Ranch Financing?

[Oldtimer]

I picked this off another ranchers blog...I'm kind of in the shape he is where what financing I need is thru a traditional bank-and have very little debt- so except for the sorry shape of calf prices, I haven't thought much of it....

But I do know several that are heavily financed thru all kinds of financial institutions- all over the country- and some big outfits that have been living from one lending company to another- and on very tight margins already...

Has anyone heard if this is causing any problems in the Ag sector yet?

Like he said in the article- it would sure be nice to have a crystal ball...

[Ben H]

I may get some flak for this, but I don't care. If anyone knows me in person I speak what's on my mind.

There is another major factor that farms and ranches need to be worrying about, change, and I'm not talking about BHO this time.

Farms and Ranches that don't want or aren't willing to change their production methods are going to be hurt, as most of you have heard it said, this industry was built on cheap grain, cheap fuel and cheap inputs for the last 50 years or more. We have the most efficient and PRODUCTIVE agriculture in the world. But as Kit Pharo likes to focus on, Profit and Productivity are two different things. The biggest thing I have been trying to change in my managment is reducing frame size and getting away from the mindset that everything has to be harvested by then end of the growing season. Last year I grazed until December, I could have gone longer if there was more forage allocated for it. We still have some of the smaller dairy farms around here, milking 50-75 cows in a tie stall barn. Bigger ones in this part of the state would be about 150. As you move North it's a different story. They all keep trying to seel to the commodity market, doing it he way they allways have. Some have plenty of land all within walking distance surrounding their barn, but they insist on bringing the feed to the animals. I won't even get into the fact that we are in the largest populated county in the State, right in the middle of the market. I focused on dairy in school, most of the time was spent looking at management of large farms. We did acknowledge the US can't compete on the World Market for milk, it's also hard to compete on beef as well. New Zealand kills us with milk, producing half as much per cows as we do. Argentina, Brazil, Uruguay, Australia, they produce beef cheaper then us. Argentina is reducing exports but their government controls the price paid for beef, they keep it low. Beef producers need to make money at under $.40 per pound. We have the opportunities here, we have the rescources, we lack the motivation to change.

[PORKER]

From my angle, cash is king ,credit is out, and there will be a slowdown as belt tighting will take place. Most everyone was only looking at short term income , but everyone will have to focus on long term ,+ ten years
Our dollar is getting cheaper every day , so the exchange rate will be a big factor as we have dollars getting closer to the Brazilian real. Gold and food could be the exchange of choice in the future as the dollar declines against all currencys around the world. Local will be the norm as transportation will cost too much.
Inflationary signals induced traders to reacquire hard assets on fears that
paper money will be worth less, and that is supportive to commodities, analysts said. The world’s wealth was moving away from the US.

[RobertMac]

[Oldtimer]