And so it begins

[jazz]

My answer(opinion) to your question would be that they don't mind farming with old equipment, and they use some sound financial management to base their decisions on. My wife and I run our business this way , and so far it's been working pretty darn good. Looking across the fence at the neighbors can be really expensive.

I think the answer is clearly no debt, no fancy iron.

[farmaholic]

When I think back to the iron we used and the way we did things when I started farming, and compared it to some other people in the neighborhood, I think "Hillbillies".

But, I didn't think I could afford to buy land AND have the best machinery(new or even "up to date" modern machinery). So we plodded along buying and paying down land and finally, 20-25 years later the machinery line is pretty darn good. We can afford the new iron now because the sacrifice was made early to pay down the income producing asset. When there are no land payments or high rents being paid, that frees up some capital for iron, if that's what you want.

Rome wasn't built in a day... BUT, once Rome is built, DON'T BE A NERO EITHER.

[phoenix64]

Tell the young fella to not give up, he's got something started, (might be hard for him to get toehold back in later). I was in a similar situation back in 03/04, drought, grasshoppers, August frost and low grain prices damn near buried me. My way out was I had virtually no personal debt, bank allowed me to take out 100,000 loan, repayable over 2 years, dumped into farm account. Was hard when making those payments with after tax money but oilfield work saved the day.

[tmyrfield]

like many on here we've gone through some godawful times. In retrospect and the fact that time heals they don't seem to be so bad. The life lessons you learn during hard times are priceless. The real reward is when things turn around and you are able to finally capitalize on them at least till the next downturn.

I hate to see my kids struggle but then again the struggles are what builds character, life would not be very rewarding if all we had was good times.

I truly fear for those that have had a period of very good crops with high prices and spent accordingly because the highs are always followed by the lows. The excesses of the late 70's when I started farming came to a crashing fall that lasted till the mid 2000's , that is a whole generation of almost zero growth. Equity on a balance sheet is fleeting and definitely doesn't pay bills

Unfortunately I don't think that this time will be different. Like my Dad has drummed into me from day 1, nothing is so bad that it can't get a h*ll of a lot worse.

[blackpowder]

I'd say he needs a mentor, backer, partner. That partner would benefit greatly by the sounds of it.
My irons always been old. But anyone who says old means cheap to operate has never fixed it while trying to pay for it and paying depreciation (and land rent) at the same time.
There are a few exceptions of course, if the guy has skills and time to do complicated repairs and has a low enough acre per machine ratio. That ratio is your key.
Unless that is the case, repair costs have tripled in the past 15 years.

[hobbyfrmr]

This is kind of a soap opera we need to follow. I do not know anybody involved, but after all the smoke clears, I am curious about who will farm that land this spring. .

[RD414]

Hobby, this is why he needs professional advice. 2 huge farmers (20000 plus) in close proximity.

[Marusko]

RD414, is there any interest on your part, and is it possible, for you and him to create some kind of custom farming arrangement? Sell his equipment to clear the debt, pay you custom rates or do cropshare arrangement for the equipment, he can help during busy seasons and work in the patch off-season.

The unfortunate part is, if 2019 is another bad year for him, that just puts him deeper in the hole. But might keep him going rather than give up land to the BTOs. If he's talking bankruptcy though, he may not be able to pay bills and maybe you don't have the iron to do it.

But I will say it could work out well both ways if you're on your own. Two guys working together are far more efficient than two guys working separately on the same amount of land, and can get by with less iron because of it.