disappearing farm land

[lavacarancher]

Jo, Angus, not disagreeing with you about the CPA but I think there's maybe something else going on because I changed accountants a couple of years ago and the first thing he asked me when he saw that I had a day job was "how many head are you running". When I told him about 125 he said that's OK, that I wasn't a "hobby rancher".

Someone else eluded to this earlier in the discussion about folks buying up land for the sole purpose of getting a tax shelter. I don't think our new administration takes to kindly to that.

In my area of Texas something has sure caused the price of land to sky rocket and I'm thinking it has to do with oil and gas more than anything. Ten years ago you could pick up unimproved land for $600 to $1000 per acre. Now you'd be lucky to find anything for less than $7000 per acre - without mineral rights. And with the recent discovery of the Eagle-Ford shale (oil and gas) I would expect it to go even higher. With land selling for that much it's hard to imagine anyone making a living, let alone a profit, growing or raising anything except maybe pot. :shock:

 

[uscangus]

Jo, Angus, not disagreeing with you about the CPA but I think there's maybe something else going on because I changed accountants a couple of years ago and the first thing he asked me when he saw that I had a day job was "how many head are you running". When I told him about 125 he said that's OK, that I wasn't a "hobby rancher".

Someone else eluded to this earlier in the discussion about folks buying up land for the sole purpose of getting a tax shelter. I don't think our new

you are "right on it"- according to my cpa, since i have a full time job, it is consider a "hobby rancher". but what save you- is the number game of 125 head. i explained to him that i will one day have about 60 heads by next year. still, that number is still small. i explained to him with 5 kids, mortgages of two houses, three in colleges(and two are applying to graduate school), that i am over stretched. i don't want to over leverage in borrowing more loans to acquire more cattles. it is that number game, according to my cpa. i explained to him that i cant afford to hire someone due to small profit margin, initially.

in regard to land appreciation, you are right again-lavacarancher-there are a lot of land buyers buying land for tax deductions such as christmas tree or orange groves, and so on. in my area, i purchased the land about 6k per acreages about six years in western wa near I-5 freeway, and it has gone crazy. the local taxes if i did not farm or use it in agriculture would have been 50k per year. there are fewer and fewer large acreage land for sale in my area. since we have a lot of wateeeeeeeeeeeer, it is hard to find. with water, you could subdivided so easy if your are away from the city line.

 

[Jogeephus]

I don't think there is any magical number they look for but I agree it would be hard to argue with someone with 100 or better head of cows. But then again, I know a man who makes over $1M a year with his day job and he runs 800 brood cows and his whole operation is nothing more than a hobby to him cause his true intent is the deductions. If that weren't enough he claims residencey in an state income tax free state yet he lives here cause he can't seem to sell his house so he "has" to keep one house on the beach and his home here. Of course because of who he is auditting him would be career suicide for an auditor.

What I understand is they try to discern your intent. This is why taking pictures and documenting what you do is so important in the case of an audit. Also, don't mix your funds. Keep another account for your farm just as you would with any other business. Attend cattle meetings, subscribe to cattle journals and keep records of everything you attended to learn and better build your business. I also don't think hiring someone is neccessary. Actually I see this as a detriment if you are small since you need to show active participation in the business rather than passive. Don't buy toys or play pretties as this is a dead give away that you are a hobbyist looking for deductions. I think a good example of this would be the fella with four cutting horses, an aluminum horse trailer hooked to a new F250 and 40 head of horned cattle.

I deal with the IRS quite frequently in farm matters and this is how I see them. Nevertheless, you can always be audited by an idiot who accuses you of hiding 800 acres of mature sawtimber and replacing it with 800 acres of 5 year old saplings. :???: The burden of proof is on you so don't be scared to go to federal court to prove your case. Its a long timely road but its nice to hear the judge confirm that the auditor is an idiot. Now these are some deductions they can't question. :lol2: (True Story)

BTW - one thing you could also do is write a letter to your extension agent asking him for guidance in the cattle business because your intent is to make money and have a profitable operation. Meet with him and then ask him to recap your meeting in a letter. Follow his instructions in so much as possible. If you are auditted you have your letter and you have proof from a government agency that you are indeed seeking to make money and your actions on the farm are again documented via photos etc. I doubt for one second they would stand much of a chance against a gov't expert in cattle.

 

[uscangus]

I don't think there is any magical number they look for but I agree it would be hard to argue with someone with 100 or better head of cows. But then again, I know a man who makes over $1M a year with his day job and he runs 800 brood cows and his whole operation is nothing more than a hobby to him cause his true intent is the deductions. If that weren't enough he claims residencey in an state income tax free state yet he lives here cause he can't seem to sell his house so he "has" to keep one house on the beach and his home here. Of course because of who he is auditting him would be career suicide for an auditor.

What I understand is they try to discern your intent. This is why taking pictures and documenting what you do is so important in the case of an audit. Also, don't mix your funds. Keep another account for your farm just as you would with any other business. Attend cattle meetings, subscribe to cattle journals and keep records of everything you attended to learn and better build your business. I also don't think hiring someone is neccessary. Actually I see this as a detriment if you are small since you need to show active participation in the business rather than passive. Don't buy toys or play pretties as this is a dead give away that you are a hobbyist looking for deductions. I think a good example of this would be the fella with four cutting horses, an aluminum horse trailer hooked to a new F250 and 40 head of horned cattle.

I deal with the IRS quite frequently in farm matters and this is how I see them. Nevertheless, you can always be audited by an idiot who accuses you of hiding 800 acres of mature sawtimber and replacing it with 800 acres of 5 year old saplings. :???: The burden of proof is on you so don't be scared to go to federal court to prove your case. Its a long timely road but its nice to hear the judge confirm that the auditor is an idiot. Now these are some deductions they can't question. :lol2: (True Story)

BTW - one thing you could also do is write a letter to your extension agent asking him for guidance in the cattle business because your intent is to make money and have a profitable operation. Meet with him and then ask him to recap your meeting in a letter. Follow his instructions in so much as possible. If you are auditted you have your letter and you have proof from a government agency that you are indeed seeking to make money and your actions on the farm are again documented via photos etc. I doubt for one second they would stand much of a chance against a gov't expert in cattle.

many,many thanks Jogeephus for your excellent and sincere advises. i highly agree that i am passive participant only after hours to maintain the farm and the herd since i have to work also to pay for the mortgage. i will take your excellent advise to talk to my extension agent about guidance in the cattle business and to show me how to make profit. i dont have much toys to show that i am using the farm as tax shelter. my shelter is through buying cattle to increase my herd stocks. i will take your advises of taking pictures.
many, many thanks to you, Jogeephus, and to the boards, newbie--uscangus.............., happy holidays to everyone.

 

[gimpyrancher]

I think the best advice is to get a new accountant. One that has some knowledge of ranching and farming. Sending him info to read isn't going to help you in the present or in an audit. Like going to a cattle farmer to ask for advice about raising Elk, or visa-versa. :clap:

 

[Dave]

uscangus, You stated that you are in Western Washington near I-5. I wish you luck finding an extension agent who knows squat about the cattle industry. If you do actually find one let me know who this person is. The last extension beef guy I knew of in Western Washington was up in Skagit county. He retired several years ago. Extension in Western Washington has suffered some serious cut backs in the last few years and mostly they just run a master gardener program.

 

[uscangus]

uscangus, You stated that you are in Western Washington near I-5. I wish you luck finding an extension agent who knows squat about the cattle industry. If you do actually find one let me know who this person is. The last extension beef guy I knew of in Western Washington was up in Skagit county. He retired several years ago. Extension in Western Washington has suffered some serious cut backs in the last few years and mostly they just run a master gardener program.

you are right-"Dave"- it is about master gardener program or small farmer in how to sell your niche. most of the farmers are either wheat, corn, peas for national foods and dairy farmer. few are beef or cow/calf producers. basically, my informations is from the department of agriculture's extension from the vetenerian school across the country and my science background. thanks to the board from newbie, uscangus

 

[uscangus]

according "capitalpress.com," being burned by the volatile stock market, the housing bubble, and low interest rates, investors are
finding financial security and comfort on the farm. agricultural real estate agents are seeing increased interest in Western farmland, especially institutional investors-insurance companies and pension funds. prior to that, you had mutual fund investors acquiring farm land
at lower rates. they look at agriculture as an investment in terms of annual cash flow and future value compare to other investment vehicles, buyers of row crop farmland(landlord-tenant) better than a bank certificate of deposit of yields of 1 to 2%.

also, farmland ownership is also a good hedge against inflation. since it is hard asset, they expect farmland to have a positive correlations to inflations. the key here-like precious metal-farmland is a tangible assets that can appreciate in value. but compare to gold and silver,
cropland produces something that people can actually eat or drink.

farmland is a another vehicle of diversification, compare to commercial and income(apartment) properties. the demand is growing, since the economy is coming out. I am hoping that it does not go up to fast. i am planning to acquire some acreages.uscangus-newbie..

 

[dun]

according "capitalpress.com," being burned by the volatile stock market, the housing bubble, and low interest rates, investors are
finding financial security and comfort on the farm. agricultural real estate agents are seeing increased interest in Western farmland, especially institutional investors-insurance companies and pension funds. prior to that, you had mutual fund investors acquiring farm land
at lower rates. they look at agriculture as an investment in terms of annual cash flow and future value compare to other investment vehicles, buyers of row crop farmland(landlord-tenant) better than a bank certificate of deposit of yields of 1 to 2%.

also, farmland ownership is also a good hedge against inflation. since it is hard asset, they expect farmland to have a positive correlations to inflations. the key here-like precious metal-farmland is a tangible assets that can appreciate in value. but compare to gold and silver,
cropland produces something that people can actually eat or drink.

farmland is a another vehicle of diversification, compare to commercial and income(apartment) properties. the demand is growing, since the economy is coming out. I am hoping that it does not go up to fast. i am planning to acquire some acreages.uscangus-newbie..

Interesting since in the area there is only maybe 2 farms sold a year with dozens of them listed at all times.

 

[uscangus]

according "capitalpress.com," being burned by the volatile stock market, the housing bubble, and low interest rates, investors are
finding financial security and comfort on the farm. agricultural real estate agents are seeing increased interest in Western farmland, especially institutional investors-insurance companies and pension funds. prior to that, you had mutual fund investors acquiring farm land
at lower rates. they look at agriculture as an investment in terms of annual cash flow and future value compare to other investment vehicles, buyers of row crop farmland(landlord-tenant) better than a bank certificate of deposit of yields of 1 to 2%.

also, farmland ownership is also a good hedge against inflation. since it is hard asset, they expect farmland to have a positive correlations to inflations. the key here-like precious metal-farmland is a tangible assets that can appreciate in value. but compare to gold and silver,
cropland produces something that people can actually eat or drink.

farmland is a another vehicle of diversification, compare to commercial and income(apartment) properties. the demand is growing, since the economy is coming out. I am hoping that it does not go up to fast. i am planning to acquire some acreages.uscangus-newbie..

Interesting since in the area there is only maybe 2 farms sold a year with dozens of them listed at all times.

i guessed dun the weather, water supply, and more population. california has almost 40 and oregon and washington is about 14 millions of people. also, we are closer to asian market or pacific rim, based on location................location. i have seen this acquisition since
four years ago where mutual funds have started to acquire farmland. with low dollar, asian investor are buying real estate and farm land. so far, we have not started aqua-farming for tilapia or shrimps.. we have all the weather. i would love to start aqua farming one day.

 

[Dave]

One would think that with all the water in Western Washingont that aquaculture would be a great fit. There are two huge hurdles. The first is water rights. The Dept of Ecology (DOE) just isn't giving out any new ones and buying existing water rights is an expensive and difficult situation. The second is the waste water. Aquaculture has a large amount of waste water. DOE regulates this too. There have been several fish farms near me that were put out of business because they have no way to handle their waste water.

 

[Rainplace]

uscangus, You stated that you are in Western Washington near I-5. I wish you luck finding an extension agent who knows squat about the cattle industry. If you do actually find one let me know who this person is. The last extension beef guy I knew of in Western Washington was up in Skagit county. He retired several years ago. Extension in Western Washington has suffered some serious cut backs in the last few years and mostly they just run a master gardener program.

We're also in Western Washington and it's darn hard to find anyone who knows much about beef cattle. Finding a nearby vet has almost been impossible since most large animal vets work on equines only. Luckily we recently found one, but he's a good drive away. Diane Fish, out of Kitsap county works with small farmers, and though her focus isn't on cattle, she comes from a beef cattle background. She's been extremely helpful and wonderful to work with.

What we see here is farmland disappearing to subdivisions, hobby farms, and horse only people. Here is the saddest thing: we are only 60 acres, yet we are the largest working farm in our area. There are bigger tracts of land, but they aren't used for farming anymore. Heck we don't even have any ag zoning laws in our county, rural residential is the closest we have.

 

[dun]

We're also in Western Washington and it's darn hard to find anyone who knows much about beef cattle. Finding a nearby vet has almost been impossible since most large animal vets work on equines only. Luckily we recently found one, but he's a good drive away. Diane Fish, out of Kitsap county works with small farmers, and though her focus isn't on cattle, she comes from a beef cattle background. She's been extremely helpful and wonderful to work with.

What we see here is farmland disappearing to subdivisions, hobby farms, and horse only people. Here is the saddest thing: we are only 60 acres, yet we are the largest working farm in our area. There are bigger tracts of land, but they aren't used for farming anymore. Heck we don't even have any ag zoning laws in our county, rural residential is the closest we have.

I was thinking that it wasn;t that long ago that I woked for a couple of small farmers not too far from Bremerton. Then it dawned on me that it was 1980. Those farmers were old and didn;t have anyone that was interested in taking over the farms.

 

[uscangus]

We're also in Western Washington and it's darn hard to find anyone who knows much about beef cattle. Finding a nearby vet has almost been impossible since most large animal vets work on equines only. Luckily we recently found one, but he's a good drive away. Diane Fish, out of Kitsap county works with small farmers, and though her focus isn't on cattle, she comes from a beef cattle background. She's been extremely helpful and wonderful to work with.

What we see here is farmland disappearing to subdivisions, hobby farms, and horse only people. Here is the saddest thing: we are only 60 acres, yet we are the largest working farm in our area. There are bigger tracts of land, but they aren't used for farming anymore. Heck we don't even have any ag zoning laws in our county, rural residential is the closest we have.

I was thinking that it wasn;t that long ago that I woked for a couple of small farmers not too far from Bremerton. Then it dawned on me that it was 1980. Those farmers were old and didn;t have anyone that was interested in taking over the farms.

yes dun, you are right but what driving this market is global demand in the Asian continent. china is growing about 10% per year and add all the other asian countries. they will be the future consumers in the future, especially basic a staples. usa is not the only consumer in these continent.. tehy have so much capital in their economy. they are the banks like japan was in the 80's. uscangus.

 

[uscangus]

One would think that with all the water in Western Washingont that aquaculture would be a great fit. There are two huge hurdles. The first is water rights. The Dept of Ecology (DOE) just isn't giving out any new ones and buying existing water rights is an expensive and difficult situation. The second is the waste water. Aquaculture has a large amount of waste water. DOE regulates this too. There have been several fish farms near me that were put out of business because they have no way to handle their waste water.

but if you have water rights, it would not be a problem. i would think about doing shrimp but it is temperature sensitive only spring thru late summer. they grow fast and have a lot of return. per acreage, you would get a lot of crops. i have seen some producers in texas.
the waste could be use for fertilizer for pasture(may be). thanks dave, uscangus, hope usc shows up this weekend against oregon,ducks.

 

[Rainplace]

One would think that with all the water in Western Washingont that aquaculture would be a great fit. There are two huge hurdles. The first is water rights. The Dept of Ecology (DOE) just isn't giving out any new ones and buying existing water rights is an expensive and difficult situation. The second is the waste water. Aquaculture has a large amount of waste water. DOE regulates this too. There have been several fish farms near me that were put out of business because they have no way to handle their waste water.

but if you have water rights, it would not be a problem. i would think about doing shrimp but it is temperature sensitive only spring thru late summer. they grow fast and have a lot of return. per acreage, you would get a lot of crops. i have seen some producers in texas.
the waste could be use for fertilizer for pasture(may be). thanks dave, uscangus, hope usc shows up this weekend against oregon,ducks.

What a waste that they couldn't figure out what to do with their waste water since the water is so high in nutrients. In Australia since water is scarce they have been doing "aquaponics" for years. They take the nutrient rich water from growing fish, move it through crops, which filters the water, and then recapture the cleaned water to dump back into the fish pools. It's a circulatory system. I played with it for a while using ducks instead of fish. If one were not able to build the infrastructure to have a large closed system, I don't see any reason why one couldn't figure out a way to use the waste water to fertilize pasture from a holding pond, or at the very least, bottle it up and sell it. I guess the key is to not to have more nutrients being produced than one can find use for. Dunno, I always think things are easier than they turn out to be.

 

[uscangus]

more foreign monies are coming here to acquire farm land. since it is hard to sell and get credit to the bank for future buyers, large mutual funds and insurance companies
are able attain large acreages. with low treasury rates and our government selling treasuries, it is for corporate companies to borrow monies from corporate bonds.

since jumbo loans are hard to get, foreign monies are coming here., uscangus.

 

[Jogeephus]

One would think that with all the water in Western Washingont that aquaculture would be a great fit. There are two huge hurdles. The first is water rights. The Dept of Ecology (DOE) just isn't giving out any new ones and buying existing water rights is an expensive and difficult situation. The second is the waste water. Aquaculture has a large amount of waste water. DOE regulates this too. There have been several fish farms near me that were put out of business because they have no way to handle their waste water.

That's no biggy to DOE. I'm sure they are aware that the Chinese grow plenty of fish and they are cheaper in spite of the freight. :roll: Friend of mine just went out of business due to this.

 

[upfrombottom]

That's no biggy to DOE. I'm sure they are aware that the Chinese grow plenty of fish and they are cheaper in spite of the freight. :roll: Friend of mine just went out of business due to this.

There is only about a third, maybe less, of the catfish farms that used to be in Arkansas. Most put out by overseas competition. When you don't have to pay unemployment taxes, Social Security taxes, Medicare taxes, Workmans Comp insurance, vacation pay, time and a half over forty, and a bookkeeper to keep up with and file all the reports and paperwork, you could compete with overseas labor. Every one of these, by law, has to be paid by a US employer on every employee. Add to that a new health care plan paid by the employer, and the rest will be gone.