Future of Farming

[Kodiak]

This [URL="http://www.wisfarmer.com/news/headlines/economist-optimistic-for-agricultures-future-b99438905z1-290780761.html?utm_campaign=deputter&utm_medium=em ail&utm_source=Eloqua&utm_content=Good%20Morning%2 0Prairies%20-%20February%205%2c%202015&elq=d5fa2fd04e9b44e5b5b0 0c59ca9aa1a8&elqCampaignId=2188"]article[/URL] by <a href="http://www.espeakers.com/s/agsn/speaker/profile/8888/David-Kohl">David Kohl</a> is quite an interesting read. The headline maybe doesn't exactly match the story, however from 30,000 feet I think it gives us a realistic view, and provides some useful advice.
What I like about this economist is that he isn't the kind that likes to throw out wild theories to see what the public's response is. His stuff is practical and useful, which likely speaks to his farming background.

[bucket]

Interesting line - 2015 costs with 2002 to 2007 prices.

Certainly tells the tale.

One key word- agility.

I think that's why seeding plans are not locked up quite yet.

[Kodiak]

The article is a big picture view, which can mask the situation in specific areas. I also noted the line you referred to, but I think that observation may be more of a local one. And I think he may have been making the comment in the context of land rent costs.

I believe the Canadian grain sector is, comparatively speaking, in stronger financial shape than the USA. And it partly boils down to the fact that Canadian farmers have stronger balance sheets due to a larger percentage of land ownership than in the USA. Generally speaking, Canadian farmers are land owners, and US farmers are tenants. This bodes well for stability here in the longer term. The USA grain producing sector is going to have a tougher time financing their operations through tough times.

[SASKFARMER3]

I will agree with you on Canadians owning thier farms and can leverage again and again till it's all pissed away! Large renters and usa farms that lease land have more risk!
But then some suit shows up out west and will tell us farmers you can't live on equity and then were hooped!
Ah farming! Pineapple or kona coffee looks more promising!

[freewheat]

I thought Canadian farms have five or ten times the debt of american farmers, no? Read somewhere that we have WAY more debt, especially depreciating asset debt. And all you have to own down there to be worth a million bucks is 60 or 80 acres in several places.

[freewheat]

An article regarding the worry of Canadian farm debt:

http://www.country-guide.ca/2014/11/26/farm-debt-ratio-in-canada-could-create-an-agricultural-bust-scenario/45272/

[freewheat]

A interesting quote:

"Brinkman provides a startling comparison of Canadian U.S. farm debt. A few years ago, he calculated the ratio of farm debt to income in Canada and found that in 1972, that ratio was two to one. In other words, it took $2 of debt to produce $1 of income. By 2007, that ratio had jumped to 23 to one.

In 2007 in the U.S., however, their debt-to-income ratio was only 2.9 to one."

[cottonpicken]

Have to disagree with him on avoiding the depression and praising the bernake,its been put off until a later date with EXTREME monetary policy,throw in chinas stimulus plan and i'll take how did china make 7% gdp for 500 alex.

[LEP]

Farm Debt levels, Ladies and Gentlemen is why the graincos are able to set basis levels to where they are.

They pay as little as it takes to get the grain in the pit and farmers can't afford to lock the bins.

[Hopperbin]

Also the train is one month over due almost everywhere. Grain companies cannot get rid of the grain. So dont need to bid for it. Many locations filling up through june delivery.

[seabass]

That is exactly on the money LEP. Divide and conquer. They know that we farmers have spent our way into a shit storm and have no choice but to sell regardless of price. Bills are due so heres what u get. Take it or leave it. We do it to our selfs everytime and then complain about it.
Ridiculous rent, half a mil drills and combines. Just add to the headache.

[Guest]

yea I agree , although not all farmers have . we watched some of the shit shows going on around us and just sat back in amazement ! watched some of that high price shit goin by and said no thanks . could never see how a $700,000 drill (equivalent to approx 240,000 bu oats plus what you have already paid in inputs to grow them) could make any sense except to the guy selling it . they have most people on a treadmill, need more land , then more machinery , then more land , etc. , for what ? ........

[westernvicki]

Over breakfast a North Dakota producer told us that they needed 40 to 50% down to buy land, as smaller bank and cooperative credit institutions are the mainstay of lenders. Here it is generally less, and can be taken from equity. Not sure if his story is reflective of the whole but indeed at that % a very different lending program evolves.

[westernvicki]

Anyway land is at least a reasonable asset to suffer for, the ratio that really had me wondering was at the farm show a $750,000 combine and 5.50$ wheat were featured on the same day.

Go figure.

[Kodiak]

Cotton - I thought that line might catch your attention.