Predictions and Observations

[agstar77]

No debt , don't care. Don't need latest and greatest equipment. Farming to make a living not to impress the neighbors or finance the ag industry. Almost a century farm and it has worked so far, no greed less stress. Merry x-mas to all and to all a good night.

[blackpowder]

8. Huge turnover in farms coming. 40% of farmers plan to exit the business in the next 10 years. That will accelerate when the cash flow stops or is negative.

I have been hearing some variation of this theme since I was a kid. I'm glad I didn't wait for this event to take place.

It seems the most likely outcome is that the non-farming offspring inherit the land, and it never does come up for sale. Maybe that would change in a high interest rate environment.

Agree, but depends on the ability of the inheritors to pay the taxes. As well as afford not to cash out.
At $1M per quarter, it's a lot for non farmers to sit on. Only the wealthier will be able to keep it.
Hence the trend in rents to reflect a % of FMV whatever that number may be.
How bad will it be for all when there is no one left willing or able to cash flow that number?
It'll take a different generation to find out. One that, if actively farming, will be rather well heeled.
It seems every acre on earth gets planted somehow regardless of cost structure.

[LEP]

The future retirement has largely happened here. Alot of consolidation has occurred and actually quite a few 5 to 15,000 acre entities. Plus a handful in the 25,000 to 110,000 range.

Biggest risk is interest rates for those operations. In the mid term that doesn't seem too likely to take off.

All bets are off if they do.

[blackpowder]

No debt , don't care. Don't need latest and greatest equipment. Farming to make a living not to impress the neighbors or finance the ag industry. Almost a century farm and it has worked so far, no greed less stress. Merry x-mas to all and to all a good night.

Man, I'm with you.
The thing that eventually affects all commodity production businesses is ever increasing economy of scale.
One can sit still only so long. Seeing that here now finally.

[BTO780]

Long as there is buying prices will NOT drop! Farmers are their worst enemies.

Manufacturers don’t give a rats ass if wheat and canola go down $2-3 bu, long as the orders keep coming in.

How many farmers in the states are able to take off two crops in one yr, or around the world?

The big will always get bigger, they don’t have a limit to where they want to be.

Stealerships and retailers will continue to steal and grain companies will continue to be crooks.
Guess that makes them thieves too.

[TASFarms]

New Kenworths are coming down in price.$30k lower? Big trucking companies aren’t taking all the trucks that they ordered. Probably start seeing that with pick up trucks in the new 6 months. Record amount of Americans behind on auto loans.

[AlbertaFarmer5]

Long as there is buying prices will NOT drop! Farmers are their worst enemies.

Manufacturers don’t give a rats ass if wheat and canola go down $2-3 bu, long as the orders keep coming in.

How many farmers in the states are able to take off two crops in one yr, or around the world?

The big will always get bigger, they don’t have a limit to where they want to be.

Stealerships and retailers will continue to steal and grain companies will continue to be crooks.
Guess that makes them thieves too.

I can't imagine going through life believing that the world is out to get you.
Is there anyone you can trust?

[fjlip]

"No debt , Don't need latest and greatest equipment."

We rarely buy new equipment, and BIGGEST non existent stress is NO debt. Seeing iron prices, we feel the new shed this year was a bargain! For the younger desiring farmers... they MUST risk, we all did. The lucky and careful will do well. Iron was always EXPENSIVE. Land Never paid for itself. Good luck to all, I can coast along after 51 farming years. Sons are well employed, they also rather not borrow $millions$, my legacy is safe.

[makar]

"No debt , Don't need latest and greatest equipment."

We rarely buy new equipment, and BIGGEST non existent stress is NO debt. Seeing iron prices, we feel the new shed this year was a bargain! For the younger desiring farmers... they MUST risk, we all did. The lucky and careful will do well. Iron was always EXPENSIVE. Land Never paid for itself. Good luck to all, I can coast along after 51 farming years. Sons are well employed, they also rather not borrow $millions$, my legacy is safe.

I bought a new grain auger 30 years ago so never say never.

[AlbertaFarmer5]

I bought a new grain auger 30 years ago so never say never.

Coincidentally. I've always said I would never buy new equipment. Then I bought a new grain auger 3 years ago.
Took me quite a few augers to figure this out, but as it turns out, there's no such thing as a good cheap used auger.

[AlbertaFarmer5]

Agree, but depends on the ability of the inheritors to pay the taxes. As well as afford not to cash out.
At $1M per quarter, it's a lot for non farmers to sit on. Only the wealthier will be able to keep it.
Hence the trend in rents to reflect a % of FMV whatever that number may be.
How bad will it be for all when there is no one left willing or able to cash flow that number?
It'll take a different generation to find out. One that, if actively farming, will be rather well heeled.
It seems every acre on earth gets planted somehow regardless of cost structure.

I thought more about this. Perhaps I was wrong when I said the heirs don't sell. Thinking about my most recent purchases.
The last 3 quarters were from estates with multiple heirs, and they couldn't get along so ended up selling the land. One piece had ~30 heirs, that gets messy.
The one before that was an unemployed big shot from the energy industry. He should have quit trying to be a big shot much sooner after the money ran out. It took nearly a year just to get the title, there were so many second mortgages on the land that had to be settled.
Previous to that was a farmer who wanted to sell some land before the prices crashed. That was 11 years ago, he will be right eventually.
I am not aware of any farmer selling their farmland wholesale at arms length in this area in recent times. It either gets passed down, sold piecemeal as they cut back, or sold after they pass on. Last farm I can think of that sold because the farmer quit farming was 1988.

Are there any stats as to how many transactions are arms length vs non arms length?
Very rarely does any land come available publicly, but according to the stats, there are lots of transactions. If I had to guess, maybe 75% of transactions are non arms length? Is that similar elsewhere?

[sumdumguy]

Estate turning over here, with 3 kids inheriting their share of 2 section of gumbo. None of the heirs are farmers - Trudeau is gonna take his pound of flesh when this land changes hands.