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Business as usual?

Hereford76

Well-known member
These thoughts have been on my mind for awhile now and I can't get my mind wrapped around them yet. What do some of you producers think about taking on more cow debt if you had picked up a grass lease to support another 150 cows at $8/aum. the lease also includes 400 acres of irrigated alfalfa/grass that would cost $45/ton on the stump for all three cuttings. The only condition to the contract is that the cattle stocked on the grass are straight Hereford.

Another question, I have ran a custom haying business since I was a kid that has certainly helped keep me on this place. This fall I picked up three jobs that are way out of my capacity as far as acreage anyhow for the equipment I have to get it done in a timely manner. I am working with John Deere right now trying to either finance to buy or lease two new or very low hour swathers, a JD 7830, 7920, or 8000 series tractor I could still pull 30ft of drills with at home, and two pull type windrowers. Right now the way things are everything pencils out pretty well but in the past I have never really been afraid to take on more debt as long as I was confident it would work. I guess I am saying for the first time I am half a** scared to take on more debt with all the talk on our economy. Would you just go on with the mentality of business as usual.
 

Andy

Well-known member
Buying equipment to do a custom job can be risky. The main problem is that the guys your working for may decide to do something different and then you take a hit on buying the higher dollar equipment than you needed to do your own hay. This is usaully only a problem when a few clients are a majority of your work.
 

jigs

Well-known member
eventually this boom is gonna bust.......not sure I would want to be overly debt laden when that happens......


however, custom haying is making more money around here than anything else.
 

Soapweed

Well-known member
Hereford76 said:
These thoughts have been on my mind for awhile now and I can't get my mind wrapped around them yet. What do some of you producers think about taking on more cow debt if you had picked up a grass lease to support another 150 cows at $8/aum. the lease also includes 400 acres of irrigated alfalfa/grass that would cost $45/ton on the stump for all three cuttings. The only condition to the contract is that the cattle stocked on the grass are straight Hereford.

Another question, I have ran a custom haying business since I was a kid that has certainly helped keep me on this place. This fall I picked up three jobs that are way out of my capacity as far as acreage anyhow for the equipment I have to get it done in a timely manner. I am working with John Deere right now trying to either finance to buy or lease two new or very low hour swathers, a JD 7830, 7920, or 8000 series tractor I could still pull 30ft of drills with at home, and two pull type windrowers. Right now the way things are everything pencils out pretty well but in the past I have never really been afraid to take on more debt as long as I was confident it would work. I guess I am saying for the first time I am half a** scared to take on more debt with all the talk on our economy. Would you just go on with the mentality of business as usual.

"The only condition to the contract is that the cattle stocked on the grass are straight Hereford."

That would be about the only way I could be coerced into running straight Herefords. It does sound like a bargain on the grass if you abide by that condition.

If I were in your shoes, I would go for the gusto and buy some more Herefords to fill the lease. I would also drop the thought of high-priced machinery like a hot potato. Of course, I am about as mechanical minded as a duck so really don't like machinery and high priced fuel. My advice is free, and worth exactly what you paid for it....nothing. :wink:
 

Hereford76

Well-known member
Soapweed said:
That would be about the only way I could be coerced into running straight Herefords. It does sound like a bargain on the grass if you abide by that condition.

I can't help but laugh about that comment.
:lol:
This guy had numerous offers on his cows and grass - but they all wanted to dump his herefords and run their black cows on his place... go figure. I sold his calves for him three years ago and at the time he said it was the most he had ever sold his calves for. I think that is part of the reason why he has made the deal so attractive - that and I sold him 6 horned bulls is 1996 that he still had and used in the 2004 breeding season. Anyhow there is room for another 150 cows. This guy was the hired ranch hand for this particular hereford ranch. The owners never had a family and when they both passed they left him the ranch - no relation whatsoever just a loyal employee. I think it was pretty good of him to honor the tradition of the family that left him the place even though he said he was under no obligation to do it. All he said was that this place made it all those years with nothing but herefords we might as well keep it that way.

And no, I won't have the slightest problem abiding that condition.

I have already started the process of stocking the place - hopefully if everything goes right I will have one pot load of Hereford pairs show up this spring out of Canada. Going to wait until rates drop before I borrow the money. Also got two loads of hereford heifer calves bought that should be here in a week (paid too much for them though).

On the custom haying deal I have a contract on 2400 acres of dryland hay for a minimum rate of $25/acre and $28/ton. If I end up doing the job at the min rate I will cover all 1st year machinery payments and clear around 15,000 depending on how much fuel goes up between now and then. Trying to get the guy to buy 1500 gallons of red fuel and store it for me. The other jobs should be gravy - but for some reason I am still leary of this whole idea. Two of these hay jobs are for out of staters from california that came out hear to play rancher. It wouldn't make a difference to them if they got a hay crop or not but they think it is neater than s%#@ to be doing it. I guess I better be careful what I say maybe these guys are active on this forum. I want to do this job and make him real happy and then try and talk him into selling the farm and ranches he bought and trade it for one right by us. I know a guy that would stock it and run it for him.

Wow - I just got interupted typing this post with a phone call from an ex-neighbor that wants to sell me his place. This fall has been crazy and to top it off my wife and I are headed to Great Falls in the morning and the doctor is going to induce labor and we are going to have our third child. I ain't going to get a wink tonight with all this in my head.
 

Nicky

Well-known member
Hereford76 said:
These thoughts have been on my mind for awhile now and I can't get my mind wrapped around them yet. What do some of you producers think about taking on more cow debt if you had picked up a grass lease to support another 150 cows at $8/aum. the lease also includes 400 acres of irrigated alfalfa/grass that would cost $45/ton on the stump for all three cuttings. The only condition to the contract is that the cattle stocked on the grass are straight Hereford.

Where can I sign up 8) Just kidding, it's a long ways away. Congratulations on the baby, and good luck. We'll be waiting for pictures.
I'm sure you'll make the right business decisions as you certainly seem to have things going well for you :)
 

Stretch

Well-known member
A feller gave me a good piece of advice long ago which was, "Get everything in writting." It may seem crazy but as prices change and children, greedy neighbors and so on get involved it stuff that is really not their concern things get way out of shape. If you have it in writting everyone has to stick with it for a set amount of time.

My own personal opinion is that there is one of the most aweful financial crashes ever seen coming in the next 2 yrs. Prices are way out of wack and people are getting sucked into the whirlwind of fast selling and fast buying. Protect yourself and don't get to wild on buying stuff for now. (Reminder this is my own personal opinion and I hope I am totally wrong and life is good for everyone!!!!!!) 8)
 

jigs

Well-known member
I think you are right about a big boom there Stretch...... gonna weed out a bunch of us! those addicted to new paint are gonna feel a pinch!

old faded paint still works....guy I work for is trading a 2 year old tractor because his kid don't like it!!! my old 1066 don't owe me a dime, and I enjoy the hell out of running it....they say I need to trade for a new rig, but I just like the old thing.......
 

Hooks

Well-known member
Sounds like yall have pretty much made the decision to go for it. I would agree with Stretch on gettin stuff in writing just to protect yourself and with Jigs in looking at used equipment if possible. We seem to have better luck with well maintained older equipment than new. One final comment:
...opportunity looks better walkin at ya than away from ya :wink:
 

Denny

Well-known member
I would sit back and decide if I really need more work and debt.I would run yearling's and limit my haying harvest the poorer fields with livestock and hay the best.I am switching a few more acre's to corn here I get to spread out my workload and my hay quality really suffers on normal years.I have also decided that 300 cow's for me is enough with the resources I have and the labor situation here.I will sell some bull's and heifer's plus feeder cattle.And if I have the feed or can get it cheap I will then buy some lightweight calves to grow over winter and run as yearling's.I am basically a 1 man gang so there's a point to it being fun.

Kid's grow fast you won't know them if your working 16 hours a day and when your time is up they kick dirt on you the same rich or poor.

With high prices these deal's pencil out easy I would figure the worst case scenario.No rain poor prices etc etc unforseen wrecks.Be careful somethings look better than they are.Good luck either way.

Another thought when I was a kid we ran a 100 cows and a 100 sows with a 2510 john deere and H farmall and an A Farmall our mower was a 7 ft new holland and a roller bar hay rake and a smaller round baler.Bigger is'nt always better.
 

Clarencen

Well-known member
It looks like you are one of the few people out there who has excess energy, Maybe you need a way to work it off.

I was always pretty conservative and afraid to take big risks, but those who were willing to plunge and take on more risk have more to show for their lifetime of work then I.

Wasn't there a story about a king who asked his adviser if he should invade Italy. His adviser asked what would he do after invading, he said conquer it, his adviser said then what. The king replied go on and conquer another country then another and an other. His adviser asked what he would do when he had conqured the whole world. The king said set back and enjoy life. His adviser said you can do that now.

Everyone has to decide for himself when it is time he can set back and just enjoy life.
 
A

Anonymous

Guest
Clarencen said:
Wasn't there a story about a king who asked his adviser if he should invade Italy. His adviser asked what would he do after invading, he said conquer it, his adviser said then what. The king replied go on and conquer another country then another and an other. His adviser asked what he would do when he had conqured the whole world. The king said set back and enjoy life. His adviser said you can do that now.

Everyone has to decide for himself when it is time he can set back and just enjoy life.

AMEN- Clarence--and over the years I've seen so many that in pursuit of their kingdom have missed many of the important things in life...

The American businessman was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

The Mexican replied that it took only a little while. The American then asked why the fisherman didn't stay out longer and catch more fish. The Mexican said he had enough to support his family's immediate needs. The American then asked, "But what do you do with the rest of your time?"

The Mexican fisherman said, "I sleep late, fish a little, spend time with my children, take siesta with my wife, Maria, and stroll into the village each evening where I sip wine and play guitar with my amigos. I have a full and busy life, senor."

The American scoffed, "I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds buy a bigger boat. With the proceeds from the bigger boat, you could buy several boats, and eventually you would have a fleet of fishing boats. Instead of selling your catch to a middleman, you would sell directly to the processor, eventually opening your own cannery. You would control the product, processing, and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually NYC, where you would run your expanding enterprise."

The Mexican fisherman asked, "But, senor, how long will this all take?"

The American replied, "About 15 to 20 years."

"But what then, senor?"

The American laughed and said, "That's the best part. When the time is right, you would announce an IPO and sell your company stock to the public and become very rich; you would make millions."

"Millions, senor? Then what?"

The American said, "Then you would retire and move to a small coastal fishing village where you would sleep late, fish a little, spend time with your children, take siesta with your wife, and stroll to the village in the evenings where you could sip wine and play your guitar with your amigos."
 

Red Barn Angus

Well-known member
Clarencen, I was glad to see your post as you always show a great deal of wisdom. I agree that the additional cows and hay land would be very tempting but with the turmoil in our markets the debt would be scary and the workload would be heavy. For a younger fellow this opportunity could be very tempting even with the risk. As an older fellow how do you know when it is time to sit back and enjoy life and how do you continue to have a mental and physical challenge when you are used to working hard for a lifetime?

I would certainly agree with the written contracts, especially with out of state owners. Go with the cows and think twice about the iron, especially if it is borrowed money. An old fellow told me years ago that his daddy told him, "spend your money on dirt and cattle, iron doesn't make you any money".
 

John SD

Well-known member
A lot of good advice in this thread. Especially good to "see" you Clarence!

Denny, I have a ton more iron around here than when I was growing up as a kid. At least it's pretty cheap used iron! :roll: :wink: The only new machine I have ever purchased was my Hesston round baler.

Dad had a couple Case DC tractors with Farmhands, old hay sweep, IH 210 swather (bought new) Ford 8N, (JD #5 mower for it) and a IH 303 combine.
 

Denny

Well-known member
John SD said:
A lot of good advice in this thread. Especially good to "see" you Clarence!

Denny, I have a ton more iron around here than when I was growing up as a kid. At least it's pretty cheap used iron! :roll: :wink: The only new machine I have ever purchased was my Hesston round baler.

Dad had a couple Case DC tractors with Farmhands, old hay sweep, IH 210 swather (bought new) Ford 8N, (JD #5 mower for it) and a IH 303 combine.

Oh I have alot of Iron also most guy's junk is my new treasure.My neighbor bought a new tractor a few years ago it was a little over $50,000 it is nice.He told me that's what you need to which I replied "I don't have that much tied up in all of my equipment combined".
 

Northern Rancher

Well-known member
If your going to be doing alot of custom work as a business you had best have pretty up to date equipment. Nothing sours a client more than watching you wire together something while the rain clouds roll in. Myself I hate iron so much I don't even own a tractor-we hire a neighbor to unload semi's and come over once a week to feed the rodeo cattle in the yard. If I was furthur away from neighbors I'd have to get a tractor but until then I'll skip that pleasure. I used to have a full line of brand new NH haying equipment back in my custom haying days so I have done the iron thing before. Alot of the older tractors can't really handle the size of bales we deal with now and I can't justify buying a new one that can.
 

rainie

Well-known member
I agree NR. Cows have teeth and legs for a reason. I just can't quite figure out what a bale processor and other gadgets have to do with profitable ranch production.
 

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