Young farmers face financing issues...an interesting article

[Sheepwheat]

Please define the following: (in acres)
STO
MTO
BTO

The STO considers the MTO to be a BTO
The MTO ... well you get the point!!

He terms to me are an attitude, not a size. There are some big operators who are normal and considerate, and there are small timers who are pretty tough customers.

For me, it is the attitude, not so much the size. Though often, size DOES play a role in attitudes towards others.

[AlbertaFarmer5]

I heard of an interesting exchange between two ladies at the local grocery. One was the wife of a mid size farmer who also operates a small business in town, the other was the 67 year old wife of a local BTO who is aggressively chasing every square inch of dirt he can find.

The BTO wife spent the entire conversation complaining about the 'old' farmers that wont let go of their dirt.

There are some young guys approaching retirement age themselves who have the same problem, the old farmers (parents) won't let go of their dirt. Not sure if that is good or bad, or if there are good reasons for it, but the end result is at best, the farm skips a generation, but more likely it ceases to exist.

[bucket]

There are some young guys approaching retirement age themselves who have the same problem, the old farmers (parents) won't let go of their dirt. Not sure if that is good or bad, or if there are good reasons for it, but the end result is at best, the farm skips a generation, but more likely it ceases to exist.

I have never understood the sweat equity where guys end up at age 55 with still hoping to farm ....then the rest of the family wants the cash and ...boom....the end...

[SASKFARMER]

That happens more than you know. They always preach proper succession plan and they are correct. Gov can **** that up with changes.

I know a few guys who are in the 50s age and mom and dad still own everything. They are farming and all of a sudden they have to buy out there sisters in the city and all over the country. All they hear is farmland is going up.

Hopefully, my kids don't ever have to buy me out. But Trudeau can screw that up real quick.

Plans are made to be changed and change is good.

[fjlip]

Please define the following: (in acres)
STO
MTO
BTO

The STO considers the MTO to be a BTO
The MTO ... well you get the point!!

Some Acres are higher return, so only applies in this neighborhood, we are STO at 1500, lots of MTO at 3000-6000, and BTO must be the 20,000 acres. All are families/investors, some corps. What do others think?

[SASKFARMER]

Someone was saying a while back the BTO can get an Opp loan against his land. Yes, that is true but say the land is worth 6,000,000.00 He doesn't have an opp at that level they would take it all as security but give the farmers 80% or less or $4.8 mil. But if he is a company and they have all secured as they would once they decide to get tough and call the loan, its 1-800 RB auction and gently get out of farming. Banks don't right off Loans if they are secured. If the loan is sideways and a plan can be made to restructure may be some wiggle but most are done. Corporations it's fast and quick.

[Oliver88]

We need the young people to farm...and try new things ...maybe it is time the financial institutions start looking at better programs...

The root cause of the farmers challenges appears to be not owning any land or having assets to use for a line of credit. The farmer in the article was seeding 5600 acres and owned 0 acres due to the price being to high around the Edmonton region.

If there is less of a barrier to entry for grain farming and banks give out large line of credits to every young farmer who rents land, how would this effect land prices?

[blackpowder]

So glad I don't give a damn for any of this anymore.
Everyone that wanted a piece of what I stuck for 40 years on can kiss my ass.
There is a young non relative in my will. At half market. What good is it to me when I'm dead.
I've been to a lot of funerals where they were flipping checks in the casket. Not mine.
Hopefully I can have a blast before they pat me in the face with a spade.

[ajl]

Looked up and read the original article. Impressive feat ,no doubt. going to 5600 acres of rented land, however, banks are always asset based lenders because of collateral so that is nothing new. Would not rent that much here without owning land that is for sure. Artificially low interest rates have distorted the land market and made it a toxic asset I get but Evansburg is a fringe area west of Edmonton so could have bought land out there. They sure had a crappy year there this year as I was out there in mid July and everything was drowning as it was at my location. I hear the claim and it is repeated in the article that young people are not interest but reality is that there are too many young people pursuing farming and that is why land is high. See lots of young second and third gen farmers here. There is no opportunity in the sector at the moment as evidenced by high land prices but the young are not considering off farm jobs as there is no opportunity there either. Saw a job wanted in the north peace area ad on the farm machinery page of Kijiji yesterday. The business he was working at recently closed. Been a long time since you saw that in AB.

[Marusko]

https://www.producer.com/2020/01/young-farmers-face-financing-issues/ https://www.producer.com/2020/01/young-farmers-face-financing-issues/

There's the article for any interested.

ajl yes there has been plenty of land come up publicly for sale in that area in the last few years. He's definitely had some opportunities to buy, but couldn't or didn't for whatever reason.

I'm 30 with an off farm job, that's the only reason I could afford to buy land last year. Annual land payments are now greater than my take home income. I'm a far cry from 5680 acres though.

[Rareearth]

Nothing ventured nothing gained

If it was easy anyone could do it

Penny wise pound foolish

Luck

Timing is everything

Entitlements


All important, general, thoughts that come to mind

[AlbertaFarmer5]

In most other industries, they seem to function without requiring asset appreciation and borrowing based on inflated assets. I would guess that most businesses do not own the real estate their businesses sit on, and the profit pays the lease. So no reason why farmers should expect to be any different.

Personally, I congratulate this young farmer for doing what most say can't be done. Growing a farm from its own profit. And doing it without outside financing.

That said, I don't like the business model of farmers going back to being serfs on rented land. Our ancestors came here to get away from that oppressive system.
And no one can reasonably claim that a farmer( or anyone else) will treat rented land as well as they will treat long term owned land. And considering that soil and our environment are the ultimate non-renewable( on human timescales) resources, I'd rather have farmers invested in the land where they make their living.

I too have been growing a farm without financing, except financing for buying land. It is certainly much slower growth than what he has achieved by instead renting land.

A comment in the article really shocked me:

A farm that I know has a revolving operating line of credit equal to the total gross income that the farm produced in a year.

Is that really a common occurrence? Essentially being an entire year behind on all income and expenses?