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Post by JoshuaGA on Oct 12, 2011 22:47:42 GMT -5
If you are making a major investment in your farm relying on borrowed capital, what are the long term ramifications financially in this current economic climate. FWIW, it is a livestock enterprise. Probably a lack of understanding on my part, just cannot fathom the enviroment we are in today.
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Post by johnwayne360 on Oct 13, 2011 6:02:01 GMT -5
5, 10, 20, or 40 year note? makes a ton of difference. Also interest rates are extremely low right now. I think livestock has a very bright future, as it seems almost no one wants to do anything but crop farm right now. Get in now you may be ahead of the curve. Although I think you are referring to dairy, which is a business i currently know very little about. I dont think Id shy away from it because of the economy either way. Farming is always a gamble, and gambling is not for those who dont wish to go all in at some time. jmho
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Post by kcm on Oct 13, 2011 7:24:13 GMT -5
Not enough information to make a decent comment. Interest is cheap, but you still have to pay back the money.
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Post by looter on Oct 13, 2011 8:10:33 GMT -5
If the enterprise is "upstream", (cow/calf) go nuts. If its "downstream" (dairy, hogs, feedlot) then run away. The world has too many of all those things. They are like oil refineries, the world needs less and less of them every year. Can't refine what does not exist. We will have a ton less Downstream capacity in ten and 20 years. Because the upstream people are producing less.
The cow/calf guy isn't marketing beef, he is marketing grass. He is harvesting the earth. This is why he is Upstream. Crop guy is also Upstream.
Oil drillers are upstream, because they harvest the earth, and will make money. Meanwhile the Downstream refiners lose money.
It's the opposite of the 80s and 90s when the downstream folks owned the show.
As always, the determining factor always comes down to average daily crude oil flows.
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Post by glowplug on Oct 13, 2011 9:40:42 GMT -5
Josh,
You're a young feller and there's time in life to bounce back if you fail at a young age. If you are confident in your farming skills and in your business plan, go for it. At age 26, wife and I took a long shot. Loan was 9%. Had no plan B that it could shoot up to 21% under Jimmmmah Carter. We came close to bankruptcy when interest rates shot up. We lived on weiner water soup and beans to get out from under that loan. We did and survived.
Go for it.
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Post by papapap on Oct 13, 2011 9:44:53 GMT -5
Low input, grazing based whether beef or dairy is the key. Overhead cost for total confinement small scale dairy would be hard to be competitive with volatile milk and feed cost. Invest more in cattle (income producer) rather than equip. or buildings (capital expenses). I've seen several hundred head dairies with little more equipment than a FEL and bushhog. Advantage now is low interest if you can find a willing lender. Return on Investment rather than maximum #/day.
Kind of like having children, if you wait till the perfect time it never will happen. Have to roll the dice and hope for the best.
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Post by glowplug on Oct 13, 2011 21:27:50 GMT -5
papa has good thoughts on using grazing. But the question is whether you can grow the quality of grass to efficiently make milk in the deep South?
Yup, we can grow great quality, cool season grasses-clovers here in WI. And we have competition to buy milk. Got great infrastructure in veternarians, implement dealers, dairy supply companies, etc. But in the deep South? I dunno.
You might do well to seek out others who are doing dairy successfully in your area. And if it doesn't cash flow, you might want to move to an other state if it is better suited for dairying.
Chase your dreams, young feller but watch your steps.
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