Considering fixed and variable costs of farming, we generally promote that is is easier to make more money by producing more on the ground you have than buy more ground. That being said, it takes ground to farm. Is there a way that you can rent, sell your labor, do contract planting/harvesting etc save up your profits and be ready with some cash when the opportunity arises? Another possibility may be to buy some ground of lower quality (cheaper) and implement our soil conditioning and micronutrient programs to get better than average production numbers then buy some of the big money ground in the future.
I imagine we are probably in a similar situation. I’m graduating college in May and headed back to the family farm. I have been eager to buy/rent ground in the area but with cash rent averaging $250/acre and selling for anywhere between $5-8,000, I have decided to just stick with the ground I already have and make improvements on it. The way I see it and as history tells us, this economy is going to have a major "correction" if you will (1980's). $13 beans and $7 corn is great but it just doesn't work. Sooner or later commodity prices will fall back and the input costs will stay the same as they were with the high prices. I know a lot of farmers that have made big land purchases based off these high commodity prices and I would venture to guess that when these prices fall they will be crying the blues. I for one don’t want to start my full-time farming career on a bad note.
i think you have a great idea about taking care of what you have before trying to get more. however, $250 an acre rent is a bargain even when corn was 4-5$ a bushel.
and your statement about the 80's is great... however the current financial status of almost every farmer is nearly bulletproof! farmers have money. a friend of mine a large commercial lender...is only giving out new loans to farmers.
I just bought a farm myself.. i was flush with cash and when the opportunity presented itself to buy a farm i grabbed it... i had been saving up for some equipment .. but the fact of the matter is that can wait.
Anyway, good luck
Much like several people and maybe yourself, I just graduated college in December from K-State. I have been wanting to farm for my entire life. My family farms in an area where much like some, the ground should have stayed in prairie. The only thing we have going for us is that we can get water pumped out of the ground easily. Dryland ground a mile from me sold for $1200/ac, unfortunately the ground much like all of my family's floods from a creek and isn't great soil. I have been bidding against larger already established farmers for renting rights and can't even come close to their bids. Thus it has been forcing me to consider beating them by buying the stuff away from them. I can't do this though because college has drained me and I don't have enough money to make the down payments needed to buy the ground outright. Buying ground is great, God isn't making anymore of it so it will always be worth something.
But I have been fearing the correction coming soon and I don't want to stick my neck out to soon and never be able to farm. One thing to consider is that if you can pencil it out and stick to a plan you will do great. However, with our country so broke and politicans wanting to cut so many programs out of the budget the correction could be coming soon. I could be wrong and anyone can correct me, but the other day they were talking about cutting out farm subsidies and many farm programs.
I wouldn't be to concerned about the farm subsidies.
Here are the two situations i see.
One: They dont cut farm subsidies because the government would be loseing control of farmers. and we all know that is the last thing they want.
Two: I feel losing farm subsidies isn't going to hurt the little guys. If you are relying on the farm subsidies to farm, your not very good job of farming and managing money. I farmed around 140 acres last year and i got 900 dollars, whipty do. If anything it will help us younger farmers, by cutting farm subsidies maybe some of these bigger farmers who farm the farm program will realize that its hard to make money doing a lack luster job of farming with no government help. It might be possible that we see a drop in rental rates, perhaps even land values though not as much.
Very good point. I never thought about how the bigger farmers could be hurt by the lack of subsidies, which could help out us smaller producers. My thoughts were that if the politicians do away with the subsidies the price control of our products that has been around since the 70's would be gone , and prices could go up significantly. Then people will bicker about farmers ripping them off along side the oil companies. Lets face it Americans are really spoiled when it comes to cheap food. Thats kind of how I saw things playing out and causing a correction to come soon.