzy of workoholics!
I wonder if there are a whole bunch of frustrated "wantabe cowboys" just champing at the bit to get into the cattle business? Now that the border has opened will there be an influx of newcomers as well as an expansion by others already in the business?

[cswilson]

Are there still plow jocks willing to cash rent land for 60/acre or is that land you can grow dope on and not get caught. In our area if those cull cows don't drop out of sight I think you'll see a year or so of consolidation while guys get there herds straightened back out-lots of old cows to get moved. Ourselves were going to cut back to what my place can carry that extra 190 hfrs in 2004 kinda pushed things.

[max]

There maybe some people really wanting to get out this time for good, now that bred cow/heifer prices are going to be up. That being said the real time to expand the cow herd, if your buying, was in '03 when cow prices were lower. The secret in making any money in the cattle business has always to buy the cattle right[cheap] in the first place.

[PureCountry]

I am truly fascinated by this constant attitude that livestock production is a sure way to lose money.

I am going to say it once, and really try to never say it again...POOR MANAGEMENT IS A SURE WAY TO LOSE MONEY.

It can happen in the frac business just as easy as the ag. business. I've seen it lots of times. If it's done right, livestock production is very profitable. There are alot of examples of it if you take the time to look.

Check out a couple of sites like grassfarmer.com, or stockmangrassfarmer.com, acresusa.com, holisticmanagement.com or a few others. They're full of examples of real farmers and ranchers who increased revenues, decreased expenses, and made a profit. Some of them are direct marketing special products;ie., pastured poultry, grass-fed dairy products, grass-finished beef, organics, etc. Others just have a unique marketing plan.

The point is, if it's done right, it's profitable. So stop saying it isn't, just because it's agriculture. I'm sick to death of hearing, "There's no money in farming..." or, "Why would you raise cattle?", "You're throwing your money away." BULL$H!T

If there's a will there's a way, bottom line.

[PureCountry]

I have so side with cowmans view of take what will make money and move on...

What facinates me are those comments that where there is a will there is a way....

My handle may be 'rookie' but don't get hung up on it because it is a little misleading...

I had a heck of a lot of will in the past, but speaking as someone who has had to startup on my own dime, in an area where there is plenty of competition and doing it not that long ago I think about renting it out or selling alot more now. Expansion.... no more.

As a business person first and a cowboy second, I simply look at the numbers, trends and my own situation and really find it hard to justify agriculture for me. ME.

Its not for lacking will. Or brains or experience. It is because the numbers are increasingly not atractive anymore, in my world.

And since I am the type who likes to EXPAND his mind and pocket book too, I amm willing to hear an opinion proving otherwise.

And I am not trying to sound negative either.

Well, baby is crying, gotta go.........

[PureCountry]

I have so side with cowmans view of take what will make money and move on...

What facinates me are those comments that where there is a will there is a way....

My handle may be 'rookie' but don't get hung up on it because it is a little misleading...

I had a heck of a lot of will in the past, but speaking as someone who has had to startup on my own dime, in an area where there is plenty of competition and doing it not that long ago I think about renting it out or selling alot more now. Expansion.... no more.

As a business person first and a cowboy second, I simply look at the numbers, trends and my own situation and really find it hard to justify agriculture for me. ME.

Its not for lacking will. Or brains or experience. It is because the numbers are increasingly not atractive anymore, in my world.

And since I am the type who likes to EXPAND his mind and pocket book too, I amm willing to hear an opinion proving otherwise.

And I am not trying to sound negative either.

Well, baby is crying, gotta go.........

[PureCountry]

My first post vanished......#$%^

If ya can rent for 60 an acre, I'd go for it and focus on the patch.

If you like playing cowboy and you still have enough money, expand with more cows, heck, even rent some moreland that would go for 60 an acre or even buy it ( what would it be per acre then any way? ) Cows should pay for it soon ,Right?

I mean if there is a will there is a way. There's just gotta be .

[max]

I whole heartily agree with you PureCountry, the constant negativity for some people gets very depressing and degrading. Some will argue that it is the reality of the industry, but my experience has shown me that those people have usually been burned before because of poor decisions. It has been said to sorround yourself with positive people or situations during times of high stress(bse), I for one had quit logging on to this site for awhile because of what i seen as constant negative discussion at times.I just started back about a month ago and have found most of the threads rather interesting. That being said money can be made in any industry providing the management and the will to change and adapt are there.

[cowman]

Well I hope I haven't been too negative boys! Reality can sometimes be fairly tough to take.
Having said that I will note that my son is actually expanding. Bought another 320 acres and forty cows last year. Going to hold back lots of heifer calves this year. However without a doubt this is more about appreciation of a land value than any great faith in agriculture.
Now without a doubt that isn't me expanding...or is it? We have a registered joint venture in our agricultural ventures and another in our oil service business...so everything comes out of the same bank account!
I gave him my cows and I signed all my land over to him(keeping a life interest) so how negative is that? Could have sold the whole works and laid on the beach the rest of my life, but chose to help my child stay in this business!

[cowman]

cswilson: Actually $60 is getting to be on the low end of the totem pole around here! $80/acre isn't much of a shock anymore for good clean level land!
I personally can't figure out why anyone would want to pay that, but the area sort of demands it? Supply and demand.
There are a lot of very old, very wealthy farm families around Red Deer. A lot of these older families have the mineral rights and quite literally could never spend all the money rolling in! I have found that people aren't usually happy unless they have something to do that adds meaning to their life? And lets face it if you don't have to worry about keeping the wolf from the door farming is a pretty good way to live? Driving around in a $300,000 tractor, with all the bells and whistles, is very enjoyable for some people? Now for me it isn't, but for some people it really is.

[PureCountry]

Land rental rates are always connected to land values, and for sure in your area, cowman, $80/acre pales in comparison to the cost per acre to buy the damn stuff. But still, I don't understand how anyone's making much of a profit margin on $80/acre. Your overhead can only go so high because we only get paid so much for our product.

I don't know. If they're making money paying those rates, good on 'em.

[cswilson]

Recreational farming makes it hard on young guys trying to start up. We have to bid against 'sun downers' here who are ranching for tax breaks. One was just here other day moaning that his CAIS never paid out-I'm thinking you made a 100 grand off farm there buddy lol. We'd see a major change in ranching and farming if a few tax laws changed at least in our area. I'm glad I got a million other things I'd rather do then rent land at $80/acre to drive a tractor around lol. If I spend more than 10 hours a year in one I break out in a rash. Too many years of spending 500/month in them when I was younger.

[grassfarmer]

Max, that's a great comment about surrounding yourself with positive people. I recently was at a Grey Wooded Forage Association event and took along a friend that had never been before - he was amazed at the crowd as they were so different from any ag gathering he had ever attended in Western Canada. The age profile is the first difference - younger crowd with many producers in their 20s and 30s. Many females in evidence too, again some in their twenties. Overall the mood was one of optimism, how much could be achieved in future with better practises and management. Nowhere did we hear the usual coffee shop doom and gloom. Very much a glass half full crowd - and you do come back from such events feeling rejuvinated.

[cowman]

Well I hope all these optomists have some money so they can get out there and buy out all the pessimists!
There are a lot of older guys just chomping at the bit to quit and retire, so hope some of these young guys are willing to step up to the plate and buy?
Hopefully we'll see a good bred cow market this fall. I suspect if cows can get back into that $1200 range you'll see all kinds of movement?
In my opinion that is a good thing? Quite often when you go to a auction mart sale it is like visiting the old folks home!
I wonder if these young producers will have the finances to buy out the older generation or will good old Dad have to give it to them? Maybe we need to import a few more ornery rich Scots? LOL
The boy has intentions of holding back more heifers and feeding them for next years bred market. He thinks there is a pentup demand for young breeding stock as there haven't been a lot of heifers retained the last couple of years? I think it really depends if this darned cull cow market gets going? There are a lot of old cows around that should have gone to MacDonalds a while ago.

[grassfarmer]

The biggest opportunity I see coming is for some of the older producers to rent their land out to the youngsters starting out. That makes so much more sense - very often the older folks are fed up farming but don't want to sell up and retire to town. They would be happy to stay in their own house, surrounded by the countryside and all their friends and neighbours. It's a matter of working out rental rates and the youngsters maybe being prepared to live in a trailer or travel to the farm every day.