Richie Bros-SASK Spring Yard Sales-OMG WHAT IS GOING ON

[TSIPP]

+30 million or -30 million ill bet wolf was somewhere in between

[jazz]

Buying land to farm at that scale is a 2 sided bet. Its not just can you get funding for it and can you get over it every year before mother nature kicks you in the nuts.

The country and govt holds the other side of that bet, that this is an industry that is important and will be supported, if not financially then strategically by strong intervention in keeping infrastructure and export trade lines open and growing.

I dont see the second side of that bet at all.

Maybe the bet on a land base that big is a bet on something else that has nothing to do with farming it at all.

[Oliver88]

4000 an acre needs $160 an acre to cover 4% money. Plus another $10 for muni taxes. Which of the six viable crops will provide $170 over cash and fixed costs?

Interesting. I have heard of land between Moose Jaw and Buffalo Pound selling for a shade lower than this price as well.
Is this the case of a large amount of successful farmers living in a small area bidding up land to unprofitable levels?

[Austrian Economics]

Here's something I've done to try and understand the "true" cost of land. Convert today's per acre price and prices going back decades into the gold price for each period.

In my neighborhood just outside of Winnipeg, in 1980 land sold for about 1 ounce of gold per acre.

Today, the same piece of land sells for between 2 and 3 ounces per acre.

If you had to go out and mine gold to buy land, back in 1980 my parents would have had to mine one ounce of gold to buy an acre of land.

Today, you have to mine two or three ounces. In other words, you have to work two to three times as hard to buy the same asset.

By setting in motion an exponential growth in debt, fiat currencies are incredibly destructive. They incentivize not the creation of capital, but its consumption. As capital is sucked out the the economy, people find themselves working harder and harder to retain their standard of living.

Because fiat makes interest rates inherently unstable, your success in business depends on your ability to time your borrowing to take advantage of downswings in interest rates during each mini-cycle of the falling interest rate trend. If you mistime it, you can wind up with a huge capital loss.

People talk about normalizing interest rates all the time. Does the mortgage rate trend in the graph below seem "normal" after 1970? Same for the 10 year treasury yield below it. Although the gold standard was not a classical one back in the 50's, my parents started farming at a time when the cost of capital was remarkably stable. Those days are long gone and we're paying the price.

[Crestliner]

Well son, I'm not saying he's Steve Jobs but he has the ability to raise capital and the balls to take risk like all industry leaders start out with. And he's not the only one - take a look at Kambeitz' operation at Lajord, there's a lot of guys going flat out. Most will fail, but one or two will squeak out a win. At one time when Wolfe came into the area the local coffee shop wags were going on about him like they are about Monette. But they made it through three generations and have $30 million to play with, less the percentage they have to send to Skippy for capital gains. Everyone wondered where they got their money, rumor was Germans idk. Old Rudy wasn't just in farming - he was an entrepreneur with multiple businesses. Maybe Monette is the same, maybe he's frontman for Gary Redhead or Jim Pattison as the rumours have it. Maybe he owns a gold mine somewhere, who the hell knows? I don't give a shit, and I'm not sure why anyone else does. If he makes it it'll be a hell of a story. If he doesn't it'll be a hell of an auction sale.

Well as the saying goes “it’s hard to read another persons mail”.....so we really don’t know what fuels Monette or Wolfe....or what the facts are for sure....but we can draw on what makes sense...common sense.

Wolfe is gone and he is selling really new equipment at an auction house that has a reputation for quick sale, no reserves, along with high selling commissions....so either Wolfe got so much money for his farmland he doesn’t give a shit about what he gets for his equipment. Or there was no plan to sell it like this when they bought it...common sense says there will be a big hit on this stuff.

Common sense also says that farming is a high consumer of capital and is highly leveraged when you are a BTO. Margins are so thin cost so high that borrowed money always has to lever up the little cash that is made. So these are high financed deals that require a friendly banker.

Common sense and history says that bankers are generally assholes and can’t be trusted for the long haul. They give you an umbrella on a sunny day and take it away when it starts to rain.....Scotia is in deep with Monette I believe as someone showed a debenture security a few years ago here for $100 million or something.....wow big partnership.

I remember when Possberg and Big Sky were holding hands and going to all the dances with Scotia when pigs had wings ....the clouds on the horizon moved in and tuned to rain and......oops the umbrella got taken away.

I don’t wish any bad on BTO’s as each to their own....but there comes a time when it might be greed or ego fueling this whole scene.

I just think there are a lot of careful, financially conscience young men and women who want to farm in the worst way, who would do a good job, raise a family in rural SASK, keep some smaller towns viable, but don’t have a chance to participate due to partly the actions of BTO’s......but their only chance to work the land is for the BTO and get a T4 slip. Sad.

When the inevitable correction comes, and some of these BTO’s blow up.....maybe these young men and women who can’t get going now might have a chance if they aren’t too old, already move away from SASK and are enjoying a monthly pay check and the farming things was just a dream they have no interest in....and common sense says no wonder our country side is dying.

Capitalism unchecked can be a bitch sometimes....eh?...just like a Federal Government that has no long term AG Policy.

[sumdumguy]

Life is one big experiment. Some just get themselves a bigger lab.

[SASKFARMER]

I remember wolf owning or buying land beside me when I was young. Big piss any coming in hired cats cleaned the land and opened it up. Then the shit show of the 80s hit and he was forced to sell. If problems in other areas and furthest away land had to go. He left a guy bought and four years later he lost and I bought and have owned for along time.

When I was in lending big banks pick winners and losers. Yea a guy with a idea can sweet talk a bank into just about anything. Look at two farms in sask that are fast growing could sell snow to a Eskimo. Either new Canadians with cash or banks.

But with banks and investors one blip or maybe two and once one gets scared they take you don’t faster than the corona virus if your over 80 with a bad set of lungs.

To big to fail is a joke comment.
Banks make money and some one is going the math. One blip and it’s all gone.

Look to the USA at a very large farm that even CNH was out millions. They let the guy go till all he had left was nothing.

Chinese on the other hand don’t like to lose so that’s a whole different bunch to get cash from. Not going there

[jazz]

Scotia is in deep with Monette I believe as someone showed a debenture security a few years ago here for $100 million or something.....wow big partnership.

You can add a 3 on that now.

Has to be the biggest land holding in the province now.

[SASKFARMER]

Yes five big banks are the largest land holders in Saskatchewan.

And second the Chinese.

Isn’t it great.

[tmyrfield]

Here's something I've done to try and understand the "true" cost of land. Convert today's per acre price and prices going back decades into the gold price for each period.

In my neighborhood just outside of Winnipeg, in 1980 land sold for about 1 ounce of gold per acre.

Today, the same piece of land sells for between 2 and 3 ounces per acre.

If you had to go out and mine gold to buy land, back in 1980 my parents would have had to mine one ounce of gold to buy an acre of land.

Today, you have to mine two or three ounces. In other words, you have to work two to three times as hard to buy the same asset.

By setting in motion an exponential growth in debt, fiat currencies are incredibly destructive. They incentivize not the creation of capital, but its consumption. As capital is sucked out the the economy, people find themselves working harder and harder to retain their standard of living.

Because fiat makes interest rates inherently unstable, your success in business depends on your ability to time your borrowing to take advantage of downswings in interest rates during each mini-cycle of the falling interest rate trend. If you mistime it, you can wind up with a huge capital loss.

People talk about normalizing interest rates all the time. Does the mortgage rate trend in the graph below seem "normal" after 1970? Same for the 10 year treasury yield below it. Although the gold standard was not a classical one back in the 50's, my parents started farming at a time when the cost of capital was remarkably stable. Those days are long gone and we're paying the price.

[ATTACH]5715[/ATTACH]

This is an interesting concept but You are comparing an asset that can produce an ongoing and sustainable income albeit with a lot of work to an unproductive asset that you can only hold and sell once you may make money or you might not. I think more and more people are thinking land is a more long term protection of wealth. And a lot harder for someone to steal, except maybe the government. If that happens well we are all ducked anyway.