Cattle people/ farmers are getting old.

[Dave]

Be willing to check out and move to different areas. I knew I wanted out of western Washington. I spent a lot of time both on line and in person looking at places to consider. I was physically on over 40 places searching for one that would work. I ended up 400 miles from the place I sold. Also realize that people are moving out. Lots of them. This whole covid thing and people working at home made people realize they can move most anywhere and still work from home. A man I know who sells ranches told that places are selling like hotcakes to people wanting out of the city. A place I seriously looked at in the fall of 2016 ended up getting purchased by a man I know. He paid $700,000 for it in the spring of 2017. He sold it for $900,000 last month to someone who wanted out of Seattle.

 

[Brute 23]

That's exactly what I'm having to do. I tried going at it all different angles, the only way I can make it work is direct sell and grow that and build my inventory to match that demand.

I agree. I hope it works for you.

 

[Brute 23]

So that means they don't want money? Or that they have no need for money?
You corrected Brute-23 by saying - young people don't want or need money.

I'm pretty sure that's not what I said.

 

[callmefence]

So that means they don't want money? Or that they have no need for money?
You corrected Brute-23 by saying - young people don't want or need money.

I would say they want and need. Some willing to work for it. But very, very few willing to wait for it.

 

[callmefence]

Farm up the road from me went on the market a few months ago, 60 acres, 5 br house, shop and barn, marginal ground, $900,000 asking price. I was able to purchase 38 acres that joined me a little over a year ago for $140k, seemed high then but looks like a bargain now.

I bought 51 acres that joins me 5 years ago for 3900.00 a acre. It's paid for and would sell for 10,000 a acre tomorrow.
I'm not going to complain about land prices right now..lol

 

[Dave]

starting small and leasing and buying over time along with off farm income is not for every future framer/rancher but is an option that can work.

It might not be for every start up but it is the only one I have seen work. And I have been in this business for a lot of years. The other way is lots of debt. One can't be afraid of using credit but too much of it will get a person in trouble.
I think I have seen just as many or more people who had the advantage of inheriting or taking over the ranch go broke as I have seen those starting with nothing and make it.

 

[acefire]

Ya, this isn't about how hard you work... it's math. People work themselves to death every day and it still doesn't work out for them.

Work smarter... not harder. That's the saying right.

It is always the math. Does not matter what business you start from scratch. If plan is to do what most do in that business.......and most do not make money. Then why do you think you will. You will have to some things differently.

 

[Lucky]

I'm not sure if when land was $5 an acre people made it on just the Cattle and thrived. They certainly didn't live to to our standards today. 90% of successful people will tell you that it's multiple income streams that get you there. You need to be diverse and physical labor isn't the only way to make money.

 

[Brute 23]

I'm not sure if when land was $5 an acre people made it on just the Cattle and thrived. They certainly didn't live to to our standards today. 90% of successful people will tell you that it's multiple income streams that get you there. You need to be diverse and physical labor isn't the only way to make money.

People died young with out our modern standards.

I can remember just in my short life when my family bought the last property, paid for by cattle, in the 90s. It was like $1200/ac. That land is worth 5-7x that now but cattle prices have gone up maybe 10%. Most costs have double or tripled at a minimum since then.

Heck, just a little over a year ago we could lease a place at a decent price, put portable pens up, and make a run at it. Those same pens are 2.5x more. That has made it uneconomical to do that. No pens... no lease going forward.

 

[Lucky]

Everything is definitely getting higher. There has always been price increases though. Today's stuff has gone up at a rapid rate and it's very hard to justify things. I'd say for the last 10 yrs or so buying equipment has been better than keeping money in the bank. It's times like these that people that foresaw that are doing good and expanding while others fail or cannot move forward. I'm glad I'm in a holding pattern right now. We are taking a break and will just enjoy what we have for now. Unless of course a deal we just can't refuse comes up.

 

[DNelson]

Everything is definitely getting higher. There has always been price increases though. Today's stuff has gone up at a rapid rate and it's very hard to justify things. I'd say for the last 10 yrs or so buying equipment has been better than keeping money in the bank. It's times like these that people that foresaw that are doing good and expanding while others fail or cannot move forward. I'm glad I'm in a holding pattern right now. We are taking a break and will just enjoy what we have for now. Unless of course a deal we just can't refuse comes up.

Reminds me of the Jimmy Carter era. it was better to spend your money on something because 21% inflation would make you buying power a disaster. interest was 18 % and inflation was 21% if I remember correctly. Feds now keeping interest low, but inflation is outpacing it similarly.

 

[TennesseeTuxedo]

Not to worry, interest rates are about to takeoff.

 

[dave_shelby]

The fed and our government have corrupted much of our country. And in parallel most of the world with debt.

I do think that if interest rates increase there will be a massive collapse and realignment of the economy as those over leveraged folks chasing growth in scale will get clobbered.

 

[Lucky]

Interest rates are liable to be the great equalizer. Most business loans unlike consumer loans are shorter term and have a variable rate. We took out a few on the business years ago that would have made it very very hard to survive had the rates went up 3-4%. Land, home, and car sales will fall like a rock too. The statistics show the avg American family can't miss a pay check and only has $500 in savings. What's gonna happen when rates go up and businesses try to cover cost by raising prices on an already taxed economy? Banks have to loan money to survive, can they make it with 10-12% Interest rates.

 

[BFE]

The fed and our government have corrupted much of our country. And in parallel most of the world with debt.

I do think that if interest rates increase there will be a massive collapse and realignment of the economy as those over leveraged folks chasing growth in scale will get clobbered.

I think you're right.

A friend of mine has gone at it like he's killing snakes grain farming since we got out of high school around 30 years ago. He inherited a nice chunk of ground, started borrowing, and never looked back. I've heard his debt load is 1.5 million. Add 3-4% interest to that annually, things will get interesting in a hurry.

 

[dave_shelby]

Butchered hogs today in one of those big old fashioned parties and got to chat. One of the topics on the menu was just this - access to farmland and trying to get started or expand. "But everything is too expensive even chicken houses" and "I don't have the right last name to rent land". And now there is pressure from solar paying crazy money on long term leases. All of these people work day jobs and arent afraid of hard work. There is interest but as people noted earlier there isn't any path.

So maybe we will be right when the era of artificially high credit growth and low rates ends there will be opportunity...for those with cash. What scares me is a parallel to the 2008 crash where investors bought up real estate. That was only because of government stimmies which firms had unequal access to.

 

[TexWes]

Here in NE Texas i dont see a viable option to start from scratch. If you weren't born with it youre pretty much out of the loop. Theres virtually no cattle ground selling around me for less than $6k an acre and those are all 100+ acres. I've seen several smaller 10 acre tracts go for $10k an acre. Thanks Comifornia! Two different solar projects just bought a thousand plus acres each of family cattle farms a couple miles from me. Lease land is unattainable in my searches. With the prices of fencing and building materials its a stretch to invest in. I've leased several spots, invested lots of time and money only to be driven out when the old folks pass and the kids sell out the the highest bidder.

 

[mml373]

I have enjoyed being a FVC - farmers veteran coalition member and I think they offer a lot of help personally. But as with all things YMMV.

How did you engage with them/what should I do differently?

 

[sbranch]

It seems there are a few things that make agriculture career/life a very hard sell to younger people:

1) Startup costs for agriculture are much higher than technology or the trades, where the last two can be near $0 to get going.

2) Operations costs and effort are much higher for agriculture than technology or the trades.

3) The potential windfall if things go well is much lower in agriculture than technology or the trades. The chances of becoming a tech billionaire are almost nil, yet still higher than becoming an ag billionaire.

4) We were in a cultural cycle where it was "cooler" to be in a city if you were younger, although this seems to be ending and shift to rural life being "cooler" is starting, but who knows how long that will last.

Individual these would be tough to overcome, but all four at once is brutal.

 

[TexasRancher]

People died young with out our modern standards.

I can remember just in my short life when my family bought the last property, paid for by cattle, in the 90s. It was like $1200/ac. That land is worth 5-7x that now but cattle prices have gone up maybe 10%. Most costs have double or tripled at a minimum since then.

Heck, just a little over a year ago we could lease a place at a decent price, put portable pens up, and make a run at it. Those same pens are 2.5x more. That has made it uneconomical to do that. No pens... no lease going forward.

I bought some land in the 90's for $1,500./ acres its now 20 to 22 times increased. I consider myself a fairly knowledgeable investor...in the future Agriculture and Silver (precious metal) will be headed much higher. Cattle producers will have nowhere to go but up (actually making profits) from here. Cattle , Silver and Natural Gas were the dogs of the investment world. Natural Gas is breaking out now. Every dog has its day.
Exponential population people growth...there will need more energy, they will need more meat, they will need more silver for batteries, solar and for inflation hedge-silver is money. Can't keep the "controlled dogs" down forever.