$32 vs $62 Rent!

[SASKFARMER3]

We just finished signing a new long term deal for 480 acres of land in higher production, higher rain fall area. The deal is strait forward with an option to purchase at the end of the term. So basically it will be part of our farms long term plan to purchase the property. Now at the same time a friend showed up from the Moosejaw area and the discussion turned to rent in that area. His comment was you must not be able to grow as much, then looked around and said I guess that's not true. Then After a few pops it came down to one thing farmers are their own worst enemies. Bidding up land base and expanding ones farm buy renting with no plan to own makes no sense. Their is $14,400.00 difference in our bottom line over the moosejaw guys even before the seeds are put in the ground. Latest word out our way is a large renter is exiting farm game after a rough fall. Hey its a rumor but he owned very little and rented some 20000 acres or more from the 8% return guys. Just a thought but wouldn't one try to lower costs be a priority over loosing money.

[furrowtickler]

The very same thing is about to happen here in the North West. Rents out of control with no plan of ownership.

[SASKFARMER3]

Some of it is smaller guys bidding up rent to get bigger but most is large farms that need to grow and are willing to pay whatever to farm more. But with the crash in commodities Its really hard to justify. Fiends to west of our farm are paying 50 to 60 for poorer land. Doesn't make sense. Oh well just smile and wave boys smile and wave. We didn't purchase a single item the year machinery went nuts neighbors couldn't figure it out. Hm now with price drop and more competition did a few. It seems it boils down to most farmers can grow a awesome crop but figuring out what its costing them really needs a make over. Oh well Ship happens.

[saskcanfarmer]

Forrowtickler/SaskFarmer - Where abouts do you guys farm?

I know what you guys mean. A month or so ago the kramer auction land rent auction has really screwed with things around here. Rent was rarely/if ever over 40$ an acre here. Now the rumors floating around is one of the bigger guys was forced to pay in that 60-65$ range. I don't know the circumstances behind the deal but I can guarantee they were not paying that when times were better. I know a couple of the final bidders in that auction are still trying to find more land and are willing to go close to that range again for the right stuff. Doesn't make sense to me at sub 9 dollar canola, sub 6 dollar peas and for an area that isn't a traditional lentil growing area.

[furrowtickler]

Your right, land south west of Prince was just rented out for $62/ac. Decent land but by far not the best around. Expanding right now is far too risky at these values. With somewhat lower inputs, one would be far better off putting an extra $10-15/ac into their own dirt than rent for over $50. JMO

[silverback]

Will there ever be a point where the monstrous farmers would say "enough is enough"?

Are they driving these rents to punish smaller farmers just for the fun of it? Drive them off the land?

Is the constant expansion needed to maintain brand new equipment lines?

Is it being able to drive the fanciest car or truck to the community hall?

There is big and efficient and then there is just big and greedy.

If someone can tell me that in order for 3 families to survive on the farm that we have to get to 15,000 acres I will see what we can do.

[bucket]

Picking up more land doesn't just come with the rent. Typically it means hiring people to run the extra equipment.

I would rather have farmers than a bunch of employees. 15000 acres still takes people to make it work properly.

Why not have three farm familes on 5000 acres each, instead of one large farm with a bunch of employees?

I realize the consolidation of farms is going to happen faster than any time in history over the next decade but is it good for the communities or the industry as a whole? Here is the problem, imho, the guy that has built a nice farm is now 65 but won't part it out to younger guys in the area. He wants the big all in cheque. Maybe he forgot how he built his farm - piece by piece. The young guys can't borrow to buy it out, so the obvious thing to do - sell to the corporate farm.

[silverback]

Does that mean you agree that one family "needs" 5000 acres to survive?

Maybe a better question should be to define the word survive.

Some of the monster farmers I see appear to need to live the life of oil and gas executives to "survive".

[bucket]

No, it is just an example, use any multiple you want. Depends on areas I suppose.

[Hopperbin]

Where did One Earth's ad for employees go?
Did they get enough already? Their website is still under construction. Could very well be that guy paying the 62 needs the tax deduction. I could think of a lot better ways to invest that extra 30 per acre. Sask. is that 62 per acre larger than land payments?

[broker]

when I started buying grain in the early 90's in southern MB, "Big" farmers that I had hauling to me were in the 2000ac range! Now, the 2000ac farmer is pretty much a hobby farmer in most areas! Wow what a difference!

[cottonpicken]

You guys are thinking like american hob
nobbs/gary pikes.

My dick is bigger cause i farm more land and i'm a
big shot-which equals me more sucsessfull than
everyone else-and guess what everyone look at
me,cause i'm just like brad pittt,except my dick is
small my family hates he and my wife is having an
affair cause i dont spend enough time with her or
the kids because im trying to be a big shot
farmer.HAHA im going to disney,hawii,lake cause
i'm a big shot.

BALANCE-is hard

[SASKFARMER3]

cotton you of all people should be able to relate. Its all about the money, Over paying for land is just plain stupid. That's all I am saying OVER paying for anything is stupid.

[SASKFARMER3]

Well said CP!!!!!

[mbratrud]

First of all land rent, I agree it has got out hand, but if I were a landlord I would expect at least 5% return on the value of my land.

As for Farm size and Mr. Pikes comments about 6000 acres to be a viable farm the man is full of shit. First of all it is not a cookie cutter solution for all farms. It depends on how diversified you cropping can be in your area. Quality of dirt. Sure there are areas where you need to be 6000 acres to be viable. If you are budgeting for a 50 bu Barley Crop, a 20 bu Canola crop or a 30 bu wheat crop at takes more acres to cover you’re fixed costs. If you have good dirt and practice more intense farm management, you can do more with less.

We Farm 3500 acres of good dirt, we run newer equipment, we usually grow 6 - 8 different crops and we focus on high production, quality and marketing. Our accountant says we are one of the most profitable farms in his portfolio.

My Point is 3000, 6000, 10000, 15000 acres they all have there advantages and disadvantages. For someone to say you need to be 6000 or bigger I disagree, and as they say Mr. Pike the bigger they are the harder they fall. 125 acres per foot of drill? Yes that is very doable but you are setting yourself up for some late seeded crops, or your forcing yourself to start so early you may have to reseed a bunch of acres. Quantify how much more per acre you can make if you get your crop in the ground between May 5th and May 15th?

I think as Farms in Western Canada shift to 3 year rotations 1/3 Cereal 1/3 Pulse 1/3 Oilseed it will be increasingly difficult for the large farms to manage to the same level of profitability as some smaller operations. Sure its great to be $15 - $20 per acre more efficient with your fixed costs but many times guys are leaving significantly more than that on the profit side. Spray that Fungicide a couple days late or Insecticide. Loose a grade here and there because the crop sat out to long. Loose yield on your crop because it shelled out because it wasn't dealt with soon enough.

I truly respect the guys that work their ass off and suffer the stress and risk of large acres, and many are doing a great job. But to make a statement like the only viable farm is 6000 plus, I think is incorrect. Can you get more profitable than a farmer who has 1000 acres of owned land no debt and runs not new but well maintained equipment, pays in advance for all his/her inputs and has time to take his kid to the rink and fishing in the summer, then take his wife on a nice holiday in the Winter?

So in Summary, with all do respect Mr. Pike I disagree.