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From the Mail Bag

27 Apr

You are a great writer, and you have some excellent points! I enjoy reading it! While I appreciate your rally to have an operation plan – a GREAT and essential concept – along with good record keeping. I have these nagging questions in the back of my mind. You talk and sound like someone who “pulled themselves up by the boot straps.” A self made man. Am I right? You are very blunt and truthful in your blog post so I hope you will not be offended by an observation.

You say you are a 5th generation rancher – so I assume your family’s land is paid for – owned out right. So do you personally own the land that you run your operation on? Or do you rent/exchange of labor or an agreement with your folks?

You don’t mention anything about saving back or budgeting for buying land, or making payments? Or saving to have enough cash to make a down payment on a farm. What about equipment needs – how was that handled? It just seems a lot is lacking from your personal story that wouldn’t necessarily be true of a beginning farmer – with just a dream and a drive to succeed.

You fail to mention that you also need capital. You would not be able to buy a farm without some startup capital – down payment and proof of repayment ability. That you would have probably borrower the money to purchase cattle as well. That’s two hefty payments to made yearly. The cattle and equipment loan could probably be paid off in seven years, the farm – probably the next forty. Not to mention a line of credit that one might need to pay the bills until the cattle are ready for market.

So while I applaud you for making good decisions and encouraging plans, record keeping etc. If the above assumptions are true – you had a lot more going for you than most beginning farmers I have come across. Please correct me if I am wrong about your situation.

There I said my peace. Thanks!

 

 

I thought this was a great comment/email.  In the past I have only responded to one message I’ve gotten.  The person that sent this one makes some excellent points.

There are a lot of topics here that were addressed.  You kind of hit me in a shotgun pattern so to speak.  I will start by saying this.  When I blog I try to keep to just one pin point topic and try to make it like a woman’s skirt.  Long enough to cover the subject, short enough to be interesting.  I do plan on covering the things you mentioned.   Such as saving, debt, dealing with the bank, equipment and so on.  I will say this.  When I write I only write about what I know.  In other words what I did or am doing.  This can’t be looked at as a road map for others.  Just a place to get ideas that can be tweaked to fit a situation.

I wanted to set aside a paragraph to address your comment about land, equipment and payments.  I do not understand the obsession about owning these things.  I have had thousands upon thousands of cattle through here in the last decade, and finally bought a squeeze chute a few weeks ago.  I had been using an automatic head catch and portable panels as the main components to my working facility.  For years when I fed cattle I wore out a lot of buckets, before I got a mixer wagon.  The two I’s that work against you are interest and iron.  Iron rusts, and interest works against you even when you are sleeping.  Now about land.  That is a separate business.  I do not own any land because it should not be a part of an operation until you are wealthy.  There are only three legs in the cattle biz.  Cattle, money, and feed. Notice I didn’t mention land.  A bar stool will stand up with only three legs right?  Those are the three legs you got to have.  The good news is you do not need to own any of them.  Sounds weird I know.  I will explain it in the future. (I know it seems like I’m kicking the can)  You mentioned it would take forty years to pay for it.  What if I told you that you could do it in fifteen or less?  Depending on how many acres you buy)  You would doubt me.  I think it is a matter of putting first things first.  I will cover that in the future because it seems to be the subject everyone gets so hung up on.  Right now I rent.  The nice thing about that is I can deduct it as an expense on my taxes.  If I were making a land payment I could not do that.  I could only deduct the interest.

Now the family matter.  I have only let a few close people into the barn, so to speak.  So I may hold back a little here.  I asked my wife just last week if I am in fact a 5th generation farmer of first.  So you’re observation is correct.  I will say this.  I started my feeding/ back grounding operation as a niche in the family farm.  When it started to make money, I found out rather rudely that sweat equity is worthless, and verbal agreements with family are meaningless.  This “niche” was then became a necessity.  I put a lot of energy and resources into growing it.  It did not take long to grow it into a full time sustainable operation.

So when you say that I boot strapped, that is correct.  I had family try to stop me from growing my business.  So I had to be creative at times to overcome challenges.  I could tell you horror story after horror story about things that went wrong in the family.  So the assumption that I have paid for land and the family is debt free is incorrect.  I will share this observation with you.  I have noticed that first and second generations tend to go through a hardening off phase caused by the struggles of building an operation.  The third and beyond generations are softer because they are far enough removed from those struggles, and do in fact inherit a lot free and clear.  I do not know if I will inherit much.  My mom has a sister that is entitled to part of my grandparent’s estate.  That means land sales I’m sure.  I have a sibling who married into a family, that farms near here.  Given all that, it is a great relief that I did what I did in starting my own business.

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2 Comments

Posted by on April 27, 2012 in Uncategorized

 

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2 responses to “From the Mail Bag

  1. Annie O

    April 27, 2012 at 8:10 am

    Thank you sooo much for this response! I feel so much better about your blog now! I happen to agree and be of the same mind with you when you state “the generations being removed…are soft.., and inherit free and clear…” I know several like that and I was afraid you might fall into that category! I am intrigued by your claims about land ownership – seems like in my part of the country farming/ranching and ownership go hand and hand. Renting for pasture and cattle operations have few opportunities – crops take up the majority of that. Its hard to watch pastures getting tilled under these days to make room for corn and soybeans. You have given me something to think about for sure and consider. I am a beginning farmer – with a plan – looking for that opportunity.
    Looking forward to future posts and insights in to the cattle business. Best wishes! You have gained a fan and I will be following your blog.

     
  2. Sivart

    May 1, 2012 at 5:59 am

    as the generations get softer, there is more opportunity to rent their land or buy it. It is a matter of geting yourself in postition to take advantage of that scenario. I know Cattlemaster personally and he has done this to soem extent within his own family, taking advantage of some ground they deemed useless and putting up cattle feeding pens.

     

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