Land Rent

[WoolyBear]

Yes cowman its oil money that ruining this damn country. Those that have it, are pushing the land costs out of reach of those that don't. Is it any wonder that young farmers are leaving when they are up against Jed Clempet and his oil barrel? At the same time the cost of that same barrel of black is running most everyone else that needs it into the red.

Just remember when its gone..... its gone.

And yes..... your machinery costs, depreciation, interest cost, etc are either not listed, or too low.

[cowman]

lakenheath: Of course you are totally right that all those costs must be taken into account for the total profitability of a farm. But you did say how can guys justify one extra quarter at these high rents?
And lets face it the guys renting land are usually running a fairly decent sized operation and adding one more quarter is like nothing? Maybe they shouldn't be doing that sort of thing but the fact is they do?
It all depends on how you look at it? And without a doubt many times it really has nothing to do with money but more with wanting to be the biggest dog on the block?
I don't think I ever said it was the smart thing to do? And personally I'm not real keen on working for fun or status or something, but you need to realize their are people who will and hey, it is their dime? I do understand how frustrating that must be for a young man trying to get ahead and without a doubt this is not an easy business...even in the good times!
I will tell you, in my lifetime, I passed up some opportunities to buy land that I dearly regret today! But then at the time I never had any money and it just didn't pencil out no matter what! Today looking back on it I look like the biggest idiot in the world...but who can see the future?
Bottom line in any business venture is do your homework and look at things like your darned banker would? Realize that sometimes you have to take a chance and roll the dice, but never do it with rose colored glasses on!

[cowman]

Wooley bear: Oil and gas aren't ruining the country. In fact I might suggest to you that is what is keeping a lot of people going? I would also note: that same oil and gas is letting a lot of farmers retire with a decent nest egg and able to either sell at a decent price to the kids or cut the neighbors kid a deal?
You shouldn't smear the one commodity that is basically keeping Canada afloat?
Don't blame oil and gas wealth with driving up farmland prices...put the blame where it should be...easy credit from Farm Credit and the various provincial loans and loan guarantees to banks?

[Ron]

Lakenhealth
1. custom seeding
2. cwb int free spring advance
3. no living cost as it is extra land
4. 15$/ac with an old combine includes repairs (there is no depreciation left). You dont need a JD 9650 to harvest 1000 acres. A decent mechanic can keep an older unit running cheaper than you shiny green guys would believe.

[Ron]

Ron I don't know if you wrote this thread while you were sleeping & forgot to wake up?

Ron you are missing alot of cost in your figures. No you don't need a brand new 9650 but the old one will need to be replaced someday.

Ron you still have to figure a cost of living on an extra 1/4. If you your cost was $10/acre living on 1 quarter than with 2 it would be $5/acre still a cost.

40(easy average like you said) what do you do like last year with frost 20bu/ac*$4.50/bus =$90/acre. 215-90=125 loss. But I guess you guys don't have frost.

[grassfarmer]

Cowman I don't know where you get your info from re Dutch land prices. I found a website showing 2001 prices at equiv. of $21,000 per acre - I doubt they have risen to $100,000 an acre just yet.

http://www.cbs.nl/en-GB/menu/themas/bedrijfsleven/landbouw-visserij/publicaties/artikelen/archief/2001/2001-0726-wm.htm

[grassfarmer]

By the way Ron 240-215=25/acre. Guess it is easy to see why guys get in trouble.

Cowman you said there are alot of mineral rights on your land. No wonder they are paying the rent they are they're play farming. What I mean by that is they're taking money from their mineral income and putting it towards land. If you're going to do it on land only you will go broke paying 60-100/acre land rent.

P.S. Cowman have a budy who was just in Europe (don't exactly remember where) Your're right they do think land is cheap here they bought some. Now they want out because they said they have no idea how we make money here.

[cowman]

grassfarmer: Just what my Dutch hog farmer neighbor told me...plus a dairy guy who has an oil lease on his "Canadian farm"? He actually showed me what he got for his sixty acres in Holland...and Yep...it was slightly over $100,000/acre!
Not quite sure where the other question was coming from in regards to mineral rights? We don't rent out our mineral rights to the guy who rents our farm land? In my own case I just do a crop share, on the land I own, with my cousin? I get all the mineral rights.
Yes he does have oil and gas rights on his fathers/grandfathers land, and yes the money he recieves is quite a bit higher than what he could possibly make farming it!
Goes with being here 100 years ago and having the money at the time to buy land instead of homesteading it! I sure as hell am never going to apologize because my great-grandfather had a dollar in his pocket...instead of being some destitute peasant from Europe!

[Vader]

You guys are all talking about high land rental prices. In my area land rent is below $15.00. In fact some people are starting to talk about letting someone farm the land for free just to keep the weeds down.

When land rent goes this low there will always be someone to take the land and farm it.

Seeded acres never seem to change regardless of grain prices.

[lakenheath]

I have some Ron's for neighbours. They are about as bright as a donkey with a pencil. When they caluclate ROI, ROE, debt servicablitly, or budget they use too high prices and unreasonable yield estimates.

I can pencil on hell of profit for this coming year.

Let's see here:

55 bushel wheat (becasue we have got that a few years in the past) at $4.50 = $247.50 bushels an acre

35 bushel lentils at 16 cents = $336.00 per acre

65 bushel peas crop at $3.85 = $250.25 per acre

Holy crap guys I can rent land for $100.00 an acre and make money. I better get on the phone and start phoning the neighbours up.

Do you think they would take this offer.

Damn after next year I can retire. Yeeha!!!!!!!!!!!!!

[cowman]

I wonder Vader: When you can't get $15/acre...what does that land sell for? Now if I was a retired farmer, looking to rent out his land, and some guy offered to farm it for nothing...to keep the weeds down...then what is my land worth? Would you say nothing?
Do you think something isn't quite right in this country? Do you think we should encourage our children to go into agriculture?
How do we turn this thing around? Or is it gone and we are just wasting our time even trying? Personally I find it very distressing that the world I grew up in is fast coming to an end! I don't want to buy out my neighbor...I want him and his sons to continue being my neighbors!
We know this hasn't been working? Do we keep doing the same thing? Maybe it is time to take a step forward? Get the garbage out of selling grain? The garbage that hasn't worked...the Canadian Wheat Board?

[cowman]

lakenheath: I can sympathize with your anger but the fact is Ron stated just how it is...in central Alberta! Now I realize you face a different set of circumstances?
Did you ever try to cut a deal with a local farmer on a share deal? Considering his plight...as well as your own?
You might just be surprized as a lot of older farmers are very understanding of what obstacles you might be facing?
I will tell you this right now: A good businessman knows how to deal with other people and can get them to see things... how he sees them? That is basic, whether you are a farmer or whatever? You come in with an attitude and you are toast...no matter how much money you have! You stroke them...you are in like Flyn!
Presentation is about 80% of any business deal? You need to sell your landlord on why he should deal with you rather than every Tom, Dick and Harry down the road? It might surprize you that in the real world of business, price actually plays a relatively small part in any deal?

[lakenheath]

Cowman, I do crop share all my rented land. We have some absolutely excellent farmland in our area, but as stated before, cash rents are out of control.

Central Alberta isn't the farming haven of the Prairies. There is farmland in Sask. that would probably yield the hell out it on any given year. But the in the end, farming is farming and certain areas are not exempt of risk.

Some of the historically richest farm areas in the Sask (rich with old money, big farmers and new machinery and heavy clay soils) got hit with drought, frost, grasshoppers and then drought.

Ron's reserve fund would get eaten up in one of those for year. But, wait a minute, he probably didn't pencil in a need for a reserve fund with a guaranteed 40 bushel Canola crop every year at $6.00 per bushel.

Ron's calculations still make me sick and so do the cash rents you speak of.

Here is the bottom line. Pay your hellish rediculous rent and puff your chest out. But....Any farmer paying that has absolutely NO RIGHT to ever complain about farming whine to government to help bail them out.

[WoolyBear]

They always said that the rural life on a farm is one of the best places to raise a family.......... now a days though, don't expect the farm to pay for the family. It just takes the live (fun) out it if you have to spend every waking hour either doing the off farm job thing to make the farm work, or taking on 5000 acres (or 20000) to make everything pencil out. Both cases don't make sense if you want your family to stay together.

We keep hearing how the trade unions at talking about shorter work weeks, farmers don't keep bankers hours, and you don't expect to find retailers open past a certain time. Why then does the size of an agricultural unit have to be so large......... or need more hours to make it pay?

[Vader]

I am sorry cowman. The Canadian Wheat Board is not the reason for the problems in agriculture. There is no CWB in the US, or in Europe and yet things are no different there.

The problem is overproduction!!!

Why do we think that we need to seed every acre and max out the production and that there will be a healthy market for what we grow. We fail to see the writing on the wall.

Only when the world has a real serious crop failure or when farmers go completely broke and quit seeding will the problem take a turn. And if it is the former rather than the latter we will stil not learn and the solution will be short lived.