My gut feeling is that the cattle industry has downsized and it will take a long time (likely never) to come back. Plowing up grass is one thing but reversing that trend is a different story. The infrastructure of the cattle industry in many areas has disappeared.
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Corn Plummeting Spurs Talk of '80s U.S Farmland Bust
- Thread starter bverellen
- Start date
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loomixguy
Well-known member
scout said:I agree seems all the suabsidlies do is go to the land owner in higher rent around here.already see pasture rents going up around here do to higher cattle prices but have noticed some young guys jumping into the feeder market more money selling corn through beef than to the elevator .burnt said:scout said:I'm also a young guy willing to buy ground and hope it cheapenss up . I believe it will moderate . a collage professor of mine always said a commodity falls at the avg price of production and the guys that run above avg go broke and the guys below it make money. the same could happen right here in the cattle market
Similar to what a speaker once said at a producer's meeting - "The average market price is equal to the average cost of production".
Seems logical, but he did not say how subsidies affect the equation. Likely just drops the average market price without changing the cost of production. So the one who knows how to work the subsidy system the bests wins?
The days of cheap grass rent are over. The grass I have will stay grass as long as I'm alive. After that, all bets are off. So much grass here has disappeared under the plow that good grass is a rare commodity. But the taxes on that grassland has skyrocketed. Nobody here, farmer or rancher is buying pasture land with the intent of keeping it in pasture...they have what I call "corn fever".
The problem is, ranchers have been able to rent grass cheaper than they could own it. That's great if you are renting, but not so great if you are the owner. If you were to buy 160 acres of grass at $2000/acre, that's $320,000. Suppose you had $160,000 of your own to help pay for it. Borrowing $160,000 @ 5% is $8,000 just in interest. If your banker was feeling generous, he might pay you 1% on your $160,000 that you used as a down payment. There's another $1600 that it cost you to own the ground. So you have $9600 tied up for the year. Throw in close to another $2000 for property taxes on that quarter and you have $11,600 tied up in owning that piece of ground for the year. $11,600 divided by 160 (really only 156 usable acres if you want to get technical) is north of $70/acre for rent just for the owner to break even, if he bought the pasture to generate income. $50/acre pasture rent won't cut it anymore. I'm going to charge my tenant $60/acre next season, and after clearing cedars and some new fence is put in next summer, the rent will probably go to the $70/acre for 2015. I guess if he doesn't want it at that price, somebody will.
Before you renters crucify me, put yourself in the owner's shoes first. Would you want to rent grass for $50/acre when it cost you $70/acre just to own it?
nortexsook
Well-known member
loomixguy said:scout said:I agree seems all the suabsidlies do is go to the land owner in higher rent around here.already see pasture rents going up around here do to higher cattle prices but have noticed some young guys jumping into the feeder market more money selling corn through beef than to the elevator .burnt said:Similar to what a speaker once said at a producer's meeting - "The average market price is equal to the average cost of production".
Seems logical, but he did not say how subsidies affect the equation. Likely just drops the average market price without changing the cost of production. So the one who knows how to work the subsidy system the bests wins?
The days of cheap grass rent are over. The grass I have will stay grass as long as I'm alive. After that, all bets are off. So much grass here has disappeared under the plow that good grass is a rare commodity. But the taxes on that grassland has skyrocketed. Nobody here, farmer or rancher is buying pasture land with the intent of keeping it in pasture...they have what I call "corn fever".
The problem is, ranchers have been able to rent grass cheaper than they could own it. That's great if you are renting, but not so great if you are the owner. If you were to buy 160 acres of grass at $2000/acre, that's $320,000. Suppose you had $160,000 of your own to help pay for it. Borrowing $160,000 @ 5% is $8,000 just in interest. If your banker was feeling generous, he might pay you 1% on your $160,000 that you used as a down payment. There's another $1600 that it cost you to own the ground. So you have $9600 tied up for the year. Throw in close to another $2000 for property taxes on that quarter and you have $11,600 tied up in owning that piece of ground for the year. $11,600 divided by 160 (really only 156 usable acres if you want to get technical) is north of $70/acre for rent just for the owner to break even, if he bought the pasture to generate income. $50/acre pasture rent won't cut it anymore. I'm going to charge my tenant $60/acre next season, and after clearing cedars and some new fence is put in next summer, the rent will probably go to the $70/acre for 2015. I guess if he doesn't want it at that price, somebody will.
Before you renters crucify me, put yourself in the owner's shoes first. Would you want to rent grass for $50/acre when it cost you $70/acre just to own it?
How many head can be run on the quarter? Year round? or seasonal?
Thanks.
loomixguy
Well-known member
30 pairs and one bull. Turn in date around May 1, depending...and out by November 1. 6 months grazing, with certain wet years maybe another 2 weeks if we're lucky.
Next year I will invest at least $2500 on fence and close to $5000 on cedar clearing, plus whatever the spray plane costs me to spray thistles. That will end up totaling more than what I will take in on rent.
The tenant is supposed to provide labor on the fence and thistle spraying, and I provide fencing supplies and chemical. It's my fault I let things slip some. Once things are to my satisfaction as far as trees, fence, & thistles, I will have no qualms asking the $70/acre for rent...maybe even $75/acre, depending on what the taxes do....(yeah, right, like they will go down...)
I am blessed that there is plentiful water on the place, thanks to some improvements I made 20 years ago.
Next year I will invest at least $2500 on fence and close to $5000 on cedar clearing, plus whatever the spray plane costs me to spray thistles. That will end up totaling more than what I will take in on rent.
The tenant is supposed to provide labor on the fence and thistle spraying, and I provide fencing supplies and chemical. It's my fault I let things slip some. Once things are to my satisfaction as far as trees, fence, & thistles, I will have no qualms asking the $70/acre for rent...maybe even $75/acre, depending on what the taxes do....(yeah, right, like they will go down...)
I am blessed that there is plentiful water on the place, thanks to some improvements I made 20 years ago.
the corn whores are driving the grass rent sky high..... I had a land lord force me to till up 40 acres of native grass so he could double his rent.... I should have bought the farm 10 years ago.... my own fault. but I want the acres, so I dance to his band.....