Does old money exist in farming?

[bucket]

I will say this. Not many farms that are 3rd , 4th , 5th generation would still be here without some sort of government handout through out the years.

The people representing farmers with bios of being a 3rd, 4th , 5th generation farm don't realize this..

IF you do the math on some of the handouts and indexed them what most farm groups are asking for is peanuts.

For perspective. The federal government funded Merit 100 million dollars for 25000 tonnes of annual raw material through that plant.

70 million tonnes are grown in western Canada.

My guess in a lot of instances guys didn't know how to write a cheque until they were in their 50s.

IMHO some guys on boards are sent there because they do less damage and are less irritating away from the farm...

Like John Dutton said to Beth in Yellowstone.." now go ruin someone else's day"

[jazz]

There are all sorts of ways to make a situation work, but leveraging on an already established business is certainly a big leg up just from a lending point of view.

You can stumble into the bank all day with your good looks and a job wage, but the bank knows that can all end in a heartbeat, so they want an asset and most assets will ride inflation. Look at some of the richest families in the world. They add new members every generation to their establishments but I dont see their kids sent off to get jobs pumping gas.

My dad had already retired and sold his place off before I entered the business. This was the late 90s when everyone wanted out and like a fool I got in. I had a six figure job in the cube farm in downtown Calgary and gave up 15 yrs of vacations trying to farm at the same time. I had a city mortgage and commuting and hour a day on top of that. My boss always wondered why I was more tired after my vacation than before. Then they found out I was moonlighting and then the flexible vacation time stopped pretty abruptly.

[Old Cowzilla]

The young pups around here on OLD money farms work very hard to keep it running smoothly. With labor shortages ,expanded acres and diverse crops it's a spray,seed,spray,spray, combine,spray,fert and go like hell to get crop sold. Some sell there campers cause they never get to use them and the kids choose other careers .

[foragefarmer]

I'm a 2nd generational farmer, my parents picked up and left one farming area and started farming in another area.

My parents slowly bought a 1/4 at at a time. Our mixed farm grew slowly with out dated equipment and lots of hard manual work. My parents were extremely frugal and kept their debt load to a minimum.

My parent's frugalness was pasted down along with expanding slowly but surely. Newer and better equipment along with more land. More net income.

So when there was money left over from the farm it was put to work, off farm investments in real estate, stock market, and also off farm jobs. Anything was done to earn more income with the goal to prosper and independency.

The farm is a business and the money it makes can be put to work in any matter I see fit to improve my net worth.

Diversification with net income from the farm is the most important thing a farmer can do, it spreads the risk out. There is always two or three sectors pulling the load if one is hurting.

If you were to dissect the the majority of successful farms you would find that off farm diversification would be found in several areas.

[bucket]

I'm a 2nd generational farmer, my parents picked up and left one farming area and started farming in another area.

My parents slowly bought a 1/4 at at a time. Our mixed farm grew slowly with out dated equipment and lots of hard manual work. My parents were extremely frugal and kept their debt load to a minimum.

My parent's frugalness was pasted down along with expanding slowly but surely. Newer and better equipment along with more land. More net income.

So when there was money left over from the farm it was put to work, off farm investments in real estate, stock market, and also off farm jobs. Anything was done to earn more income with the goal to prosper and independency.

The farm is a business and the money it makes can be put to work in any matter I see fit to improve my net worth.

Diversification with net income from the farm is the most important thing a farmer can do, it spreads the risk out. There is always two or three sectors pulling the load if one is hurting.

If you were to dissect the the majority of successful farms you would find that off farm diversification would be found in several areas.

Then it isn't really the farm that is successful its the other businesses...why drag down profit with a farm?

[Sheepwheat]

Then it isn't really the farm that is successful its the other businesses...why drag down profit with a farm?

Eye opening isn’t it? Ugh

[jazz]

Then it isn't really the farm that is successful its the other businesses...why drag down profit with a farm?

Farmers might be more extended these days in general. Hard to pin down where the risky and responsible debt actually is in this business, but its clear that most farmers are much more savvy business men than previous generations. I see farmers doing financial things that my dads generation would consider unthinkable back then. If you wanted diversification that mean cows and sending your wife off to work.

My dad never grew anything but wheat and fallow. First yr I started farming that changed and we added lentils and flax into the rotation. Some guys were making big bank on pulses since the 70s before they were widely adopted. Likewise with the canola hybrids. Now canola is seeded right to the US border.

Farmers also got so much better at marketing as well when the CWB got its mercy killing.

And in my opinion, no farmer should be afraid of the stock market after the risk we go through to grow a crop but there are still guys that wont put a dime in there. You should at least hold stock in the companies you support like your bank and Nutrien and Sleepy Rail.

[ajl]

Interesting discussion. Here is a question: what does a 25 yr old with a bit of entreprenuerial gambit and several thousand saved up do today? Assuming that he is not born into assets or have a lot of good connections. One thing that has changed is that assets that have a proven track record of making money are never sold any more since interest rate manipulation ensures that there is no alternative investment available. The obvious example is that good land never comes on the market any more. Mediocre stuff does and a bunch has shifted recently due to the covid inflation mini boom that we are it now. Even Warren Buffet has resorted to buying Berkshire stock back since they can't find anything to invest in at the moment.

[SASKFARMER]

I love this subject it’s like taking and cashing in old 1000 dollar bills.

Is a reset coming it sure seems like 1981 all over again.

[AlbertaFarmer5]

Thinking back to the help I got when I bought my first quarter of land, and first cows.
I would have been about 19ish when I bought the first cows, no assets to my name. Full time job as an apprentice mechanic. I borrowed the money with the intention of building some credit, then payed it back using work income. A year later the quarter of land next door came up for sale.

Dad came with me to meet the realtor, and didn't discourage the decision, so both those were a big help.

My grandma loaned me the down payment with interest at the going rate, which I paid back with work income including the interest within a year or two, I forget. That is certainly a hand up that wouldn't be available to all, and was much appreciated.

My employer provided a letter proving that I was gainfully employed, and would be as long as I wanted to be. That was a massive help, and was all the bank required for collateral.

Living at home, unofficially exchanging labour (which isn't really labor when you enjoy it) for room and board and use of equipment was also a huge help, allowing me to reinvest all of my work income back into the farm, paying down the mortgage in a panic. Didn't get much sleep, working as much as 400 hours a month, then coming home to put in another full day of work.

Bought the next quarter 2 or 3 years later, using equity built up in the first as collateral
Didn't obtain any significant income from the farm, none for quite a few years, since there really wasn't much, BSE hit, health issues, weather, I was building equity for the long term plan, so that was acceptable in the short term, off farm income was paying for it all. Understanding employer who himself wanted to, and tried to farm helped a lot. As long as the work got done when it needed to be done, no one cared if I worked all night and farmed all day, and was available 24/7.

Paid for those in a couple of years, bought 2 more using the equity, sold a couple of subdivisions, and used that to buy another. All arms length deals. By this time land is up to $200,000+ per quarter.

Only after that were we finally able to make a non arms length deal on the 3 quarters of the home farm. With a discount to full market value, and internal financing. The terms were accepted, not negotiated, so as to appease the non farming siblings( long story, don't go there, as it turned out, nothing short of gifting the land to them was acceptable). So I suppose that is old money at work. Those two terms would not have been available to anyone with non farming parents.

By this time, (10 years ago) I was mostly farming full time, health issues on my part( turns out no sleep and non stop work takes its toll), and parents health didn't leave much choice. Only after that did we finally start to see income from the farm. Which we have continued to put back into buying more land. Continuing to get by on the bare minimum in equipment expenses. As of today, the arms length purchases outnumber the non arms length by 4 times.
Edit to add that somewhere in there I found time to obtain an engineering degree 2 hours away when health issues were making the previous career choice and possiibly even farming look non viable, then pursued that career as a side project. Plenty of academic scholarships helped that cause.
So looking back through that, we definitely did have more help than I'd like to admit. Not sure if any of that qualifies as old money though?
And the biggest help being the skills and opportunities that come from growing up on a farm with hard working parents, regardless of scale or profit or equipment.

[fjlip]

"And the biggest help being the skills and opportunities that come from growing up on a farm with hard working parents, regardless of scale or profit or equipment."


Agree and SIZE is not the only indicator of successful. A good life is huge in terms of satisfaction and happiness, even longevity. In the end, what matters?

[jazz]

Interesting discussion. Here is a question: what does a 25 yr old with a bit of entreprenuerial gambit and several thousand saved up do today?

IMHO education is a waste of money these days. Unless you go for the big money as a doctor or lawyer or something like that. Any lower tier wage positions, educated or not will be facing down a lot of taxation and inflation in the future with no way to rise above it or offset it. After covid, these companies are running super lean and thats not going back to the way it was.

Skilled trades have a place and are a mobile profession if needed. Highly skilled professions especially in tech will face pressures from automation and outsourcing.

Buys assets as soon you can, preferably something that pays you too, and hold on.