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And so it begins

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    And so it begins

    I have been asked for advice from a young farmer who is so far behind from this year and can’t see it farming this season. I don’t have the answers he needs. Some older machinery partially paid for equipment and rented land. He has the ability to do well in the oil patch. I’m afraid he needs bankruptcy advice but don’t know where to send him. Any suggestions for that advice in Saskatoon area would be appreciated.

    #2
    With respect. Paying for machinery with rented land a good way to grow old. Ask me. But, if like the rest of us, he will carry on anyway.

    Comment


      #3
      Well turn the equipment back over, let the rented land go would be a start. farming and working the patch are pretty hard unless the job is right outside your door.

      I always said the no equity model of farming was a dead end.

      Comment


        #4
        Without realistic actual financial information there is no specific advice anyone can give him. Sounds like a young farmer that tried to manage within his means and that is unfortunate.

        He needs to put together detailed but simple financial statements and look at his situation. Balanced sheet (detailed schedules); family living budget; non net non farm income figures; seeded acres and rental costs and herd size. That is a good start; doing proforma income and expense tends to over whelm guys at this stage... he needs to do that next to chart a path forward if there is one.

        If there is nonfarm to cover living; then may have a chance to restructure if P&I can be structured to fall with $25-$45/ac depending on rental rates. Cows I think about $125 P&I per cow.

        However, I think based on your post with equity limited to older equipment and I am guessing negative working capital I think he may be looking at an exit strategy.

        And if that is the case he will be better for exiting in the long run - lots of successful stories of guys who I saw exit this industry.

        Comment


          #5
          Let me say this....

          Meanwhile Ralph Goodale just gave a Russian steelmaker in regina 40 million for building lines that they have been in the business for over 50 years....

          SNC is covered by the government ..

          Bombardier never paid back shit over the years to the taxpayers....

          But we force young guys out through no fault of their own...

          You can not compete when prices for commodities are set by the US market while the American farmer is given a 12 billion payout to make them whole....

          canola is set by soybeans but american farmers are getting an additional 1.65 a bushel from the government.....which is 2.20 CDN....


          you can not.... as an individual...compete against the treasuries of other countries....
          Last edited by bucket; Mar 9, 2019, 12:13.

          Comment


            #6
            Originally posted by jazz View Post
            Well turn the equipment back over, let the rented land go would be a start. farming and working the patch are pretty hard unless the job is right outside your door.

            I always said the no equity model of farming was a dead end.
            Zero(or little) skin in the game with nothing to lose might lend itself to different risk decisions compared to someone who has skin in the game and something to lose.

            I cannot imagine starting at zero....maybe that says more about me and my situation than those willing to take that kind of risk.

            With zero equity there is little room for error when things get tough.

            Is the post bankruptcy waiting period for new credit too onerous or not onerous enough? Maybe it depends on the mitigating OR incriminating evidence supporting the financial conduct leading up to bankruptcy. Aka....each case judged on its own merits.

            Comment


              #7
              This is beginning to feel like the eighties all over again. That was a generation ago. Some people only saw decent returns and never felt financial pain or stress. Not saying there wasn't any out there in pockets or individual situations but there have been some good times.

              High land prices, high input costs, cocky farmers, trade bàttles distorting grain prices....

              Comment


                #8
                bucket, we can totally forget about the govt every doing anything extra for this industry. Those days are over and I don't think a conservative govt would do much either. Even if one gets it, it would get punted the next election by progressives anyway.

                What farmers need to do is fight back with accountants and corporate structures and laws to protect ourselves from both economic risks and over reach by govt.

                Comment


                  #9
                  Originally posted by RTK View Post
                  Without realistic actual financial information there is no specific advice anyone can give him. Sounds like a young farmer that tried to manage within his means and that is unfortunate.

                  He needs to put together detailed but simple financial statements and look at his situation. Balanced sheet (detailed schedules); family living budget; non net non farm income figures; seeded acres and rental costs and herd size. That is a good start; doing proforma income and expense tends to over whelm guys at this stage... he needs to do that next to chart a path forward if there is one.

                  If there is nonfarm to cover living; then may have a chance to restructure if P&I can be structured to fall with $25-$45/ac depending on rental rates. Cows I think about $125 P&I per cow.

                  However, I think based on your post with equity limited to older equipment and I am guessing negative working capital I think he may be looking at an exit strategy.

                  And if that is the case he will be better for exiting in the long run - lots of successful stories of guys who I saw exit this industry.
                  Ha Ha! Fu#k all that, write a cheque and take over the property.

                  Comment


                    #10
                    I dont understand why equip is a big issue. To me equip and,imputs are the 2 things you can control. The last season auctions almost made me cry at how cheap equip was, I could go farming with decent line of equipt for under 100K, imputs dont need to be top end,there is the law of deminishing returns,land is different but if you dont have access to a land base at a resonable price how can you consider farming in the first place.
                    You dont need all the newest and fanciest to grow a profitable crop,if your cop is low.Mixed farming is the way to go on the cheap,lots more options,weather not such a big concern,tough grain feedlots still buy, hay in rotation uses less chemicals improves yields with less fert,its all in what you want or expect.400 or 4000 acres,makes a difference. Thats my 2 cents worth.

                    Comment


                      #11
                      Diversifying income for farmers in the last 20 years was simply to get more land, rented if it had to be.

                      This poor SOB doesn't even have a home quarter to live on it sound like. Home quarters are protected in bankruptcy. The guy could have downsized to a few owned quarters live there cheaply, puttered around and the go chase patch money.

                      My dad always had other incomes coming in so he was never dependent on one. Surface lease, seismic, cows, hay and some grain crops on the side. He also never bought himself crops either like.

                      Comment


                        #12
                        Sublet the rental if breakeven or profit and if equity in machinery sell it. If no equity in machinery tell lender he can have it., get it off the property. Just be sure to protect himself. Work the patch or whatever job he can get.
                        If he can’t see a profit in farming himself and can’t get financing.
                        First rule if in a hole.

                        Comment


                          #13
                          This is a no brainer. If, as you say, he has the ability to earn good money in the oilpatch, then that is what he needs to do. Hobby farm on the side during spring breakup and road bans (I.e seeding) and on weekends. Cash is king, why waste it farming, it is a dead end. I can’t make a living on my land base, fortunately I am semi retired so it keeps me busy, but I can’t even imagine how much land you would need to make a family living wage these days farming.

                          Comment


                            #14
                            Originally posted by Taiga View Post
                            but I can’t even imagine how much land you would need to make a family living wage these days farming.

                            Its the ultimate chicken and egg. I need 2500 acres to make it or whatever, but I cant do it myself so I have to get better machines and hire someone which takes more money to run, so I need more land and on and on it goes. Then you have a kid that wants to come in but you are too young to hand it off, well double acres in one big shot. Meanwhile by doing all that the resulting inflation has driven up land iron and input prices.

                            Comment


                              #15
                              Originally posted by jazz View Post
                              Its the ultimate chicken and egg. I need 2500 acres to make it or whatever, but I cant do it myself so I have to get better machines and hire someone which takes more money to run, so I need more land and on and on it goes. Then you have a kid that wants to come in but you are too young to hand it off, well double acres in one big shot. Meanwhile by doing all that the resulting inflation has driven up land iron and input prices.
                              Two friends of mine farm straight grain, on less than 1000 acres, raising families with no problem at all. Yet some neighbors struggle with 6000 acres. Guess what the difference is?

                              Comment

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