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Thread: Farm bankruptcies

  1. #11
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    Quote Originally Posted by nogie1717 View Post
    It is possible, Paul, but the name calling and "clap backs" have gotten to be pretty outrageous.

    I can't speak for the eastern part of farm country, but South Dakota has its challenges. Low prices, fueled by oversupply and tariffs are going to squeeze out even more farmers.

    At the same time, farmers have been their own worst enemy. If you think suburbanites like to "keep up with the Joneses", imagine that being done with quarter million dollar pieces of machinery, pole barns and land. If the farmers worked cooperatively and collectively, they'd have a much greater control over their destiny.

    When times were good, some used those profits to pay off debts. Some figured the good times would keep on rolling. I hate to see generational family farms go under, but there should be accountability regardless of one's trade.

    One of the biggest issues, IMHO, is the corporate sponsorship of family farms. With $4 being the break even mark on corn, there just isn't the ability to pay loans. So, Cargill and Monsanto have stepped in and basically bankroll some of the farms, ensuring their brand of seed, chemical, etc., is used. Ever hear of the company store? I can promise that's where some of these guys are headed.
    Quote Originally Posted by paul young View Post
    It has become impossible to discuss anything on this forum due to a few toxic posters.

    I really thought discussion of this topic was possible. My mistake.-Paul
    Paul, it is a very good topic and nogie makes the point that it is not the same all over the country. I will post what I know from experience and local knowledge and not just from what I read. Couple of things to do first.

    I hope you will not be discouraged by the nonsense as there are many posts that do seek knowledge and there are those that seek debate to LEARN something. JUst take the time to separate the wheat from the chaf.

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  3. #12
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    WSJ has a large article on this subject today, a quote:
    Quote Originally Posted by wsj
    Nathan Kaufman, Omaha branch executive at the Kansas City Fed, called the recent rise in bankruptcies modest.
    He said that while further increases are likely, he doesn't anticipate a sharp jump in filings, although the downturn in ag could
    drag on for years to come.
    It also discussed the large number of legal practices involved & how lucrative it is for those folks .

    One farm family along with their 2 sons farmed 17,000 acres & declared bankruptcy with $36,000,000 in debt. The 5th generation
    farm had corn, hogs & cattle. The farm"s last 197 acres homesteaded in the 1860's will be auctioned this month.

    We looked @ a property in Eastern WA about 30 years ago. Asking price of $750,000 which was not supported by the income
    statements. The RE broker said we would have to pay cash in order to make a living on it. I informed him that if we had that
    cash we could invest it in CD's, which at the time were paying over 11% without any hassle. Seems the bank had loaned the
    guy money to buy a combining outfit including 3 combines & the trucks to haul them for custom combining & he was not doing
    well. I blame a lax banker for that.

    When I got out of college I thought owning a motel would be great. The banker, whom I had been highly recommended to gave
    me a piece of advice I have used in pricing. "Remember that most small businesses are priced without taking the owners salary
    out in the expense column." Their criteria was: they would loan 100% on a chain motel in a major city, 75% on any motel in the
    areas outside of Butte.

    A lot of people are not frugal enough to be in business!
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    Someday your life will flash before your eyes. It's your responsibility to make sure it's worth watching!

    Skills can be taught. Character is either there or it's not!

  4. #13
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    Quote Originally Posted by paul young View Post
    A couple of months ago, I posted about American farmers whose backs were against the wall and in danger of going under. MANY on here pooh-poohed it even though I provided data to the contrary. Some even said I had no knowledge or understanding of farming. At the time, I bit my tongue and let it go.

    I do have first hand knowledge of farming, having worked on farms in my youth and having spent all my adult life in close association with many Dairy and grain farmers who were generous and gracious enough to let me hunt their properties in 4 states and 2 Canadian provinces over those 45+ years. They were, without exception, the most humble, kindest and proud people I have ever met. None were looking for handouts, Heck, they didn't even want money from me for the privilege I was asking for. In fact, most invited me into their homes for conversation and a meal.

    And now this. https://www.msn.com/en-us/money/mark...ing/ar-BBTfj7M
    This is just the tip of the iceberg.

    Many on here lament the growth of Agribusiness and what it means to the hunters, fishermen and environment. As these small farms go under, who do you think gains more control of agriculture?

    Food for thought and a topic to discuss. -Paul
    Paul, this is not from farem journals. It is simply a little history of my decisions and the effects on agriculture in my local area. I do not speak for other areas of the country. Abour 2 years ago a man of a multigeneration farm family also went broke and took bankruptsy while managing to save his family farm. He also had increased his farm operations bybuying land in Arkansas which is a short drive across the river. I suspect he got in trouble and doubled down and lost. My farmer said it was the first farm bankruptsy he had heard of in over 20 years.

    Last fall, before soybean harvest, he came to me and said he intnded to store all the beans he had enough bins to hold and wanted to know if I was will to also store mine as he would not have to separate my share at harvest. Beans were down significantly since Trump had implemented tariffs. Neither he nor I believed that there would not be a fairly quick settlement and knew that the price of beans would rebound significantly. His words were that "two billion chineese had to eat. There are currently rumors that an agreement will be done by end of March and if that happens we stand to come out very well. Fact is that neither of us need to sell our beans anytime soon. Only 2 days ago, I asked him if a lot of beans would come out of storage as we would and he said that very few beans were not sold. In fact he is planning on adding to his ability to store grain and building additional grain bins. Those that have to always sell at harvest cannot hold their crops. Those who have little or no debt have far more options.

    This is what I do. I keep at least 2 years of farm expence such as my share of fertilizer in cash. As my father always said, "during the good days, save for the rainy days. Money market funds was a good way to keep cash for working operations till the interest rate went to ZERO. That cost me money and also cost those that saved for their retirement and found thatthey either had to continue working or cut back significantly in their lifestyle.

    Farm income can vary greatly from year to year. In the past, we could income average over 5 years which did help when it came to income tax. I became well aware of it when I was sick and could not work for an entire year. By going back and income averaging those years, I got an income tax refund which, along with the collection of accounts receivable, allowed me to pay my business expenses and live without incurring additional debt. Most extablished successful businesses can expect to have a relatively steady income with an acceptable growth. That is not true when it comes to farming, at least here.

    As I have said before, there are far fewer people in farming dur to efficiency. But that also requires far mor farmland per farmer, far more capital equipment and far more operating money per farmer. Add tho that that farmland is not depreciable a business expense, also affects farmers. If you consider that farmland sells for about 31 times net income. If you consider that a genertion is about 20 years. If you put a pencil to these facts. There is no way a family can acrue through savings, enough farmland, equipment and operating money. Every 20 years, the death tax would steal the land from the family. By the way, big corporations do not pay death taxes every 20 years when the owners die.

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    Thanks for posting about your current experiences, Cary.

    Glad to hear your farm is on solid footing and that you are confident that things will improve for farmers soon. I hope that you're right. They deserve better and should not be pawns for politicial ambitions.

    It's a shame that the law is skewed in favor of the largest producers at the expense of the little guy. That didn't happen overnight. This has been coming to a head for a long, long time. -Paul
    there's no good reason to fatten up a retriever.

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    Paul, I grew up helping my Uncle farm 40+ years ago, he ran around 1400 acres. We ran a 6 row planter/6 row corn head/cultivator, pulled gravity boxes, pulled weeds by hand, open cab tractors some thirty years old. About eight years ago I was helping a neighbor with planting, he ran about 2200 acres, from the first day we started tillage till the last day of planting was 11 days. 48 row planter, four monster tractors (three with tracks)(none over ten years old) pulling 35-50 ft tillage equipment using gps for steering, seed tenders, fuel truck, skid steer, utv's you name it. How many rounds do you suppose you save by running auto steer in a tractor, pulling 50 ft chisel plow in a 1/2 mile wide field? My guess....not one. While it is sure nice to use a $60k skid to load seed into a $40k seed tender, to fill planter, I'm not sure that is necessary. Does a housewife new a $60k SUV, does a "King Ranch" trim package, pull any better than an XLT, or have a larger bed? So while tariffs are putting a serious hurt on most, I'm pretty sure a few did themselves in.

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    One other thing I will mention is that bankruptcy isn't always the end of the farm. There is a farmer in the community who has declared three times. I recently read his son declared for the first time recently. For some, it's a clever move to reduce debt. Some would argue it makes them smart.
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    Yes, several posts have been deleted. Any further mention of them or any future personal attacks will result in suspension of accounts.
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    Quote Originally Posted by caryalsobrook View Post
    Money market funds was a good way to keep cash for working operations till the interest rate went to ZERO. That cost me money and also cost those that saved for their retirement and found thatthey either had to continue working or cut back significantly in their lifestyle.

    Farm income can vary greatly from year to year. In the past, we could income average over 5 years which did help when it came to income tax. I became well aware of it when I was sick and could not work for an entire year. By going back and income averaging those years, I got an income tax refund which, along with the collection of accounts receivable, allowed me to pay my business expenses and live without incurring additional debt. Most extablished successful businesses can expect to have a relatively steady income with an acceptable growth. That is not true when it comes to farming, at least here.

    As I have said before, there are far fewer people in farming dur to efficiency. But that also requires far mor farmland per farmer, far more capital equipment and far more operating money per farmer. Add tho that that farmland is not depreciable a business expense, also affects farmers. If you consider that farmland sells for about 31 times net income. If you consider that a genertion is about 20 years. If you put a pencil to these facts. There is no way a family can acrue through savings, enough farmland, equipment and operating money. Every 20 years, the death tax would steal the land from the family. By the way, big corporations do not pay death taxes every 20 years when the owners die.
    The portion of your post I deleted really explains why some go broke & others do not!

    We can thank Bernanke, Yellen & the deficits don't matter crowd for the savers getting shafted.

    We can thank the Tax simplification Act of 1986 for the income averaging going away. I wonder
    what farmers got in exchange for allowing that to happen?

    Buying farmland at those exorbitant prices rarely makes sense. You do remember the Hunt Brothers
    trying to corner the AG market along with buying very expensive farm land in LA many years ago? It
    is virtually impossible for a 1st generation farmer to get into the business.
    __________________________

    Marvin S

    Everyone's friend is No One's friend

    Someday your life will flash before your eyes. It's your responsibility to make sure it's worth watching!

    Skills can be taught. Character is either there or it's not!

  11. #19
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    Quote Originally Posted by Marvin S View Post
    The portion of your post I deleted really explains why some go broke & others do not!

    We can thank Bernanke, Yellen & the deficits don't matter crowd for the savers getting shafted.

    We can thank the Tax simplification Act of 1986 for the income averaging going away. I wonder
    what farmers got in exchange for allowing that to happen?

    Buying farmland at those exorbitant prices rarely makes sense. You do remember the Hunt Brothers
    trying to corner the AG market along with buying very expensive farm land in LA many years ago? It
    is virtually impossible for a 1st generation farmer to get into the business.
    I thought the thread was why farmers go bankrupt, so why was the deletion?? I keep saying "Spend less that you make. It is not importantant how much you make, it is important how much you save, incredibly easy to understand, extremely hard to maintain decipline and determination to follow.

    What is the tax code today, over 80,000 page that are CLEAR AS MUD? Sadly the income tax code has a great effect on the value of assets. You think it is too hard for 1st genertion to get into farming. I think the government makes it too easy at the cost of the taxpayor.

    Your last paragraph really isn't worth a comment.

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