Friday Crop report third week of January, god it's cold.

[SASKFARMER]

Wheels up. It was a good trip home.

Let’s look at the facts: let’s pretend you have a decent farm, with 10 quarters paid for and 10 rented.

Would you spend $800,000.00A QUARTER to add 4 more quarters at 3.2 million and take $ 640,000 out of savings for the down payment?

Does it make economic sense?

Now do that on hundreds of quarters and tell me slowly how it works out fine.

Or just farm what you have enjoy life.

Later.

[Hamloc]

Wheels up. It was a good trip home.

Let’s look at the facts: let’s pretend you have a decent farm, with 10 quarters paid for and 10 rented.

Would you spend $800,000.00A QUARTER to add 4 more quarters at 3.2 million and take $ 640,000 out of savings for the down payment?

Does it make economic sense?

Now do that on hundreds of quarters and tell me slowly how it works out fine.

Or just farm what you have enjoy life.

Later.

The answer depends on your age and if you have someone there with a strong interest in taking over. As we age the decision certainly is harder. But competition for rented land increases all the time as does the cost of rent.

[BTO780]

If I was still in this game you couldn’t pay me to rent an acre. Landlord always makes more at the end.

Been there done that.

[blackpowder]

I think 10 quarters is a questionable example. Here, that's $12M idle equity. Still a very healthy ratio to increase base by 40%.
Next gen the last otherwise.
Goal dependent. Savings have a return to beat as well.
However, question still valid.
I'm guessing the trend for farms in that cash position should be other investments or businesses.
Banker tells me few in that ratio position.

Question. Regional differences maybe, but for how many generations will rented acres be this high? Depends on taxes and economy i guess. 50 year outlook?
I'm renting land now that's treated like an apartment building. With a well maintained ACB.
I see an increase yet here.
Earlier stage of the consolidation cycle.

[TASFarms]

Wheels up. It was a good trip home.

Let’s look at the facts: let’s pretend you have a decent farm, with 10 quarters paid for and 10 rented.

Would you spend $800,000.00A QUARTER to add 4 more quarters at 3.2 million and take $ 640,000 out of savings for the down payment?

Does it make economic sense?

Now do that on hundreds of quarters and tell me slowly how it works out fine.

Or just farm what you have enjoy life.

Later.

That is tax paid dollars to boot. The price of land has far exceeded what a person can do with tax paid dollars. I could be wrong. The only way it works is inside a company.

[fjlip]

SF you should have posted this..

Yes after tax, Corp only 10%....but...

even on a 1000 acres, lose $200,000 for 25 years?

returns HAVE to change or zero makes sense.

[furrowtickler]

And that’s with above average yields for the majority

Not many areas will average $14 canola either , maybe $13 and change

[Templeboy]

I think 10 quarters is a questionable example. Here, that's $12M idle equity. Still a very healthy ratio to increase base by 40%.
Next gen the last otherwise.
Goal dependent. Savings have a return to beat as well.
However, question still valid.
I'm guessing the trend for farms in that cash position should be other investments or businesses.
Banker tells me few in that ratio position.

Question. Regional differences maybe, but for how many generations will rented acres be this high? Depends on taxes and economy i guess. 50 year outlook?
I'm renting land now that's treated like an apartment building. With a well maintained ACB.
I see an increase yet here.
Earlier stage of the consolidation cycle.

I agree with BP, there are few farms in that boat, and if you don't have a next gen coming up why would you do that, should diversify with investments.

In this exact case, farming 20 quarters, adding 20 percent more acres may not need a bunch more equipment, might fill in some spaces in a block, shore up the base, could be a great play. Could also be pent up demand because they have passed over a few times by neighbours or other land sales with BTO's pinching in.

It's pretty easy to get offside with the taxman if you are making big principal payments. If you 3X this deal you have burned up your small tax rate just on principal. I think rented acres are going to grow, simply the lack of capital and the tax constraints even if it cash flows. Taxes are a great equalizer of the masses. Some outfits will get around it with REITs or other investment vehicles.