Your comments previously and on a recent post about producers who don't care about profitability got me thinking kpb. I share the same concerns as you in this regard, and I think it is one of the things that makes it difficult for young producers to get into the business in a proper way.
Now as for where cowman fits. With a lot of the discussion regarding aging producers, land costs, etc. on here I think this is part of the problem.
1. A producer over the age of say 65 has quite a bit to gain by showing no profit. CPP, old age security, etc. I think this affects cash flow on these operations more than a lot of us would appreciate. Your debt is paid down and you are getting a regular cheque, but if you show too much profit then they will claw some back. I know this is not strictly true, and that things are not a bed of roses out there, but I think it is a factor.
2. Land prices are accelerating in a lot of the cattle raising areas. The acreage owner drives a lot of this indirectly. Land ownership laws are part of the problem/solution. A lot of people want to live in the country and our philosophy over time has been to let them. This has driven up land prices beyond productive capacity. As well, it has driven many farms to split or shave off chunks for acreages, often retiring huge amounts of debt in the process.
A couple of issues here. Young ag producers have a hard time getting started. Older producers can't effectively sell an economically sized unit and get full value out of their land appreciation. Changing land use/ownership laws could greatly damage the potential equity value of current landowners, cash flow versus profit drives a lot of producers (probably particularly so in the older generation).
Before CS or anyone jumps all over me, I know that each individual is responsible for their operation, I am just thinking out loud about a lot of these driving forces that heretofore have not been present in the Canadian industry.
Now as for where cowman fits. With a lot of the discussion regarding aging producers, land costs, etc. on here I think this is part of the problem.
1. A producer over the age of say 65 has quite a bit to gain by showing no profit. CPP, old age security, etc. I think this affects cash flow on these operations more than a lot of us would appreciate. Your debt is paid down and you are getting a regular cheque, but if you show too much profit then they will claw some back. I know this is not strictly true, and that things are not a bed of roses out there, but I think it is a factor.
2. Land prices are accelerating in a lot of the cattle raising areas. The acreage owner drives a lot of this indirectly. Land ownership laws are part of the problem/solution. A lot of people want to live in the country and our philosophy over time has been to let them. This has driven up land prices beyond productive capacity. As well, it has driven many farms to split or shave off chunks for acreages, often retiring huge amounts of debt in the process.
A couple of issues here. Young ag producers have a hard time getting started. Older producers can't effectively sell an economically sized unit and get full value out of their land appreciation. Changing land use/ownership laws could greatly damage the potential equity value of current landowners, cash flow versus profit drives a lot of producers (probably particularly so in the older generation).
Before CS or anyone jumps all over me, I know that each individual is responsible for their operation, I am just thinking out loud about a lot of these driving forces that heretofore have not been present in the Canadian industry.
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