Reposting

[Brandonm2]

Land is like stocks. The value can be highly volatile month to month. I did not recommend buying either on credit. Land is even less liquid than stocks. IF you let yourself get in a situation where you MUST sell NOW or the bank is foreclosing you can almost bet that you will be in one of those temporary market corrections that shake out the little investors. That said the value of raw land over time has risen exponentially since World War II. As more of America is gobbled up by development in coming decades and demand for agricultural goods and recreational opportunities continues to increase I expect (OVER TIME) that today's prices will seem CHEAP in future decades, especially measured against the value of the future paper dollar.

You must know people with a lot more money than I pulling enough frog hides out to pay cash for a 100 acres isn't your average Joe.

If they don't have the cash to invest they shouldn't be in the market.

 

[Caustic Burno]

Caustic, I pretty well practice what you are saying about the grass and what type to grow. Planting permanent grass is a long term payout, and you will fight bahia all the way. I have also found that cattle prefer it when grazeing.
Most people I know feel that I am undergrazeing. I do not beleive in stocking over 75% of capacity for average rainfall. This gives me plenty of allowance for makeing hay, buying stockers, or leaving the extra grass in the fall for standing forage. It is also a good buffer for the next drought.
When you stated that you only had 2 months of feeding hay, you also told me you manage your pastures well.
It seems as though may people feel that to make more money they need more machines(cows). They just don,t understand you first must have the raw material to feed into the machine (cow).
Then we get into to the machine (cow). What machine is the best for ones individual operation. I beleive that subject has been covered buy you guys very well.

Yes, I can vouch for Novatechs ranch ecomonics. I have never seen anyone be able to train his cows to eat huisatch as well as this man. I think the sweetfeed makes the thorns more digestible :cboy: A lot of people might be undergrazing this year just do to the additional rains in many parts of the country. Last year was a different story.

I still don't get how CB get's away with feeding out hay only 2 months out of the year while grazing the cows AND cutting the grazing forage for hay at the same time. Given that grass nutritional levels drop later in the year and he's calving all year, somethings got to give on the side of nutrition unless there is a low cow to acre ratio.

CB - how many cows are you running on how many acres? I see about 30 in your picture but that means nothing.

I assure you there are more than 30 under management and in that 200 acre pasture.
I run a unit to 2 acres. One way I get away with hay two months of hay is my cows are grazing on stockpiled grass and hay until pastures turn knee deep in rye grass and clover. That was planted years ago. Every spring when the rye grass is in seed the bat wing goes across the pasture, seed for next winter was just planted. I stay away from grazon as it kills the seed. If you manage your winter grass and clover after the intial planting it will take care of you in our enviroment.

 

[Caustic Burno]

Land is like stocks. The value can be highly volatile month to month. I did not recommend buying either on credit. Land is even less liquid than stocks. IF you let yourself get in a situation where you MUST sell NOW or the bank is foreclosing you can almost bet that you will be in one of those temporary market corrections that shake out the little investors. That said the value of raw land over time has risen exponentially since World War II. As more of America is gobbled up by development in coming decades and demand for agricultural goods and recreational opportunities continues to increase I expect (OVER TIME) that today's prices will seem CHEAP in future decades, especially measured against the value of the future paper dollar.

You must know people with a lot more money than I pulling enough frog hides out to pay cash for a 100 acres isn't your average Joe.

If they don't have the cash to invest they shouldn't be in the market.

Thats like saying people who don't have the cash for a new car shouldn't drive. It's not reality there are far more people that have to borrow and make payments than those that pay train riding cash.

 

[Brandonm2]

Land is like stocks. The value can be highly volatile month to month. .

One problem we have around here is much of the land in 80 acre plots or bigger is getting bought up by Big city boys in state and out of state for hunting land or so they can get automatic deer tags.

They have artificially pushed the price up and it might be a big gamble to pay them prices, a lot less unstable than if people were buying it for Homes.

Do you really believe that we are likely to run out of people with the money to buy hunting land? That is what is driving up the value of property all over Alabama. I have a neighbor that does the tractor work for six or seven hunting clubs. Any time they need more money they just add more members. Ten doctors or ten businessmen can each pony up $25,000 they will never miss and the next thing you know they got a 1/4 of a million in cash and the resulting Limited Liability Company can borrow two or times that in a 30 or 50 year mortgage. This is a growing economy with a growing money supply. New wealth is being created all the time and it is always in search of a "safe harbor". There will be market corrections, recessions, and maybe even another Great Depression over the coming century; but I am fairly confident that land values (on the avg) will still be appreciating at 7% (or more) every year at the dawn of the 22nd century (barring something cataclysmic like a killer asteroid impact).

 

[Caustic Burno]

I agree with CB in that you have to be a grass farmer first and most everything else he stated. One additional thing. Everyone has an unfair advantage. Figure out what it is and capitalize on it. It might be cheap land, mild climate, a good market, or cheap feed. A person needs to figure out what it is locally that gives you an advantage over everyone else. I know of some big feedlots here in the Northwest that are located near potato processing plants. All that waste from making french fries makes cheap cattle feed. That is their unfair advantage.
In my case I am close to a very large layer farm and several large dairies. I can fertilize with chicken and cow manure for a fraction of the cost of commercial fertilizer. That gives me an advantage.

I agree we all have to find our advantage mine is I live in the Big Thicket. The Big Thicket is possibly the most biologically diverse area in the world. Cactus and ferns, beech trees and orchids, camellias and azaleas and four carnivorous plants all occupy what is called the thicket, along with the pines, oaks, and gums common to the rest of East Texas. The thicket also supports a wide variety of animal life and is especially noted for the many species of birds, around 350, that either live in the area or visit annually. The abundant rainfall and the long growing season, around 246 days, ensure that vegetation and all the animal life that depends on it thrive.

 

[aplusmnt]

Land is like stocks. The value can be highly volatile month to month. .

One problem we have around here is much of the land in 80 acre plots or bigger is getting bought up by Big city boys in state and out of state for hunting land or so they can get automatic deer tags.

They have artificially pushed the price up and it might be a big gamble to pay them prices, a lot less unstable than if people were buying it for Homes.

Do you really believe that we are likely to run out of people with the money to buy hunting land? That is what is driving up the value of property all over Alabama. I have a neighbor that does the tractor work for six or seven hunting clubs. Any time they need more money they just add more members. Ten doctors or ten businessmen can each pony up $25,000 they will never miss and the next thing you know they got a 1/4 of a million in cash and the resulting Limited Liability Company can borrow two or times that in a 30 or 50 year mortgage. This is a growing economy with a growing money supply. New wealth is being created all the time and it is always in search of a "safe harbor". There will be market corrections, recessions, and maybe even another Great Depression over the coming century; but I am fairly confident that land values (on the avg) will still be appreciating at 7% (or more) every year at the dawn of the 22nd century (barring something cataclysmic like a killer asteroid impact).

You are more optimistic than I am. And I hope you are right! But I think we will see a big stock market crash and the bottom fall out of many markets including expensive hunting land. All the outsourcing and living on credit will eventually catch up to America and we will see a big correction in many of the over inflated prices in lots of areas.

But that is just my pessimistic view of the future economy, I really hope your outlook is the correct one.

 

[Brandonm2]

If they don't have the cash to invest they shouldn't be in the market.

Thats like saying people who don't have the cash for a new car shouldn't drive. It's not reality there are far more people that have to borrow and make payments than those that pay train riding cash.

True, and those people who collectively borrow $$billions are the people that drive the land values up for the rest of us; but I don't see how borrowing a $half million or more to get into a business that is going to return $100 an acre a year (or less) is really a wise investment strategy.

 

[Brandonm2]

You are more optimistic than I am. And I hope you are right! But I think we will see a big stock market crash and the bottom fall out of many markets including expensive hunting land. All the outsourcing and living on credit will eventually catch up to America and we will see a big correction in many of the over inflated prices in lots of areas.

But that is just my pessimistic view of the future economy, I really hope your outlook is the correct one.

I share your assessment IF we are talking five years out. I think that CLEARLY a lot of people are living in homes they can't afford, owe thousands in credit card, student loan, and medical bill debt they can't ever pay. I understand that the stock market and real estate market is currently overheated and most banks are carrying a lot of bad debt. I also think the dollar is artificially strong. A correction is coming. Whoever is elected President in 2008, is going to have a recession to deal with I am afraid. I am still bullish about the longterm fundamentals. Europe is not having babies.....dittoe with Japan. There is great risk in investing in Latin America, Africa is "Heckish", the Middleast has oil and nothing else going for it, Russia's move to a market economy has been a big disappointment, a collapse in the U.S. economy will have a domino effect on export dependent Asian markets. The U.S. will not start bleeding capital in a big way and if the value of the dollar drops that actually helps domestic manufacturing and domestic exports. We have a free floating dollar. People can't panic (domestically) and demand gold dollars so there is no restricting the money supply (what turned the panic of 29 into a horrid worldwide Depression). If oil goes up much more against the dollar, then ethanol and soydiesal are liable to get even more help from US gov. Grain production has to increase to meet that demand which means ag land value rises especially versus a weak dollar. Longterm I am very bullish on the American economy.

Also on more of a microeconomy level. Investors who get burned in the stock market typically take their capital out and start looking for "safe harbors". This happened big time after the internet bubble burst. People panic and start investing in things like land, pine trees, corn fields.....especially when lured by a rise in foreclosures and high commodity prices versus a weak dollar that makes thinks like cattle and soybeans seem more profitable than they probably are.

 

[Sir Loin]

CB,
Re:

First to address your land statement I am not in the land business, I am in the cattle business.

Well before you can learn to "farm grass" you MUST first have "land" to grow the grass on, right? So the first thing a beginner should learn is about "land", correct?

If you think you are going to go out and buy 100 acres somewhere build fence buy the equipment to run and maintain the cattle you are never going to get a return on your money with todays land prices.

Well thousands of cattle ranchers, including myself, do it every day.
So then your advise to beginners is to not even try because it cant be done, right? But you should learn to farm grass.
Exactly what type of "grass" are you talking about? Mary Jane?

The days of 200 dollar an acre land is gone and that was for good land. Today here the same land is 4000 an acre in impoved pasture.

Sounds very reasonable to me. Here the poor land is going for $4,000 and up per acre.

This was never about recouping there intial startup cost because they can't.

WHAT? Don't you include your land cost as an expense, just like fertilizer and fenceing, etc?
And don't you expect a return on your investment you make in your land as well as your grass?

SL

 

[backhoeboogie]

I don't see how borrowing a $half million or more to get into a business that is going to return $100 an acre a year (or less) is really a wise investment strategy.

Those who did it in these parts are multi-millions better off now. Originally, their investment was for equity. Cheapest land you can acquire is $9K an acre now. If you bought it ten years ago at $1K an acre, you got a good return.

Now, it is Barnett Shale. $2500 an acre just to lease it for three years on a 25% royalty. You can figure about $200 a month per acre for 15 years or so on an average well. Good wells are doing better. The kids who sold off the family farm are crying.

 

[dun]

The thicket also supports a wide variety of animal life and is especially noted for the many species of birds, around 350, that either live in the area or visit annually. The abundant rainfall and the long growing season, around 246 days, ensure that vegetation and all the animal life that depends on it thrive.

Do you have wild (feral) hogs?

 

[3MR]

The thicket also supports a wide variety of animal life and is especially noted for the many species of birds, around 350, that either live in the area or visit annually. The abundant rainfall and the long growing season, around 246 days, ensure that vegetation and all the animal life that depends on it thrive.

Do you have wild (feral) hogs?

I imagine you do, but if not you can certainly come get some of mine!!!!!!!

 

[Brandonm2]

I don't see how borrowing a $half million or more to get into a business that is going to return $100 an acre a year (or less) is really a wise investment strategy.

Those who did it in these parts are multi-millions better off now. Originally, their investment was for equity. Cheapest land you can acquire is $9K an acre now. If you bought it ten years ago at $1K an acre, you got a good return.

Now, it is Barnett Shale. $2500 an acre just to lease it for three years on a 25% royalty. You can figure about $200 a month per acre for 15 years or so on an average well. Good wells are doing better. The kids who sold off the family farm are crying.

My grandfather borrowed money to buy his place, a house, equipment, horses, cows originally too using back combat pay from WWII as the down payment and paid it off in seven years off cows. NOW we are talking about $2000, 3000, 4000, 5000 an acre. I COULD be wrong; but I think we have reached a point where ranching is not going to cover some of THOSE payments. Now if you are psychic and know that somebody is going to strike OIL on the property in five years, by all means sign up for a $4000 an acre 0 down variable rate mortgage on 500 acre. All I am saying is that land speculation at THESE prices should be a cash only game.

 

[Brandonm2]

But you should learn to farm grass.
Exactly what type of "grass" are you talking about? Mary Jane?

Only a complete dummy grows marijuana on their OWN land!! The govt will seize your property and you will lose everything. You buy those camouflage pattern five gallon buckets Academy and most hunting stores sell, buy the best potting mix you can get "Jungle Grow" is probably the best, and plant the seedlings in that then you go to a pine forest (owned by somebody else) and use rope to pull the plant and bucket up near the top of the tree then tie the rope off as high in the tree as you can get with a tree stand. And then repeat the process over and over again. The plants are much harder to spot from the air and just about impossible to spot from the ground accidentally. Your only risk is that you will be caught in the act, though I bet they are working their butts off trying to get water to their plants THIS YEAR. I have certainly never done it; but I think everybody in rural Alabama knows somebody who is or has been in that business.

 

[3MR]

hmmmmm! You got a recipe for meth too!

 

[Sir Loin]

3MR,

Where are you getting a ton of feed for $20?

From the mills and we do the trucking.
Our two base products are cotton seed hulls and corn gluten. Dry gluten for the creep feeders and wet for mixing, when possible.
We also get reject grindings and cleanings from the mills.
$20 per ton is the lowest we have paid and $40 per ton is the highest after mixing. The mix depends on who is eating it. Cows of cow/calf on pasture get a different mix then steers in the feed lot as do calves of cow/calf with access to creep feeding.
The mix depends on what your want the supplemental feeding to do.
For example: When feeding the cow of a cow/calf the intent is to only sustain the cow, where as the intent of feeding steers and a calf of a cow/calf is weight gain.
So we mix accordingly.





12:10,
Re:

Dang! At $20 per ton...I'll sell my land, cancel the leases, sell my tractor and implements, forget the fertilizer, put some troughs in the barn and be done with it.

Well we haven't sold everything but we do exactly that with our steers and cull heifers.
We put them in a dry lot, feed them out to 1,000 lbs and off they go to the Kansas feed lots for finishing and marketing.

Now let me try to clarify some misconception you'll may have.
Supplemental feeding means just what it says.
When you supplement, you are adding too what an animal would normally eat.
And you do NOT have to supplement all of your animals nor do you have to supplement year round or at the same level of supplementation constantly.
In the case of a cow calf operation the primary thing eaten should be grass.
And anything you give that cow or calf is a supplement to the grass that they would normally eat. That includes hay. As hay is an added expense as is every other supplement you would give them. (Minerals, salt, feed etc)
All supplements are an added expense and can only be justified by an increase in productivity.
In a cow calf operation that can only be "more calves" produced and/or "a better calf" produced.
Supplemental feeding of your cows will allow you to run more cows per acre producing "more calves" while maintaining the cow's nutrition requirements year round enabling her to produce "a better calf".
Creep feeding of your calves also produces "a better calf" while at the same time reduces the demand on the cow, which again allows her to produce "a better calf" next time around.
Now I don't expect you smaller operations to have the equipment and get the volume discounts that we get nor to have the type contracts or relationship we have with the mills but you should be able to but some type of supplemental feed from your local mill for around $40 per ton.
Call them and find out.
Tell them you want to feed out a couple of steers and are looking for the cheapest feed you can find. Tell them you have a pick-up truck and will pick it up. If you don't have a truck, as them how much is it "PER TON" delivered.
If you buy a ton, creep feed your calves a pound or two per day and see what happens.
SL

 

[backhoeboogie]

All I am saying is that land speculation at THESE prices should be a cash only game.

Noted.

I apologize to everyone for getting involved with the hi-jacking on this thread. It was a good exchange for quite some time.

 

[3MR]

Im paying about 180 a ton for 20%, or I guess I should say I was. They are on grass now. If I could get even 12% at 40 a ton I would be feeding like crazy. I can move 6 tons at a time and at 40 per ton I would be saving enough money I could afford to get the equipment to move and store a lot more.

 

[Sir Loin]

AB,
Re:

This is true but don't forget about "leasing" land versus buying. Larger operations tend to lease when starting out

First let me say this: I DO NOT GIVE LEGAL ADVISE! This is just an opinion.
All farm or ranch land should be leased regardless of who the owner or operator is to protect person assets and homestead. If you are going to be in the cattle BUSINESS then you better run it like a business.
When in Rome, do as the Romans do!

Re:

I think most folks are making suggestions here starting at the point that you already have land in which case "grass farming" is the # 1 priority. If leasing, the land expense has to be figured into the prfit/loss scenario. If purchased and assuming that most land does not lose value, then factoring the price of the land into the cattle operation is not all that important since the value of the land is recovered at the time you exit the business - at some point in time, you WILL exit the business.

Wrong, wrong wrong!
The fair market lease value of the land should always be carried as an annual expense. You should incorporate and let your corp. lease your land. (Tax benefits.)
If CB is not expensing his land then it is no wonder he thinks he is making money growing grass with a few cattle on it.

SL

 

[forageconverter]

First to address your land statement I am not in the land business, I am in the cattle business. If you think you are going to go out and buy 100 acres somewhere build fence buy the equipment to run and maintain the cattle you are never going to get a return on your money with todays land prices.
The days of 200 dollar an acre land is gone and that was for good land. Today here the same land is 4000 an acre in impoved pasture. You are better off to take your 400,000 dollars and put it in the bank.

That was the first thing you said in this string that I disagree strongly with. $400,000 in the bank at 5% interest (and most of the last 10 years you couldn't get that) is only a pathetic $20,000 per year return and after you pay federal and state income taxes on that it is only a $12,000 return. I would much rather have my $400,000 parked in land (even if it is not in cattle). The hunting rights lease will MORE THAN pay the property taxes. Land appreciates just about every year and you pay nothing on that appreciation. We have a paper dollar that is backed by NOTHING other than people's faith that it has some value. When oil, corn, beef, land, gold, steel, stocks, and foreign paper currencies all go up at the same time versus the dollar that is NOT prices rising; that is simply the paper dollar losing some of it's value. I would much rather have my assetts sitting in good ground no matter how much paper it is supposedly worth. 9 times out of 10 even at the absurd price of $4000 an acre it will be worth more next year than it was this year. Now people BORROWING money to buy land is an investment strategy I will not endorse; but I don't buy stocks on margin either. Land speculation is an entirely different business than cattle. I certainly don't expect the cows to actually pay for the land. They should be able to return their purchase price, the equipment needed to maintain the herd and the property, their inputs, return something on the labor and management needed to care for them, and return more on the land than raising pine trees, leasing the property for corn, or running a hunting club would yield. Land is the longterm play. You CAN pay too much for it; but on the whole the fundamentals still look strong to me. The American population has doubled since 1950. http://www.census.gov/popest/archives/1 ... ockest.txt

and is actually trailing the growth in the world as a whole
http://www.census.gov/main/www/rss/popclocks.xml

I am certain that Congress will figure out how to import more foreign workers (either legally or illegally) and I fully expect to see America easily hit 350 million people in my lifetime. All those folks need ground to live on. They need ground to work and play on. They need board lumber for the house they will live in. They need meat on their plate, bread in their belly, and increasingly they will need corn ethanol to run their little cars around. The American landowner will provide them with what they will need and will make a profit doing it. I am very bullish on land, timber, and cattle. If I were somebody like Bill Gates (with revenue streams out the wazzoo to invest), I would be purchasing tens of thousands of acres of cattle ground out west (preferably WITH mineral rights), Mississippi timberland, rice ground in Arkansas, and own 200,000 plus acres of the best ground I could purchase in Brazil and be cherry picking farms and forests 20-60 miles out of the fastest growing American population centers.

What do you include in your cows' inputs? Do you include their feed bill? If the land produces their feed, do you not charge for their feed?

How much of a return do you expect on labor and management? And how much of a return do you expect for an alternative use of the land, such as leasing property for corn?


It takes about three good acres to run a cow here, at about $1,500 an acre. A good cow cost about a $1,000. Excluding equipment and operating costs, that's a $5,500 investment per cow. If that money was invested at 5% interest, that's a $275 profit per cow, for doing nothing. What would you consider a good profit per cow?


In this area, land has been appreciating at a quick rate over the last ten years or so, but if land is unable to pay for itself, the profit from appreciation can only be realized if other money is out there to buy the land. This means for land appreciation to exist and continue, there is and will always have to be better investments, or better ways of getting money, than buying land.

In other words, for Bill Gates to make money with land, someone else would have to have the money to buy that land from him. And since those other people couldn't make that money with the land, there would have to exist better ways of attaining money than buying land; which means there would have to exist better places for Bill Gates to put his money other than land.

If those better investment opportunities cease to exist, then land prices will be forced to be what the land can afford to pay for itself. Otherwise, who will buy the land?

As far as an increasing population leading to an increasing demand for raw materials produced from the land, I'm not sure this will ever lead to an increase in profit to the farmer or landowner, as there are so many middlemen in between the farmer and the consumer, not to mention the numerous input suppliers who seem to have the keen ability to accordingly raise their prices to match any increase in farm income.