The future of mega farms.

[Marusko]

my opinion

family owned mega farms with no succeeding generation will be bought out by other mega farms. Or hutterites. Or investors as a package. We've seen a lot of investor money buying land to rent to farmers but I expect that will shift to investors who hire farm managers and employees to run the show as that would appear to provide a better ROI than rent.

It will be rare for a mega farm to break up the land to sell small lots of land to existing smaller operations.

Most of our O&G industry is owned by foreign entities. So many canadian companies have foreign ownership, it's sickening. They'll come for our land next. through Canadian shell companies.

Ecclesiastes is a great passage to find peace in your situation but I would argue it only applies if you have enough to make a living. The guys who have more than enough and yet continue to bid up land and rent to unprofitable levels, which derails opportunity for the smaller neighbours, could use some Ecclesiastes.

[AlbertaFarmer5]

What if there's no limit to the size of farms in the future?
Between autonomous machines and AI, is there any limit to how many acres one owner could manage? Could that owner be located anywhere in the world doing it remotely?
Could that owner/operator have no relevant skills or experience? With technology taking care of that instead?
Could the only limit to who farms and how big they are simply be their access to land?

[wheatking16]

Many of these "mega" farms have adopted and developed management practices typical of a corporation of that size.

These practices should be adopted by all businesses, not just "mega" farms.

Management and the business strategy will be tested by an industry-wide liquidity challenge or crisis, which, in my opinion, has not been experienced in over 30 years.

The cyclical nature of commodities and recurring business cycles will ensure one is experienced.

Strong management teams will likely get ahead of a crisis, if they can.

I suspect many of the "mega" farms have adopted real estate growth strategies.

Borrow, refinance, repeat.

This has been a great strategy since around 2010.

Leverage works well, until it doesn't.

Balance sheets can be strong but vulnerable.

Here are some scenarios to determine vulnerability if a balance sheet includes market values for farmland.

1. Reduce farmland values by 20%, 50% and 60%;
2. Increase the cost of borrowing by 2%;
3. Combine scenarios 1 and 2.

Will lenders of today have similar attitudes to those of the last liquidity and balance sheet crisis?

[AlbertaFarmer5]

Many of these "mega" farms have adopted and developed management practices typical of a corporation of that size.

These practices should be adopted by all businesses, not just "mega" farms.

I'm not sure farms would be better off by having a bloated hierarchy of managers who make decisions at the speed of bureaucracy while adhering to rigid budgets, schedules and financial plans. Giving strict orders to subservient, uncaring, unmotivated employees who don't own a bolt in the operation.

[Taiga]

Whenever I hear Manager I think bloated non-billable (non-income-earning) payroll expense.

[foragefarmer]

I'm not sure farms would be better off by having a bloated hierarchy of managers who make decisions at the speed of bureaucracy while adhering to rigid budgets, schedules and financial plans. Giving strict orders to subservient, uncaring, unmotivated employees who don't own a bolt in the operation.

And how did MNCs get to where they are now? I'm thankful they had a lot more faith in their management and employees.

Have you heard of a share structured business?

Farms can't be set up in the same way? Or profit sharing being offered to management or employees.

Do you not consider farming a business regardless of any size?

[wheatking16]

Don't confuse management practices with bloated payroll.

Individuals and teams can adopt these practices without having to include full-time managers.

In my previous businesses, we introduced practices that reduced employee costs and payroll while increasing efficiencies, with profit levels responding accordingly.

I improved my business and increased my margin.

Every time I have added a "who" with more skills than I at specific tasks, I have increased efficiencies.

Every

F%$#n

Time

It is humbling.

A significant learning experience for me was the realization that I did not know what I did not know.

Once I began to know what I did not know, I started learning and my business improved.

In my opinion, it is impossible to manage all aspects of a sizable and growing business effectively.

If one thinks they can, they don't know what they don't know.

[AlbertaFarmer5]

What an interesting turn of events. Forage is arguing for multinational corporations, I'm taking the other side. Don't tell Chuck.

Can all of the improvements you suggest the implemented, of course.

How many businesses or farms do you know that are set up that way?

[BTO780]

The big always wants to get bigger .. they are a business, businesses always want to grow.

I know of a family run farm who needed 70 employees to take last yrs crop off. Couldn’t imagine, how many to put the crop in?

Thought someone said once the most profitable farm size was 5000 acres?

How many of these mega farms can actually say they know what’s happening on every quarter? Most have other eyes watching over, which to me takes the fun out of crop checking.

Like I mentioned farming isn’t farming anymore, it has turned into a business.

[blackpowder]

Sorry, Farming always was a business. We were always buying things from, and selling to, for profit businesses.
I've been doing it a lifetime.
Those that didn't think that way either, died before their insolvency, quit, or were large enough to not know the difference, for a while...
No matter the circumstances, equity and/or economy of scale have to keep pace with inflation.
Now today? I'm investing/leveraging equity off farm. If you're not growing (keeping pace) you're losing and you darn well know it.
It's not always about the number of acres regarding profitability.