Extremely Profitable Big Time Operators ?

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Stocker Steve
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Extremely Profitable Big Time Operators ?

Postby Stocker Steve » Sun Oct 15, 2017 5:36 pm

There is a trend in this area towards very large livestock operations that own very little land. Some contract for all their feed, and others have long term leases on land. I assume they have a skilled bean counter on their staff who has calculated that their returns are higher when they invest in more livestock, and let someone else makes the land payment. :?:

Do you see this in your area? If so, about what percent of their land is deeded?
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Re: Extremely Profitable Big Time Operators ?

Postby Texasmark » Sun Oct 15, 2017 7:15 pm

You talking about farmers making a living or better yet a profit? None of that around here. Just about the time you think you are going to see black ink, a rock knocks out your cab door while you're cutting your sparse hay.....happened to me yesterday. $640...more than the hay will sell for much less the expenses in getting it in and delivered.

We have a feedlot in the area. Runs about 1800 head in a finishing operation. That operation is small real estate. The cattle are born and raised on leased land in the area. Had 400 acres leased across the street from me for as long as I've been here (40 years) and was here when I got here. Folks that do the work and supervise the operation (plus "hands" to help out) own the land and the operation. Haven't seen any Cadillacs or Escalades in the parking lot.

One of the owners that works places near me has about a '85 model, 1 ton flatbed (isn't even a dually) Cummins diesel that smokes, worn out tires......you ought to see these guys maintain a fence on their leased land. Partial roll of well used barbed wire (like is rolled up when a fence is taken down....about 3' diameter half a dozen loops, barbs at least are well rusted, some Zinc still on it in places, Bowie knife for cutting and stripping small saplings, an old, rusted, wad of used baling wire, pair of common pliers, and a little time which they have plenty of.
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Re: Extremely Profitable Big Time Operators ?

Postby SmokinM » Sun Oct 15, 2017 7:52 pm

Most here run on leased land myself included( I am not a big operator tho). Can't afford land to buy it so you have to find someone that has invested in land or inherited and is smart enough to let somebody else take care of it. Lease rates here are cheap and stocking rate can be decent, the problem is finding land that isn't tied up already. Usually fence is total junk if they give the lease up. Hard to get long term written leases as well. Mostly gentlemans agreements and most of the time we are gentlemen about it. Grain farmers got real aggressive for a few years but low grain prices have leveled the playing field some. Big places tho they still keep tied up so all us cow guys get are little places spread out.

As for profit, if you make it here it is on leased land, extreme profit is if you grow something other than cattle. I however am to pretty for jail so I don't grow it. :cowboy:
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Re: Extremely Profitable Big Time Operators ?

Postby ddd75 » Sun Oct 15, 2017 7:58 pm

several feeding out dairy beef and several milking. buying all inputs.

they all have new 60k trucks, trailers, semis, equipment, buildings, etc.
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Re: Extremely Profitable Big Time Operators ?

Postby Stocker Steve » Sun Oct 15, 2017 8:07 pm

ddd75 wrote:several feeding out dairy beef and several milking. buying all inputs.


Seems like feedlot steers are followed by feedlot dairy cows, and even some feedlot beef cows.
Here they sometime set up separate legal entities for forage production and forage harvesting and meat/milk production.
I would never want to own or operate a feedlot, but I think there are some lessons to learn from them.
Corn silage is $25 to $30 per ton here. Can you cash flow it for that?
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Re: Extremely Profitable Big Time Operators ?

Postby Tbrake » Sun Oct 15, 2017 8:20 pm

It is way way way cheaper to rent than it is to buy. Absolutely no way you can pay 22-2500 for decent pasture and have to buy cows to go on it. Only time we buy is if the landlord comes to us and says he is selling it. Either we buy it, or it goes to auction. Expections being farms close to home and of good quality. We always rent when possible. Only variable would be if you had a bunch of cash sitting in the bank to put down. Unless everyone is a much better farmer than me, that’s usually not much of an option.
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Re: Extremely Profitable Big Time Operators ?

Postby Aaron » Sun Oct 15, 2017 8:31 pm

They are at the mercy of the markets, completely. Calves go to $500 US or less, but hay still at a premium and you could be in for a world of hurt. Also, leases can be broken. Might do really well some years and be close to bankruptcy other years. I know of one guy here that does it with 90 cows, only owns 160 acres. No equipment whatsoever and rents all his equipment from neighbors. He talks a big game, but everyone knows the books tell a different story. His wife admits they barely scrape by and are one bad year from bankruptcy. Things got so bad a year or so ago that she threatened to divorce him if he didn't pull in his reins, which was a real shocker because they are hardcore Mennonites.

Of course, you must keep in mind that land is cheap to buy here relative to other places. Was at a tax sale for next door township last week to see what tender amount a 165 acre parcel would go for. I had thought about putting a tender in for 10k (minimum bid was $7800) but that someone would probably pay closer to assessed value of 18k. It is a few miles down the road and would have been only good to me for hunters to rent. Low and behold the high bid was 36k, which really surprised everyone in the room, even the clerk reading out the tenders. There were 15 tenders and 3/4 of the bids were under 25k.
Last edited by Aaron on Sun Oct 15, 2017 8:40 pm, edited 1 time in total.
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Re: Extremely Profitable Big Time Operators ?

Postby farmerjan » Sun Oct 15, 2017 8:37 pm

SmokinM wrote:Most here run on leased land myself included( I am not a big operator tho). Can't afford land to buy it so you have to find someone that has invested in land or inherited and is smart enough to let somebody else take care of it. Lease rates here are cheap and stocking rate can be decent, the problem is finding land that isn't tied up already. Usually fence is total junk if they give the lease up. Hard to get long term written leases as well. Mostly gentlemans agreements and most of the time we are gentlemen about it. Grain farmers got real aggressive for a few years but low grain prices have leveled the playing field some. Big places tho they still keep tied up so all us cow guys get are little places spread out.

As for profit, if you make it here it is on leased land, extreme profit is if you grow something other than cattle. I however am to pretty for jail so I don't grow it. :cowboy:


Wish I could LIKE your post a half dozen times!!!!

We are considered big in this area. We run between 175 and 200 head brood cows. 99% leased land. Yes, it is too expensive to try to buy the land in most cases. Avgs 6-10,000 an acre here unless in real big parcels, then at least 5,000/acre. Friend's elderly aunt just passed, maybe 200 acres I think, nice house, bank barn that needs some work, decent but not all great fences, asking $800,000. We pay an average $40 per acre for rented land. Most places are in the 25-40 acre size. Fences range from pretty good to "just wish there was a fence" type of fences. Several places we have done fencing in exchange for rent. Lost 2 places this year to sales of the land and will lose another 20 couple acres, place was sold with the stipulation that the lease had to be honored until Thanksgiving. We've been there 25+ years. Nice house, beautiful bank barn, good fencing, split in two pieces for some rotational grazing, (plus we have the 22 acres across the road), $325,000. That's 10,000 acre plus 125,00 for the house & barn.

We have a couple that are long term, but most owners don't want to get tied into it. So you don't do anything extra because you might not have it next year. A couple of cut throats, trying to steal places out from under you too. We will be cutting our numbers this year, mostly through selling some old cows and open cows. Culling will be very tough; no extra chances for open cows this year. And if they have crappy calves, they may go even if bred. May keep fewer replacements this year too because we have alot of heifers to choose from so we can be very selective.
That said, just heard that there is a guy who bought a place we used to have, was very dissatisfied with present condition of farm, had seen pictures from 5 years ago, and talked to several people who knew when we had it. He wants us to take it over again. Absentee owner who invests in properties.... Money seems to be no object, so wants all NEW FENCES and is looking at two adjoining properties to buy. Could work into a sweet deal but not counting on anything. Will see. Seems to be pretty particular and I don't have alot of patience for that but might be okay.

We bought 75 acres for 3,000/acre 2 years ago, then bought the house on 2 1/2 acres because the water is on the house and the right of way goes right along the house. House cost 100,000, but it puts the farm "back together" and the house is rented to pay the mtg on it. Cows pay most of the mtg on the farmland. Alot of headaches though. House rent is $350 more than I pay where I am so no way am I going to move there, plus it is 25 miles further away from 80% of the dairies I milk test. It is investment, a good price for the land and it will bring more than what is invested.

Yeah, we just aren't into growing "ALTERNATIVE" crops. I'm too old to want to spend time where I can't go where I want, or do what I want!!!!!! Too set in my ways to put up with rules and guards and stupid stuff.
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Re: Extremely Profitable Big Time Operators ?

Postby Texasmark » Mon Oct 16, 2017 8:11 am

SmokinM wrote:Most here run on leased land myself included( I am not a big operator tho). Can't afford land to buy it so you have to find someone that has invested in land or inherited and is smart enough to let somebody else take care of it. Lease rates here are cheap and stocking rate can be decent, the problem is finding land that isn't tied up already. Usually fence is total junk if they give the lease up. Hard to get long term written leases as well. Mostly gentlemans agreements and most of the time we are gentlemen about it. Grain farmers got real aggressive for a few years but low grain prices have leveled the playing field some. Big places tho they still keep tied up so all us cow guys get are little places spread out.

As for profit, if you make it here it is on leased land, extreme profit is if you grow something other than cattle. I however am to pretty for jail so I don't grow it. :cowboy:


"As for profit, if you make it here it is on leased land, extreme profit is if you grow something other than cattle. I however am to pretty for jail so I don't grow it."

Had some dumbass thought he was going to hide 12 acres of grass in his corn field. Wound up with 10 years in Fed prison and died of old age while there.
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Re: Extremely Profitable Big Time Operators ?

Postby Stocker Steve » Mon Oct 16, 2017 5:49 pm

Lived in ND for a couple years. Hard (dirt surfing crop farmer) chargers in the middle of the state buy a quarter and then rent a couple thousand acres from widows and trusts. Seems to work if you have with crop insurance.

Go west Smokin M, and buy a couple hunting dogs!
Last edited by Stocker Steve on Mon Oct 16, 2017 5:54 pm, edited 1 time in total.
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Re: Extremely Profitable Big Time Operators ?

Postby Stocker Steve » Mon Oct 16, 2017 5:51 pm

I live in central MN now but I still hunt ND. Hard chargers with livestock here rent about half of their acres. Most folks are clueless grazers and set stock - - but I think this approach can work very well if you are able to do MIG, and manage variable stocking rates, and manage the cattle price cycle. :shock:

Might have to get up early to do all that...
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Re: Extremely Profitable Big Time Operators ?

Postby SmokinM » Mon Oct 16, 2017 7:51 pm

Stocker Steve wrote:Lived in ND for a couple years. Hard (dirt surfing crop farmer) chargers in the middle of the state buy a quarter and then rent a couple thousand acres from widows and trusts. Seems to work if you have with crop insurance.

Go west Smokin M, and buy a couple hunting dogs!


Oh if only I could convince my wife! Still no luck but I keep trying!!!
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Re: Extremely Profitable Big Time Operators ?

Postby Stocker Steve » Mon Oct 16, 2017 8:21 pm

SmokinM wrote:Oh if only I could convince my wife! Still no luck but I keep trying!!!


Slim pickings out on the prairie. :nod: BYOW
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Re: Extremely Profitable Big Time Operators ?

Postby Stocker Steve » Tue Oct 17, 2017 4:20 am

Aaron wrote:They are at the mercy of the markets, completely. Calves go to $500 US or less, but hay still at a premium and you could be in for a world of hurt. Also, leases can be broken. Might do really well some years and be close to bankruptcy other years.


I agree that there is more risk with being big and being specialized, but I think these guys believe they are "too big to fail". What would the bank do with a confinement operation like that?
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Re: Extremely Profitable Big Time Operators ?

Postby chevytaHOE5674 » Tue Oct 17, 2017 5:29 am

Stocker Steve wrote:What would the bank do with a confinement operation like that?


The same they do it anything else they repo, auction it off to try and recoup their investment.
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