Stabilizing your farm for a bumpy couple years.

[mbratrud]

I find myself watching the current events unfold in almost disbelief.

I'm old enough to remember lots of challenging times economically. Inflation and Interests rates created a world of hurt for my father in the 80's. I graduated in the early nineties when Canada was compared to a Banana republic. Jobs were scarce and my first few months in the workforce i banked my hours and lived with family until the company i worked for lifted a hiring freeze a couple months later. But that sacrifice got me a job.

We started farming in 1999 and 2000-2005 were some ugly years and it took off farm jobs to subsidize the farm. Then 2008 hit. The commodity boom provided the sugar rush Ag needed to make up for decades of meager existence.

Never in my lifetime has a global event with such catastrophic events unfolded this close to home. Its not just the Pandemic... its that together with a general softening that was already happening and then Talk of Great Depression like unemployment that could be as high as 20%. We are all praying that doesn't happen but with everything shutdown i cant see how it cannot be historic levels. Our Government puts on a brave face how they are going to support workers. So say the gov has to support even 5 million workers at $1500 per month costing at least 10 Billion a month by the time you factor in lost tax revenue. For how long? and how many defaults as a result? How can this all be funded?

How does this relate to the farm from the point of view that farm assets could devalue as much as 20%. What are you doing to protect yourself? I personally am not overly worried about commodity prices (maybe i should be). My worry is the availability of credit, and interest rates not in the short term but 12-36 months out. Will short term financing become tight?

We are managing cash flow as far as 12-18 months out without financing Its a challenge to do that and get the best price for grain. I guess personally with the current interest rates we are evaluating long term interest rates. as far as 10 years, and in some cases paying penalties to refinance mortgages that are set for renewal in 2021 and 2023 just so we can lock in until 2030. Do we need to take into consideration the Stability of our financial Institution. Is this and over reaction?

Also looking at doubling up insurance with Crop insurance with private coverage. These insurance and financing measures could cost as much as an additional $15 per acre. It doesn't feel like time is on our side.

Someone please tell me I'm over reacting and shut my spreadsheets down and news feed off. Or what measures others are taking? How are you looking at new crop price coverage?

Finally wishing all my farmer friends good health in this crazy time.

[quadtrac]

I don’t think anyone really knows how it’ll all turn out.
But personally I don’t see how it’s possible for the economy to not be upside down for a very long time.
Hard to say what that’ll mean for farming exactly. Defiantly are worse businesses to be in at the moment.

[jazz]

That quatunine will have be reversed within 2 weeks otherwise there wont be anyone left to afford our food.

[mbratrud]

I don’t think anyone really knows how it’ll all turn out.
But personally I don’t see how it’s possible for the economy to not be upside down for a very long time.
Hard to say what that’ll mean for farming exactly. Defiantly are worse businesses to be in at the moment.

I agree other than toilet paper and healthcare i don't think there is a sector or business i'd rather be involved in. Just how to navigate through with out being drug down by outside influences like Banking crisis and short term supply chain disruptions.

[bucket]

I find myself watching the current events unfold in almost disbelief.

I'm old enough to remember lots of challenging times economically. Inflation and Interests rates created a world of hurt for my father in the 80's. I graduated in the early nineties when Canada was compared to a Banana republic. Jobs were scarce and my first few months in the workforce i banked my hours and lived with family until the company i worked for lifted a hiring freeze a couple months later. But that sacrifice got me a job.

We started farming in 1999 and 2000-2005 were some ugly years and it took off farm jobs to subsidize the farm. Then 2008 hit. The commodity boom provided the sugar rush Ag needed to make up for decades of meager existence.

Never in my lifetime has a global event with such catastrophic events unfolded this close to home. Its not just the Pandemic... its that together with a general softening that was already happening and then Talk of Great Depression like unemployment that could be as high as 20%. We are all praying that doesn't happen but with everything shutdown i cant see how it cannot be historic levels. Our Government puts on a brave face how they are going to support workers. So say the gov has to support even 5 million workers at $1500 per month costing at least 10 Billion a month by the time you factor in lost tax revenue. For how long? and how many defaults as a result? How can this all be funded?

How does this relate to the farm from the point of view that farm assets could devalue as much as 20%. What are you doing to protect yourself? I personally am not overly worried about commodity prices (maybe i should be). My worry is the availability of credit, and interest rates not in the short term but 12-36 months out. Will short term financing become tight?

We are managing cash flow as far as 12-18 months out without financing Its a challenge to do that and get the best price for grain. I guess personally with the current interest rates we are evaluating long term interest rates. as far as 10 years, and in some cases paying penalties to refinance mortgages that are set for renewal in 2021 and 2023 just so we can lock in until 2030. Do we need to take into consideration the Stability of our financial Institution. Is this and over reaction?

Also looking at doubling up insurance with Crop insurance with private coverage. These insurance and financing measures could cost as much as an additional $15 per acre. It doesn't feel like time is on our side.

Someone please tell me I'm over reacting and shut my spreadsheets down and news feed off. Or what measures others are taking? How are you looking at new crop price coverage?

Finally wishing all my farmer friends good health in this crazy time.

Question....how do think Air Canada is preparing to stabilize their income? ...

While I admire people that want to go it on their own .....the fact is you can't out finance the treasuries of other nations that will support their farmers...

If you can ....you shouldn't be farming or you are in a different class than 90 percent of farmers..

[Sheepwheat]

The minute is stopped shooting for max yields and watched what I spent, things started getting better. This includes dropping canola, and taking back control. A bit of forage, a bit of chemfallow, seeding lower input crops, and stop shooting for the stars. Stars don’t pay bills, limiting bills and limiting risk pays bills.

Changing my expectations. Living on less. Working harder doing things that actually pay. Buying animals that produce, ,rather than iron that depreciates.

Putting my grain through animals, rather than relying on unreliable grain buyers and rail companies.

Pricing my own product. Not being a price taker, but making my own prices for what I produce. Picking a barely “profitable” price is not the answer. Making your own price is.

Above all, and for real the most important thing? Stop watching the neighbors, and certainly STOP doing what almost everyone in Saskatchewan who is in agriculture is doing.

Unless you see the state of agriculture with multi million dollar depreciable iron sustainable of course. And if you think to farm, that you simply HAVE TO have iron in abundance, and x acres of land to make it work, my ideas are not for you...

I am not even concerned a tiny little bit about commodity prices, input costs, or interest rates. But to get this freedom, you have to get to the point that this life is not about dollars alone...

[LEP]

The minute is stopped shooting for max yields and watched what I spent, things started getting better. This includes dropping canola, and taking back control. A bit of forage, a bit of chemfallow, seeding lower input crops, and stop shooting for the stars. Stars don’t pay bills, limiting bills and limiting risk pays bills.

Changing my expectations. Living on less. Working harder doing things that actually pay. Buying animals that produce, ,rather than iron that depreciates.

Putting my grain through animals, rather than relying on unreliable grain buyers and rail companies.

Pricing my own product. Not being a price taker, but making my own prices for what I produce. Picking a barely “profitable” price is not the answer. Making your own price is.

Above all, and for real the most important thing? Stop watching the neighbors, and certainly STOP doing what almost everyone in Saskatchewan who is in agriculture is doing.

Unless you see the state of agriculture with multi million dollar depreciable iron sustainable of course. And if you think to farm, that you simply HAVE TO have iron in abundance, and x acres of land to make it work, my ideas are not for you...

I am not even concerned a tiny little bit about commodity prices, input costs, or interest rates. But to get this freedom, you have to get to the point that this life is not about dollars alone...

I agree with much of what you have written. However, demand destruction may come back to affect you.

While your production is small enough compared to the market, prices may take a haircut. Restaurants may not be buying for awhile, and individuals have fewer dollars in their jeans to spend on tasty shisliki ( hope I spelled it right).

Not trying to be an asshole, but you might find you are much less of a pricemaker in the current environment.

[Marusko]

(...)How does this relate to the farm from the point of view that farm assets could devalue as much as 20%. What are you doing to protect yourself? I personally am not overly worried about commodity prices (maybe i should be). My worry is the availability of credit, and interest rates not in the short term but 12-36 months out. Will short term financing become tight?

We are managing cash flow as far as 12-18 months out without financing Its a challenge to do that and get the best price for grain. I guess personally with the current interest rates we are evaluating long term interest rates. as far as 10 years, and in some cases paying penalties to refinance mortgages that are set for renewal in 2021 and 2023 just so we can lock in until 2030. Do we need to take into consideration the Stability of our financial Institution. Is this and over reaction?

Also looking at doubling up insurance with Crop insurance with private coverage. These insurance and financing measures could cost as much as an additional $15 per acre. It doesn't feel like time is on our side.

Someone please tell me I'm over reacting and shut my spreadsheets down and news feed off. Or what measures others are taking? How are you looking at new crop price coverage?

Finally wishing all my farmer friends good health in this crazy time.

Are you extending amortizations of the loans? Or just locking in the current low rates?

I started farming mid-boom. 75ac in 2014, grown on rented land since then, part of a bigger family operation.

Have had only straight hail insurance for the canola all this time, but with big land payments from land purchases last year (I'm destined to be right at the peak of the next hump in Les Henry's land price chart), and so much uncertainty, it really feels like time to add crop insurance. I looked into AgriStability ... not sure on that one yet. It's pretty cheap though, less than a $1/ac.

Should be getting principal payments deferred for 3 months. Job income to be significantly lower for a couple months at least, that industry is dead now for a while. Cancelled plans to do some small reno work on this old house. Gonna be watching cashflow more carefully for sure. Not really changing crop plans at this point, all seed and fertilizer is bought and some in the field already.

Single biggest worry personally is a very illiquid business investment that won't be paying dividends now and can't be sold with all this going on and knocking the industry flat. I'd love to have my investment back to cushion the farm. Shot myself in the foot. If farm profitability drops and my job doesn't pick back up, I'm probably OK for a year but beyond that I'm going to need more credit than I have collateral for. Being the 4th gen with the 3rd gen still farming... hate to admit but they might save my bacon.

[woodland]

Are you extending amortizations of the loans? Or just locking in the current low rates?

I started farming mid-boom. 75ac in 2014, grown on rented land since then, part of a bigger family operation.

Have had only straight hail insurance for the canola all this time, but with big land payments from land purchases last year (I'm destined to be right at the peak of the next hump in Les Henry's land price chart), and so much uncertainty, it really feels like time to add crop insurance. I looked into AgriStability ... not sure on that one yet. It's pretty cheap though, less than a $1/ac.

Should be getting principal payments deferred for 3 months. Job income to be significantly lower for a couple months at least, that industry is dead now for a while. Cancelled plans to do some small reno work on this old house. Gonna be watching cashflow more carefully for sure. Not really changing crop plans at this point, all seed and fertilizer is bought and some in the field already.

Single biggest worry personally is a very illiquid business investment that won't be paying dividends now and can't be sold with all this going on and knocking the industry flat. I'd love to have my investment back to cushion the farm. Shot myself in the foot. If farm profitability drops and my job doesn't pick back up, I'm probably OK for a year but beyond that I'm going to need more credit than I have collateral for. Being the 4th gen with the 3rd gen still farming... hate to admit but they might save my bacon.

Marusko I can relate to almost everything you said. May 20 2003 my brother and I bought three quarters off of a neighbour and found out about the BSE case five minutes after signing the deal. My mom was very worried about the cash flow and making payments until another lady said you could always sell some of it to get by. Luckily things worked out and we’ve grown since then. We like to lock the interest rate for the term of the loan just for peace of mind and with AFSC the rates don’t change much.

We learned to live cheap and find custom work to pay the bills in those tough years. I wouldn’t rely on agri stability to cover you but crop insurance for the grain side of our operation has saved our bacon occasionally. For the cows we always try to have an extra year or two of feed on hand which is better than any insurance available.

Staying positive and crunching the budget with realistic numbers is key while dealing with and communicating to the bank. Looks like you’re thinking ahead already. Nothing worse than running out of cash and operating loan while being forced into rash hasty marketing decisions.

Working with family does have its benefits. Hopefully it works out for you. 🍀

[mbratrud]

Are you extending amortizations of the loans? Or just locking in the current low rates?

I started farming mid-boom. 75ac in 2014, grown on rented land since then, part of a bigger family operation.

Have had only straight hail insurance for the canola all this time, but with big land payments from land purchases last year (I'm destined to be right at the peak of the next hump in Les Henry's land price chart), and so much uncertainty, it really feels like time to add crop insurance. I looked into AgriStability ... not sure on that one yet. It's pretty cheap though, less than a $1/ac.

Should be getting principal payments deferred for 3 months. Job income to be significantly lower for a couple months at least, that industry is dead now for a while. Cancelled plans to do some small reno work on this old house. Gonna be watching cashflow more carefully for sure. Not really changing crop plans at this point, all seed and fertilizer is bought and some in the field already.

Single biggest worry personally is a very illiquid business investment that won't be paying dividends now and can't be sold with all this going on and knocking the industry flat. I'd love to have my investment back to cushion the farm. Shot myself in the foot. If farm profitability drops and my job doesn't pick back up, I'm probably OK for a year but beyond that I'm going to need more credit than I have collateral for. Being the 4th gen with the 3rd gen still farming... hate to admit but they might save my bacon.

In my case If the money is cheap enough looking like 3.5-3.75 I might extend amortization but pay the same through top ups but gives me the flexibility to not do that if cash becomes to expensive or supply chains have issues.

On the Agristability make sure you understand what level of crop insurance you need to carry without having claw backs

[agstar77]

Farm only what you can farm without a large operating loan. Time to get real. Farm crop share only no cash rent. Renters will be able to name terms. Cash only after crop sold and expenses paid.

[6V53]

Make more summer fallow , that's your crop insurance. Use the equipment you have on less seeded acres and you'll get done harvest sooner to boot. But if you find yourself in a hole, Quit Digging.

[mbratrud]

Make more summer fallow , that's your crop insurance. Use the equipment you have on less seeded acres and you'll get done harvest sooner to boot. But if you find yourself in a hole, Quit Digging.

on the Summer fallow, I'm not a fan. on the quit digging agree 100%

[Marusko]

Marusko I can relate to almost everything you said. May 20 2003 my brother and I bought three quarters off of a neighbour and found out about the BSE case five minutes after signing the deal. My mom was very worried about the cash flow and making payments until another lady said you could always sell some of it to get by. Luckily things worked out and we’ve grown since then. We like to lock the interest rate for the term of the loan just for peace of mind and with AFSC the rates don’t change much.

We learned to live cheap and find custom work to pay the bills in those tough years. I wouldn’t rely on agri stability to cover you but crop insurance for the grain side of our operation has saved our bacon occasionally. For the cows we always try to have an extra year or two of feed on hand which is better than any insurance available.

Staying positive and crunching the budget with realistic numbers is key while dealing with and communicating to the bank. Looks like you’re thinking ahead already. Nothing worse than running out of cash and operating loan while being forced into rash hasty marketing decisions.

Working with family does have its benefits. Hopefully it works out for you. ������

I was a kid for BSE but I remember it, and a drought the same year? Bad timing. I remember walking through hay and pasture with more grasshoppers than grass. Glad to see you made it out and I enjoy your posts here. Thanks for the well wishes.