The future of mega farms.

[foragefarmer]

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?

As usual when one of your posts falls flat, you mention Chuck in the following post to deflect.

Just because I call you out on your countless B.S. posts, is not a reflection of my beliefs in business and MNC.

It's to bad Agriville provides you with the sanctuary to contiue on that path.

[AlbertaFarmer5]

You didn't answer my question. You posed a hypothetical scenario about profit structures within a large corporation.

Why even bring this up as possible scenario if you can't even find an example of this happening in the real world?

[foragefarmer]

You didn't answer my question. You posed a hypothetical scenario about profit structures within a large corporation.

Why even bring this up as possible scenario if you can't even find an example of this happening in the real world?

I do know of one large corporate operation having profit sharing with it's manager. Me posting the name would be insane on this farmer chat line.

You can't be that naive to think corporate farms that keep expanding in size and numbers are not offering profit sharing bonuses or even share purchases in the real world to retain good management and employees, that you have to ask me to provide you of a name of a large mega corporate farm doing so.

They understand corporate structures, and know how to succeed or they wouldn't be expanding as they are.

No wonder you put so much faith in Trump.

[jamesb]

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?

In my earlier farming days dealing with the bank was a major struggle. There was times they went from very supportive of farms with a good balance sheet to very quickly getting cold feet and really tightening up their lending. One couldn't trust them at all from year to year. Ag has been "sexy" for a over a decade now and eventually the pendulum swings back the other way and some failures in farming will make things interesting for negotiating with the bank. I had a very smart non farmer business man friend wanting to understand farming numbers better years ago. He was amazed that I accepted the low rate of return on the farm (early 2000's), my reaction was an acknowledgment, yes this is true but had the belief that farming will improve and we will move forward. I just wonder if the companies operating farms will accept the long game or get out. I guess I kinda feel they will cut their losses

[wheatking16]

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?

I don't know if this is for me, but my response is not enough..

but the number is growing.

Sometimes at the owner's initiative.

Other times, at the request or demand of a lender.

This does not have to be complicated.

Stick to one's knitting

Fill every job that is not dependent on you.

It can be as simple as a third-party bookkeeper utilizing online software with the implementation of cheap technology to assist with invoice processing.

A fractional CFO.

A Law firm with specializations, not the same one transferring titles and defending your DUI.

Properly structured entities are a must.

Trying to be a jack of all trades is a fool's errand, IMO.

[LEP]

Once you get to a certain size it seems many pay for agronomy. On our farm we do it ourselves and try to keep current by attending a conference or two and reading alot.

For some the fractional CFO is helpful. I know a couple friends that do that. It allows for timely in season financial tracking vs budget. For operations with a tight budget this tracking is useful.

Sure wish there were more independent mechanics available. We do most things except ripping into a diesel engine. My son has gotten pretty good at troubleshooting electrical issues which is invaluable.

Many ways to do it. I would say the biggest risk is rapid expansion. That has a different meaning to each operation. To some adding 1500 acres would be lots. Other it might be 2 or 3 times that.

[wrongway]

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?

Use market value to get better rates on loans
Use book value to see if balance sheet increase is from management or from land price lottery.
My accountants use benchmarking to show you where you stand with respect to their other clients. There must be some very top notch managers out there that are able to operate with such razor thin margins. I cannot, so really try to keep my fixed costs close to the bottom range, except for maybe management salaries...

[wheatking16]

Once you get to a certain size it seems many pay for agronomy. On our farm we do it ourselves and try to keep current by attending a conference or two and reading alot.

For some the fractional CFO is helpful. I know a couple friends that do that. It allows for timely in season financial tracking vs budget. For operations with a tight budget this tracking is useful.

Sure wish there were more independent mechanics available. We do most things except ripping into a diesel engine. My son has gotten pretty good at troubleshooting electrical issues which is invaluable.

Many ways to do it. I would say the biggest risk is rapid expansion. That has a different meaning to each operation. To some adding 1500 acres would be lots. Other it might be 2 or 3 times that.

Yeah, bets should be made relative to account size, or land expansion relative to existing acres.

[shtferbrains]

Sometimes the mega farm, especially the investors situations, are looked at as a tax dodge?
Farming can sometimes be run as perpetual tax avoidance.
Always seem to be trying to plug the holes?

"Your assets simply have to be more productive than having your money stolen."

"So you buy *ANYTHING* that the government can’t steal. And boom, positive nominal ROI."


?
"

[Grain Farmer]

The mega farms buy or rent everything for miles around.
for people selling or renting it's a win..
Anyone trying to expand, just hope your neighbors prefer you over $$$.