The future of mega farms.

[jamesb]

A little bit of philosophizing today.

These days there is always lots of coffee row talk and gossip about the big farm operators. I recently saw a post online that spoke of the term " Schadenfreude". I had to look it up. Schadenfreude is "the experience of pleasure, joy, or self-satisfaction that comes from learning of or witnessing the troubles, failures, pain, suffering, or humiliation of another?". I get the impression by some that they seemed to feel threatened by the "perceived " success of other farmers. It is fun to look over the fence for ideas but I really try to look after my own operation and not feel that I am in a race with anyone else. I don't see myself a strong church person but I think the words of Ecclesiastes has the wisdom that pretty much sums how I want to look at things.

A bigger picture idea is "what is the future of the mega farms ?" Almost all farms here today have grown by buying retiring farmers land. Sizes have grown on some operations to levels unheard off years ago not even including the big name outfits. Most farms operated by families are willing to accept low returns at times to survive for the upturns that eventually comes.
Question : Will this mega farms that are "family owned" in some respects but are operated with a very corporate style carry on through this or will they move in a different direction in a downturn?
Also, on retirement or just quitting, how does these large land tracts sell? Its gonna be a daunting task to figure out how to find another operation to absorb the big land base or how to break up the land to lots existing smaller operations can buy.
Non farm investors can and will have a roll whether we like it or not but even they want a return or do they ? maybe they just want a secure place to park money if the SHTF.

[ajl]

Mega farms have always been a phenomena. One such example is the Noble farm in southern AB that had 30000 acres in 1928. Read a history book on it. Not much is left today. The Turin colony farms much of the 1920's expansion today. The business cycle always got them in the past. Fast forward till today. Today we have gubmints totally dependent on inflation to stay alive. Add to that, canuckistan is the money laundering go to for the world's organized crime. This has meant interest rates staying well below market rates for an extended period which allows unprecedented capital accumulation. Right now US farmers pay 1.5% more interest than in the great white north which will eventually pressure farmland prices to the downside south of the border. The federal reserve in cahoots with the demoncraps are keeping liquidity tight down there because it does not feel obligated to support the regime which is different than the experience in rest of the world's leftist dictatorships.

[Grain Farmer]

Big or small..nothing lasts forever.

[Grahamp]

The business cycle and character flaws in the next generation get most every family business. I will say though that the level of management sophistication and the value of farmland is creating mega farms that may last longer than you think. Our immediate area has 2 mega farms and then probably 4-6 just under mega farm status. For the most part they seem quite well run, grow good crops and have the next generation involved in a meaningful way. I would be very surprised if any of them went broke in the next 25 years. Maybe selling out to Super Mega farms, but other than that I don’t see them blowing up or going away.

[poorboy]

The government move to steady inflation has made the mega farm viable on owned land. The asset values keep inflating, so the farming operation just needs to break even.

Kind of like the stock market.

Just need reliable top managers and the mega farm should have unlimited access to capital and expansion potential.

The ones I see struggling in the future are the all family operations as dynamics change it is much harder to keep top notch managers when only using family.

[newguy]

The government move to steady inflation has made the mega farm viable on owned land. The asset values keep inflating, so the farming operation just needs to break even.

Kind of like the stock market.

Just need reliable top managers and the mega farm should have unlimited access to capital and expansion potential.

The ones I see struggling in the future are the all family operations as dynamics change it is much harder to keep top notch managers when only using family.

Farm land inflation and less family farms not a new thing.looks exactly what was said in mid 70s .50 years ago.What I do not like is sask government investing in a very select group of farmers to produce more through their irrigation at 1.25 million per quarter.

[bucket]

Farm land inflation and less family farms not a new thing.looks exactly what was said in mid 70s .50 years ago.What I do not like is sask government investing in a very select group of farmers to produce more through their irrigation at 1.25 million per quarter.

Food for thought.

If the government ignores the current drought and refuses to help, and thinks we can grow a crop with 3 tenths of rain so far.

Then, why do they think developing more irrigation at 1.25M per quarter to grow dryland crops is good value?

The heavy lifting of production is done by dryland farmers.

The increase in production isn't the full production on irrigation, it is the spread between what they already grow and what the new BPA production is. For example , if the land can grow 40bpa and irrigation makes it 80bpa the increase is only 40bpa not the 80bpa.

There are chickpeas and lentils on many pivots around this area this year. The last crop survey by ICDC only had 5% in specialty high value crops. Very few acres in hay . Most of the acres were wheat canola flax durum under a pivot.

While the consultant who justified this project made it look like a good deal, there numbers are obviously flawed because the existing districts are still subsidized $40 an acre going on 10 years now.

The current West Side project engineering costs are exceeding 20 million for a 90000 acre project. That alone is a $222 per acre subsidy in itself. No dryland farmer sees a benefit for that but they are paying for it.

There is more nonsense to those projects, but the bottom line is -

If you don't support dryland farmers , who are the major production and economic drivers, why would you throw a billion at less than 75 farmers for a minuscule boost in provincial production.

The current irrigation projects will not make up the production shortfalls of this years overall crop.

[newguy]

Food for thought.

If the government ignores the current drought and refuses to help, and thinks we can grow a crop with 3 tenths of rain so far.

Then, why do they think developing more irrigation at 1.25M per quarter to grow dryland crops is good value?

The heavy lifting of production is done by dryland farmers.

The increase in production isn't the full production on irrigation, it is the spread between what they already grow and what the new BPA production is. For example , if the land can grow 40bpa and irrigation makes it 80bpa the increase is only 40bpa not the 80bpa.

There are chickpeas and lentils on many pivots around this area this year. The last crop survey by ICDC only had 5% in specialty high value crops. Very few acres in hay . Most of the acres were wheat canola flax durum under a pivot.

While the consultant who justified this project made it look like a good deal, there numbers are obviously flawed because the existing districts are still subsidized $40 an acre going on 10 years now.

The current West Side project engineering costs are exceeding 20 million for a 90000 acre project. That alone is a $222 per acre subsidy in itself. No dryland farmer sees a benefit for that but they are paying for it.

There is more nonsense to those projects, but the bottom line is -

If you don't support dryland farmers , who are the major production and economic drivers, why would you throw a billion at less than 75 farmers for a minuscule boost in provincial production.

The current irrigation projects will not make up the production shortfalls of this years overall crop.

So there are saying subsidize a few for food security? Which is a fancy phrase for cheap food.

[bucket]

So are you saying subsidize a few for food security? Which is a fancy phrase for cheap food.

I am not.

I think the government investment in irrigation is a white elephant . The projects don't produce food and they would be competing against lower cost jurisdictions that have better weather. They will just increase the debt on the province which in turn raises taxes in the long run.

[newguy]

I am not.

I think the government investment in irrigation is a white elephant . The projects don't produce food and they would be competing against lower cost jurisdictions that have better weather. They will just increase the debt on the province which in turn raises taxes in the long run.

Basically the big company supporters needed a project to line their pockets again.For the size of the project Moe is very quiet about it.