Should I..

3DayFarm · #1 01/04/12, 07:32 PM

Hello everybody... I wanted to ask you all for some advice. I currently own 40 acres that I want to get into hay production. My current situation is that I dont have the time to do much with it, Im always either at work, church or with the family. Theres a piece of property that is for sale...15 acres of coastal grass for 90K. That property is already producing hay. What do you all think, should I buy the property. I currently have like 20k in debt because I bought a country lot in another town, but other than that its just the regular reoccurring bills (Utilties & Taxes). My plans are to buy as much land as I can afford right now when Im working so that hopefully I can live off the land and get to retire early from the rat race.

Alice In TX/MO · #2 01/04/12, 08:24 PM

If you already have debt, the answer is NO. Do not increase debt.

rags57078 · #3 01/04/12, 08:27 PM

can you afford it without starving ?

lisa's garden · #4 01/04/12, 08:56 PM

Tricky situation...but if I were you i would not add more debt on top of existing debt. If you don't have time to work on the land you have, how will you have time for more?

I know it is tempting to own more land...I'd like to also. But would you ever pay it off by selling hay?

farmerDale · #5 01/04/12, 09:09 PM

Why is everyone so scared of debt? It's not like it is a home mortgage, it is LAND that should offer a return of some kind, (crops). As a farmer, if I had no debt, I'd be stuck farming nothing, absolutely nothing.

Now, that being said, only you can tell us what the land can produce for a return. My hangup is 6 000 dollar an acre farm land producing hay. Here, that would not pencil out. but if there, you can grow a lot of hay and sell it for a reasonable price, and cover your expenses and debt payments with some left over, park your money in farmland.

There is a balance between risk averse, and wildy risky. Debt is not alwayd risky like everyone panics about. debt is cheap right now. It is a means to an end, it is a necessary thing if you plan to grow a farm. If I had to use all my money to make my farm work, again, i would have no net income from farming, because i would be farming 0 acres.

Work the numbers, then work through them again. If it pencils, go for it. In 10 or so years you may have 15 more acres free and clear: At this point the risk averse will be wondering how to get the CASH needed to buy more land.

Work those numbers, and don't be a chicken if they work!

Good luck,
Dale

texican · #6 01/04/12, 09:11 PM

One the one hand, if you don't have time now, for the land you own, where would you find time for the new land, you don't own?

Then again, work, church, and family can be 'put off' for three or four days every three or four weeks, when it's time to get in the hayfield. Or, get the boys from church and all the family in the hayfield and have some 'sweat of the brow' teaching moments.

There's a lot of equipment involved in making hay.... and, it's either feast or famine. Regular years, you can't sell hay for what you have in it... fuel, fertilizer, equipment maintenance, labor, and the occasional black swan cost. If one prices according to their costs, they couldn't find anyone to buy the hay. Then, in years like this one (depending on where you are in Tx) you made zero hay, and still have all the infrastructure costs but no income.... or, you weren't in a drought area, and could sell every ton you produce, at 4x normal cost.

I'd have to have a dang good job, and a passel of younguns that could work the fields, before I'd go into debt buying a hayfield, especially for 6K/acre. Now if it had center pivot irrigation already in place, it'd make it somewhat easier.............

Callieslamb · #7 01/04/12, 10:47 PM

If you don't have time to do anything with what you have, why do you want more? What happens to an investment that isn't taken care of? Why not invest a bit more in what you already have and making it productive so you can hasten the time that you can leave the rat race.

So you use the country lot you bought and own 20K on? Can you or are you willing to sell it? How much land do you think you need and how much can you work alone?

Molly Mckee · #8 01/04/12, 11:57 PM

Do you know anything about making hay? Do you have equipment or have you priced it? I see that you are in TX. Do not figure profit on this years hay prices-- they are high because of the drought. You have to make hay when the sun shines--literally. If you want to get a good price for the hay, you make hay when it's ready--not when it fits into your schedule. Will that work for your family?

farmerDale · #9 01/05/12, 12:14 AM

Good points from the others regarding equipment and such. I went at it as if you were actively farming. I guess you are not, maybe?

Good luck regardless.

uncle Will in In. · #10 01/05/12, 06:14 AM

Your best investment would be to make your 40 acres into a paying piece of ground. Your share of the hay off the 15 acres wouldn't pay the interest on $110000.

idigbeets · #11 01/05/12, 06:44 AM

I'd hay what you have and if it's enough to make payments on another 15 acres then go for it. It's entirely up to you, we don't know your finances.

Gianni · #12 01/05/12, 10:14 AM

Does the purchase price of the land equal 1/3 your annual income or 3x your annual income. It would make a big difference. What kind of use is on the 40 acres now? Is it scrub brush, timbered or pasture? Put a pencil to those and your questions should get answered.

CesumPec · #13 01/05/12, 10:22 AM

I think the financial return on hay as a business is terrible unless the land is free to you because it's been in your family forever or someone lets you make hay on their fields for a 50/50 split. Put cattle on those fields and it looks better financially because you're capturing more of the value chain. But from what I've heard numerous people say in several states, they can lease fenced pasture with water for a fraction of the price of buying. So buying the land for cattle probably doesn't make sense either. And as far as your time goes, while you can ignore grass for weeks at a time, cattle not so much.

If you are buying the land for the hopes of reselling at some point down the road, it might make sense if you've got a good feel for where development is going to go, but that's a big roll of the dice. I would only do that if I could see that the land would be profitable from farm ops.

"SPIKE" · #14 01/05/12, 10:35 AM

I'm allergic to debt. I have had it and know for sure! LOL

With the weather patterns the way they have been, the droughts in Texas could make hay growing tough. If you have all the equipment and water there already, I guess it could be profitable. But if you don't, then it leads to more debt!!

SPIKE

rambler · #15 01/05/12, 12:20 PM

Quote:

Originally Posted by 3DayFarm

Hello everybody... I wanted to ask you all for some advice. I currently own 40 acres that I want to get into hay production. My current situation is that I dont have the time to do much with it, Im always either at work, church or with the family. Theres a piece of property that is for sale...15 acres of coastal grass for 90K. That property is already producing hay. What do you all think, should I buy the property. I currently have like 20k in debt because I bought a country lot in another town, but other than that its just the regular reoccurring bills (Utilties & Taxes). My plans are to buy as much land as I can afford right now when Im working so that hopefully I can live off the land and get to retire early from the rat race.

You say you don't have time for the land.

So - what will you do with it? Does it have rental income - can you sell the standing hay, can you rent it out to be farmed?

Such a purchase needs to generate income, what is your plan to make some money from it?

'Here' farm land is worth $150-300 an acre cash rent per year. Some areas you can sell hay for $4-5 a small bale, or have it custom harvested for you at about 40% of that money coming to you.

What is your plan? If you just gonna buy it let weeds grow and do nothing with it for 10 years, that does't sound wise.

Do you have a plan?

--->Paul

sammyd · #16 01/05/12, 03:11 PM

you don't have time for the property you own yet you want to pay 6000 an acre for more land that you won't have time for?

foxtrapper · #17 01/05/12, 03:40 PM

Scattered disconnected pieces of land all over the region is not the best way to build up a farm.

oregon woodsmok · #18 01/05/12, 04:08 PM

In most areas, you can get a custom farmer to do all the tractor work for a percentage of the hay crop.

Still, if you are buying land to retire on when the job stops, decide what you want to do with the land, get it all in the same area, and buy land that will meet your needs in the future.

If your dream is to retire and make goat cheese, then a hay field might be a very good investment. If you want to retire and be a vintner, then a hay field isn't such a good idea. You need land that is perfect for growing grapes.

I don't think it is such a bad idea to purchase good agricultural land now, as long as you can afford to pay for it. Interest rates are deliciously low. It's not a bad time to take a mortgage to buy something that will be useful.

plowjockey · #19 01/05/12, 06:02 PM

Quote:

My current situation is that I dont have the time to do much with it, Im always either at work, church or with the family

This would be the deal killer for hay, from the get-go, IMO.

When hay is ready, it needs to be bailed - NOW. Four hours from now, or tomorrow, it will be raining, leaving you with a ruined hay cop.

Hay equipment is expensive, but getting a little cheaper (at least around here) because they are plowing up their hay fields to plant corn. Still you will have to sind a bundle, plus find some labor.

90k for a 15 acre hay field, sounds maore than a bit pricey, IMO.

good luck.

Jennifer L. · #20 01/06/12, 12:24 PM

Quote:

Originally Posted by 3DayFarm

Hello everybody... I wanted to ask you all for some advice. I currently own 40 acres that I want to get into hay production. My current situation is that I dont have the time to do much with it, Im always either at work, church or with the family. Theres a piece of property that is for sale...15 acres of coastal grass for 90K. That property is already producing hay. What do you all think, should I buy the property. I currently have like 20k in debt because I bought a country lot in another town, but other than that its just the regular reoccurring bills (Utilties & Taxes). My plans are to buy as much land as I can afford right now when Im working so that hopefully I can live off the land and get to retire early from the rat race.

Rather than go into debt buying a piece of land when you already have land that you SHOULD be working with, why not spend some money and hire someone to whip the land you already own into shape?

Unless you are looking at the 15A as being an investment property I can't see why you'd want to bother with it.

You could also consider cutting back on off farm activities if you don't have the time to get stuff done.

Jennifer