Monette - WTF were they thinking?

[chuckChuck]

So the Monette family looks like they were good talkers but not really good at making plans on how to pay back $950 million to creditors.

First of all what the was the strategy and plan here? Anyone of their many farms would have been a very nice operation that would have paid more than a very good living if well managed.

Why would any normal sane person want the headaches of running multiple farms in multiple locations in an industry that is full of weather and market risk?

It looks like they were mostly motivated by ego and greed. Because from a business plan point of view, none of it makes sense. Who were their advisors, accountants and bankers because they all look like they screwed up or were mislead.

The other thing they did and other very large farms do, is they bid up land and rents to levels that are crazy making it impossible for most farmers to compete with.

They are speeding up the consolidation of land in the hands of a few large farms and beginning farmers and land short farms can't get any access to affordable land. They are driving up land costs for everyone including themselves.

This might be the start of a much needed correction in land prices.

The Monettes must have missed or forgotten the lessons of the 1980s!

[sumdumguy]

I think if Monettes would have come through the 1980’s and nineties, they may not have been so frisky. Just Sayin - BUT they saw an opportunity and the greedy bank doors flung open to them as they did to many, and they jumped in. Probably make out OK. They’ll likely have enough titles in their own names and they’ll toss this experience to history.

[blackpowder]

It's hard for a socialist to look through the glass and guess.

[farmaholic]

......what could possibly go wrong?

[farmaholic]

Is this an example of "economy of fail"? I guess no one is "too big to fail", no matter the "economy of scale"!

To a degree these types create their own land value appreciation.
Borrowing capacity increases exponentially based on balance sheets versus the cold hard reality of grain farming in Western Canada.
Thinking the high prices of 21, 22 and maybe a bit of an extension( pre sales) into 2023 were here to stay or the new normal.
Increases in input prices coupled with lower commodity prices.
Drought in some areas. Ego and greed. Green bankers(secured, which should wear some of the responsibility instead of innocent unsecured creditors!)

So they rode the Ag wave... didn't anyone see the beach coming and the wave dying? Get ready or crash.... and it sounds like they did, or are.

[rodd]

Over 30 million crop acres in Sask alone, I don't think 400000 acres in one operation spread around western Canada will move the dial very much. Yes it is visible and interesting to watch., but won't really affect anything.

[chuckChuck]

Monette land and property listed on X they had total assets worth $1.05 billion both owned or rented. And Debt owed creditors around $940 billion.

Total farmed Acres 392,940

Total owned acres 213,889

Total buildings value $143 M

Total list value$1,059,377,365

It looks like they spent most of their time looking for what more they could buy using some else's money and not enough time managing what they already had!

This will put every big over leveraged farm under a lot more scrutiny. Hopefully it slows down the wanna be land barrons and empire builders with too much ego and not enough financial management and prudence.

[farmaholic]

Rodd, it could have affects in areas they own/operate alot of land.

CC, wouldn't that be $940 MILLION

[chuckChuck]

Yes my bad! Almost 1 billion in debt!

[goalieguy847]

The funny part is that monettes were increddiblllyyy subsidized by almost every level.

They definitely got sweetheart loans. They definitely utilized every level of ag subsidies from.. cheaper insurance rates at their acreage levels...
usa born ad hoc payments... agrastability... agrinvest. ( these are at the top level)

And then every level below that.

They get better pricing on equipment and the dealers then make more margin on the smaller farms.

They get better pricing on every single possible input... which the retails then tack onto the margin they make on every other farm out of their retail. So every smaller farmpays more which then subsidizes monettes... who then use that spare change to cut out the smaller farms by jacking up rent and artificially inflating land values.

So they are .. in essence... socialist farming ( especially in the usa with those ad hoc payments)
and with alot of help from you and me.

we were helping pay their bills. Thats " capitalism" baby!!!!

Pause.. not.. really.

I hope that the fert suppliers and banks and equipment dealers take it thru the nose and the landlords that jumped ship due to the promise of higher rent miss 1 yr of payments and come back to their previous renter with their tail between their legs.

Monette received every advantage to go big... and thats just the advantages we know about. In 13 yrs they go from a small farm to the biggest farm in canadian history? ( i think...im not that old)
questions need to be asked about who approved their financing and where exactly that financing came from. The scale and $ amounts that they grew by in such a short time is .... incredible. For all of us that have a sharp pencil we know that financially their rise was....dubious. at best.

crooked? Maybe.
Questionable? Ab- so- effing- lutely.