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Ranch Financing?

A

Anonymous

Guest
I picked this off another ranchers blog...I'm kind of in the shape he is where what financing I need is thru a traditional bank-and have very little debt- so except for the sorry shape of calf prices, I haven't thought much of it....

But I do know several that are heavily financed thru all kinds of financial institutions- all over the country- and some big outfits that have been living from one lending company to another- and on very tight margins already...

Has anyone heard if this is causing any problems in the Ag sector yet?

Like he said in the article- it would sure be nice to have a crystal ball...

The financial crisis not only rocking this nation, but the world is something. I've heard it described as the worst financial crisis since the 1930's, if not worse than the 1930's. Where this crisis is going to end and when would really be nice to know. What the world will look like at the end would be nice to know too.

Okay, I know this whole crisis seemed to have started with the burst of the housing bubble but it has gone well beyond that now to a complete lack of confidence in the whole financial system. The housing market was over leveraged and now any financial instrument that is over leveraged is vulnerable to collapse as we have been seeing.

So this really makes me wonder, what is going to happen to those agricultural producers out there that get their financing through a non-traditional bank, i.e. one that does not accept deposits. I know quite a few producers that get their financing this way and it really makes me wonder when this source of credit will dry up for these producers. I have been hearing rumbles from some of these guys that their "bankers" are demanding a certain number of dollars for their calves and if they don't get it they will be foreclosed upon. Most of the times these numbers are well over what the market will support right now. These guys sound like they are in real trouble to me. Is this a side affect of what is going on in the financial markets? It would be curious to know.

I'm not overly worried about my financing. I finance through a traditional deposit bank and the banker is not worried about my situation. With the markets the way they are I might be down a little this year but it is not a problem. I really wish I had that crystal ball though to see the future. What is going to happen out here in the country? Will this financial crisis bring down farms and ranches?
 

Ben H

Well-known member
I may get some flak for this, but I don't care. If anyone knows me in person I speak what's on my mind.

There is another major factor that farms and ranches need to be worrying about, change, and I'm not talking about BHO this time.

Farms and Ranches that don't want or aren't willing to change their production methods are going to be hurt, as most of you have heard it said, this industry was built on cheap grain, cheap fuel and cheap inputs for the last 50 years or more. We have the most efficient and PRODUCTIVE agriculture in the world. But as Kit Pharo likes to focus on, Profit and Productivity are two different things. The biggest thing I have been trying to change in my managment is reducing frame size and getting away from the mindset that everything has to be harvested by then end of the growing season. Last year I grazed until December, I could have gone longer if there was more forage allocated for it. We still have some of the smaller dairy farms around here, milking 50-75 cows in a tie stall barn. Bigger ones in this part of the state would be about 150. As you move North it's a different story. They all keep trying to seel to the commodity market, doing it he way they allways have. Some have plenty of land all within walking distance surrounding their barn, but they insist on bringing the feed to the animals. I won't even get into the fact that we are in the largest populated county in the State, right in the middle of the market. I focused on dairy in school, most of the time was spent looking at management of large farms. We did acknowledge the US can't compete on the World Market for milk, it's also hard to compete on beef as well. New Zealand kills us with milk, producing half as much per cows as we do. Argentina, Brazil, Uruguay, Australia, they produce beef cheaper then us. Argentina is reducing exports but their government controls the price paid for beef, they keep it low. Beef producers need to make money at under $.40 per pound. We have the opportunities here, we have the rescources, we lack the motivation to change.
 

PORKER

Well-known member
From my angle, cash is king ,credit is out, and there will be a slowdown as belt tighting will take place. Most everyone was only looking at short term income , but everyone will have to focus on long term ,+ ten years
Our dollar is getting cheaper every day , so the exchange rate will be a big factor as we have dollars getting closer to the Brazilian real. Gold and food could be the exchange of choice in the future as the dollar declines against all currencys around the world. Local will be the norm as transportation will cost too much.
Inflationary signals induced traders to reacquire hard assets on fears that
paper money will be worth less, and that is supportive to commodities, analysts said. The world’s wealth was moving away from the US.
 
A

Anonymous

Guest
Herd a market commentary this noon where John Lawrence of Iowa State was interviewed on the cattle situation . He was asked about the number of cattle coming into Iowa because of our supposed glut of ethanol byproducts. He let the air out of the guys asking that question when he said cattle on feed in the large lots were 3 % less than a year ago and cattle on feed in the smaller farmer feeder lots were 27 % less than a year ago
As to the feedlots, the local cattle broker told me last week that every other lot in the south had a "for sale" sign on it. Obvious exaggeration but probably some truth to it.

I took this off another site- and this was kind of what I was wondering-- if any had heard how this is effecting feedlots- that run on a lot of borrowed money? As I know some in this state, anyway, actually have in the past had a lot of cattle owned by investors...I know one lot that has 40 different branding irons hanging on the wall- depending upon the financing/ownership set up with the cattle...

This and the fact that the country buyers are not being seen much- and when seen are offering less than they did 2-3 months ago made me wonder how tough tight money in these big lending outfits was going to effect the cattle industry....

Old Pat Goggins has been saying we need a good old fashioned Depression to get this country straightened out- and he may get it.... :wink: :(
 

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