Expectation #2

[parsley]

Ted farms.

Ted and his family live a lifestyle they cannot really afford, nor have earned.

Ted and his family have loans that are extremely precarious. One bad crop year and they have planned to default, expecting lenders and institutions and governments, and businesses to pick up their bad debts.

Ted has hidden assets for himself.

Is this sound, defensible financial planning? Pars

[parsley]

And what does Ted teach his children?

Pars

[ado089]

If crop insurance wasn't such a joke Ted would be able to handle one crop failure.

[parsley]

Partnering with a joke should be examined.
Haven't carried crop insurance on this farm for probably over twenty years. Pars

[ado089]

That's a nice luxury to have but when you just start farming and you're $1.5 million in the hole not having crop insurance isn't really an option or is it? So there are you're two options, hoping that you can squeeze enough out of crop insurance to try again next year and keep paying down debt or using strategic asset placement to cover your arse if things go south. You're teaching your kids that no one out there is looking out for you, so you have to do it yourself.

[cottonpicken]

You're looking to push some buttons eh?

Any loan is a sort of contract agreed upon with security well defined you default security is seized

In fact you can default on one set of loans have assets seized and on another set creditor will be happy

Non of this is from personal experience fyi

You probably haven't had a loan since nixon claimed he wasn't a crook eh pars

And if someone in the electronic age thinks they can hide assets good luck with that

[parsley]

"You're looking to push some buttons"

Actually I'm not. It's not a personal thing cott, any more than a banker sitting across looking at any farmer's spread sheet. Dollars.

It's rather, a look at agricultural credit, where it's headed and why, and what the consequences are.

Some were too big to fail, right?

Wrong.

It's extremely important-think, imho, to not only review the annual snapshots of how poorly the farm community is functioning economically,and yawn, but to examine what principles those incomes should be built upon.

Trust is one. Reliability. Decency. Honor. Are they eroding? Farmers need to ask themselves these questions. Credit rating factor them in, you well know. Was Big Sky decent?

"Any loan is a sort of contract agreed upon with security well defined you default security is seized"

Good point.

Is there such a thing as good faith though? Like the kid with the bike? Or should the banker tell the kids to get lost?

If you are the lender, and you know that it's 'a given' that the basic exit contingency plan is to NOT pay the piper, what effect does it have upon interest rates, upon loaning to agriculture as an industry, to private enterprise, to decency, to farmer reputation?


Are there consequences to operating as did Big Sky did?

[parsley]

ado089,

Every generation faces the same problem, different numbers.

Most of my generation had startup days when we could not even afford to go to a movie.

We weren't poor. We just didn't have any money. LOL Pars

[parsley]

Basic principles are essential to provide for the base that agriculture can move forward on.

Investors and bankers have to view agriculture as sound and worthy. Nothing worse than Farming is headed south when investors read their annual report stating that 41,000 farmers have defaulted on operating loans.

Money will be a tight commodity in the next ten years. But trustworthiness, and your WORD could be the most valuable asset farmers own. IMHO Pars

[cottonpicken]

good questions

another inch of rain and only 60% done makes hyde
cranky

our system is so fatally flawed i dont know where to
begin

the number of market distorting problems is mind
numbing(subsides is only one)

the whole world seems hell bent on some kind of
sick twisted ever evolving form of "capatilism"
which will sink us all

there are no rules if the rules change everyday

gm bankrupt..bail themn out

fannie freddie bankruptt..bail them out(dont worry
cmhc has already put every canadian on the hook
for morgage bailouts way before the us
government descided to back stop......did you know
that everyone?)

so if you or ted get into a fight make sure you win.

[parsley]

" The need for substantial new investment in agriculture is clear. However, on the other hand, it is obvious that the number of donor-supported agricultural credit programmes is in decline and the extent to which governments or commercial financial intermediaries are compensating for the reduction in supply of loanable funds to agricultural production, processing, and marketing is limited."

One way to interpret the above is this:

Canada can just as easily import cheap grain from Russia in a couple of years...cheaper than we can produce it.

Hardly a proposition that will convinice your banker to give you money to plant a crop in 2012.

But old relationships last the test of time. Trust. Integrity. Reliability.

Guard them. Not even a banker will kick a decent farmer when he's down. Pars

[cottonpicken]

**** russia

and **** all those eastern *****s.

We will bring them to their knees.