BTO bankruptcy. Effect on remaining farmers.

[blackpowder]

I find it hard to make predictions this am.
I suspect the real cost of living and taxes will continue to increase over the next 100 years as thay have in the past 100.
So no matter economy of scale, the strongest holder of land will be relatively debt free.
Be they large or small, foreign or domestic, public or private. Regardless of who actually crops it.

[jazz]

Top 10% was around 3.6% ROA for the years of study. I have a couple of GIC's at 3.6%.

ajl, ROA assets is a poor measure. These land assets are inflating at 7% a year for almost 20 yrs here. Production is never going to keep up with that.

A better measure is return on investment or return on production. I cant imagine farming on much less than $200 an acre net production returns but I imagine some BTOs are running around the country thinking $50 is great over a lot of acres.

Every one of these large centrally run farms has not stood the test of time. Any BTO I know of is in the field daily and not in the office on his ipad. Most of the ones here have more family in the operation than employees. The family is the reason they got big to accommodate more members into the business, not to just become the big dog on the block.

[bucket]

ajl, ROA assets is a poor measure. These land assets are inflating at 7% a year for almost 20 yrs here. Production is never going to keep up with that.

A better measure is return on investment or return on production. I cant imagine farming on much less than $200 an acre net production returns but I imagine some BTOs are running around the country thinking $50 is great over a lot of acres.

Every one of these large centrally run farms has not stood the test of time. Any BTO I know of is in the field daily and not in the office on his ipad. Most of the ones here have more family in the operation than employees. The family is the reason they got big to accommodate more members into the business, not to just become the big dog on the block.

I have heard some BTOs are good with $10/acre net in their pocket at the end of day....all expenses covered.

[AlbertaFarmer5]

I'm not convinced about the efficiency of scale in this case. Reading a few articles from 2013 about the farm. It was 8000 acres at that time. This was one quote:

Kalisvaart now runs things with his dad, brother, sister, brother-in-law and uncle

That is 6 people not counting hired help. No numbers given for hired help. My own operation, has a grand total of 1 adult, plus occassional hired help in spring or fall, for just under one quarter the grain acres they are doing, plus hay, cows, using antique machinery, doing all repairing, bin building, fabrication, brushing, land breaking, custom work etc. In an area that makes Gibbons look like the garden of eden for weather and soil.

Edit, the grainews article from 2013 does answer the hired help question:

three fulltime employees. At peak periods such as harvest they’ll have as many as 12

I don't see how that many more people per acre is going to be more efficient?

Another quote:

who spends as much time planning and marketing as he does getting his hands dirty.

“I almost rarely get out and drive a truck. Seeding and harvest it is all hands on deck, but this time of the year, I spend 95 percent of my time in the office,” he said.

I know what would happen to my efficiency if I tried that, at any time of year.

[ajl]

ajl, ROA assets is a poor measure. These land assets are inflating at 7% a year for almost 20 yrs here. Production is never going to keep up with that.

A better measure is return on investment or return on production. I cant imagine farming on much less than $200 an acre net production returns but I imagine some BTOs are running around the country thinking $50 is great over a lot of acres.

Every one of these large centrally run farms has not stood the test of time. Any BTO I know of is in the field daily and not in the office on his ipad. Most of the ones here have more family in the operation than employees. The family is the reason they got big to accommodate more members into the business, not to just become the big dog on the block.

ROA in this case separates the performance of the production side from the land speculation business. All farmers have two enterprises: production and land speculation. In this area land has not risen over the past decade. A parcel similar to mine sold a couple of weeks ago that I had bid on. Mediocre land and what the lady got for it was around what we paid for a parcel in 2015. Land here had actually gone down but thanks to covid pogey is likely rising again somewhat. Western SK land has had a good run but that is likely over as well so the 7% is done for now. Land here was high when SK land was cheap so that is the difference. Good land around here was around $1000 to $1200 in the late 80's compared to $3500 to $4000 now. Your land was $400 at that time.

[AlbertaFarmer5]

Farm scale storage can be a money maker, not building your own terminal.

I have guys near me farming at this size and none of them have yards like these guys built.

But what they built is hardly a terminal. Based on 8000 acres at the time, they only had 40 bu/acre of storage. And they sold a bunch of bins at an auction in 2018, and possibly expanded in the meantime. In our area, I consider 100 bu/acre to be bare minimum storage.

[fjlip]

I have heard some BTOs are good with $10/acre net in their pocket at the end of day....all expenses covered.

So...if you make a $100 per you are 10 times your size? Now I am feeling BTO.

[Sheepwheat]

I wonder what the iron “assets” are for those operations returning that whopping 3.6%? Also, if ones land is worth 1500 an acre, vs. Another area which is at 4000, it’s gunna sure show up! Wow that’s nuts.

We actually have a deal with a friend of ours. He bought some ewes for us, and he gets a 10% return from us, plus a lamb per year, plus he owns the ewes in the end.

Any takers? If y’all need a place to park your money, we’re just a pm away! It’s the “stock” market after all, with far less risk... Lol

[ajl]

Making $10 per acre on rented land here lately after all overheads and your own labor is covered qualifies you for super star status around here. If you are doing $100, your landlord is a sucker. Many landlords here are looking for back rent. Profit in these parts is rent that you pay yourself on land you own outright.

[Richard5]

Another quote:

who spends as much time planning and marketing as he does getting his hands dirty.

“I almost rarely get out and drive a truck. Seeding and harvest it is all hands on deck, but this time of the year, I spend 95 percent of my time in the office,” he said.


If he spent 95% of his time in the office he maybe needed a faster computer so that he could get the work down outside