# Are you making money?



## stack em up

Reading thru a lot of threads here and one thing keeps popping up in my mind, are you actually MAKING money, or is it just cash flow? I have my costs down to the gnats ass, and I don’t know where I could trim any more fat, but would like the net profit higher. I understand some on here do it as a hobby and that is just fine.


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## Farmerbrown2

Making money yes pays the taxes and heat for the house buys a lot of pizza for the kids. I pay the kids for helping so teaching them a work ethic hopefully. My off farm job pays absolutely no farm bills. If my job has to cover farm bills I quit.


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## BWfarms

The ROI of a hobby is the pleasure you derive from it. This isn't the first time you tried to bully club the fence post that looked like a horse to death. We get it, money matters to you... it doesn't really matter to me.

I'm not going to make a lot of money raising cattle but I will tell you my life is richer for it. I could easily apply my efforts to other more lucrative business but that's not the way I'm wired. It's like what I told my mother in law who was bitching about teacher pay, "You can always leave and find a job that pays more."

If you want more money, sellout.... but will you be happy?


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## OhioHay

Yes we are netting profit in our hay business. Our hay acres net better than our average corn and bean acres. We do have a very strong hay market due to one of the largest Amish populations in the world being in our back yard. Without that, I don't think we would be as profitable.


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## stack em up

Actually BWFarm, the reason I ask is we were offered damn good money to rent out the farm (~660 acres tillable) and I can’t quite figure out how the individual is doing it with current crop prices. I guess my question should have been worded differently.


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## BWfarms

That's a way different question.

Simple, they are not making money. Every financial literature I've read has said so.

However if it's because he's looking for a tax shelter....


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## r82230

My costs have inched up (naturally), but the selling price is up dramatically this year, so profits are up substantially.

When I spent the time figuring out the pay-back on the equipment and hay shed that I had built, to move to ss bale production. I was looking at 7-8 year pay back. With this year's hay market, it's looking like the time period is reduced to 5 years. Have to admit, I used conservative numbers in my figuring in the first place.

In case you missed (or haven't found it), here is a link to a thread with a spreadsheet for calculating most of the costs for hay production.

https://www.haytalk.com/forums/topic/91018-what-is-your-cost-of-production/page-2

I think it is still up (hosted by Dana), but I not sure.

Larry


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## r82230

stack em up said:


> Actually BWFarm, the reason I ask is we were offered damn good money to rent out the farm (~660 acres tillable) and I can't quite figure out how the individual is doing it with current crop prices.


This reminds me of a long time ago when I planted corn and quit. I couldn't make a positive cash flow, but maybe it was just me, with $2.47 a bushel cost and a $2.25 -2.30 a bushel market. I friend asked me to help take a closer look at his operation. We figured that he was 'losing' money (as I was) growing corn. He would make more money for his time, working at Micky D's, plus the cash he would get for renting his ground out. And didn't take in the time he would save marketing the crop.

He rented to another local farmer, that though they could make out by 'spreading' their cost over more acres, making them more 'efficient'. Didn't work, their combine and equipment just wore out faster. 

Tough decision either way Stack, good luck.

Larry


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## stack em up

Just very torn today, been a battle for a couple years now, and wondering if it's worth it fighting anymore. Have basically quit making hay other than for my own use as we had lots of winterkill and flooding last year and this year, not worth replanting with no market anymore.

The sweet corn cannery is closing end of this year so sweet corn isn't an option anymore, that used to give very good ROI.

Brothers father in law was going to rent some of his ground to us but has since rented 2000 acres to the same fella who has offered us cash rent, said we are stupid not to take it and run. I tend to agree, provides the check is good. Just thinking out loud


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## r82230

stack em up said:


> I tend to agree, provides the check is good. Just thinking out loud


As long as you are thinking- wouldn't this also give you more room in your shop (and time) to do more wrenching? Thinking of your skills and newly found time. At least you get to set the selling price of your work, this way (verses the boys at the Chicago BOT). 

Larry


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## r82230

Stack,

Got to add, (being you might like AC equipment), I haven't done corn for a lot of years and just finally sent the old Gleaner K down the road last week. I was talking to the purchaser, that with the three row head and 80+ bushel an acre corn, she would starting kicking the corn out the back on much of a side hill. Couldn't imagine harvesting the 150+ bushel an acre stuff today. Ah, the memories, 4 row corn planter and a 3 row head on the combine, with no GPS! Had to pay attention while planting it seemed. Only did about 400-450 acres of corn at that time. I seemed to have a lot of time and not much money, all while thinking sleep was over rated.

Larry


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## stack em up

Very good point Larry, however there are very few smaller farmers around here anymore to take advantage of an independent mechanic. The way it’s going, there won’t be any left in 3 years. I’ve thought about different jobs I could do, not much I can actually. Potential renter offered to help me get on Disability, how nice of him, lol


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## OhioHay

BWfarms said:


> That's a way different question.
> 
> Simple, they are not making money. Every financial literature I've read has said so.
> 
> However if it's because he's looking for a tax shelter....


My farm isn't a tax shelter. Zero off farm income and making a living. Don't believe everything you read.


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## swmnhay

Got to stick it out for the good years.It averages out in the end.

Guys paying bigger rent are betting on the come or need a place to haul their free manure,lol.

Crunched some numbers myself for corn figuring 200 bpa.Used Some rd Numbers But it's pretty close.
$200 for seed,Fert,chem =$1 bu
$100 for Machine exp. = .50 bu

200 bu x 3.50 = $700 gross
Less $300 expenses

$400 return for land cost.

Looks like farming it nets me $100 more then renting it out at $300

Now if I could sell it for $4.50 a bu I'd make $200 acre more


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## BWfarms

OhioHay said:


> My farm isn't a tax shelter. Zero off farm income and making a living. Don't believe everything you read.


Keep paying those extra taxes.


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## Farmerbrown2

We rented our farm out for several years all the guy did was mine our soil.

My uncle rents part of his farm out does his own soil testing to make sure the renter is keeping the soil levels where they need to be . If we rent our place out again I will be more on top of the renters.


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## OhioHay

BWfarms said:


> Keep paying those extra taxes.


Your response makes no sense. You apparently have read and believe that farms are only tax shelters and can't be profitable. We are an example that farms can be profitable.


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## OhioHay

stack em up said:


> Just very torn today, been a battle for a couple years now, and wondering if it's worth it fighting anymore. Have basically quit making hay other than for my own use as we had lots of winterkill and flooding last year and this year, not worth replanting with no market anymore.
> 
> The sweet corn cannery is closing end of this year so sweet corn isn't an option anymore, that used to give very good ROI.
> 
> Brothers father in law was going to rent some of his ground to us but has since rented 2000 acres to the same fella who has offered us cash rent, said we are stupid not to take it and run. I tend to agree, provides the check is good. Just thinking out loud


Maybe keep your livestock and enough ground to support that and cash rent the rest. Do a short term lease in case you change your mind or ag turns around. Definitely a tough decision and I wish you the best with it.


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## BWfarms

OhioHay said:


> Your response makes no sense.
> You apparently have read and believe that farms are only tax shelters and can't be profitable. We are an example that farms can be profitable.


You apparently like to assume before clarification, got offended and have a bone to pick. I'm going to go out on a limb that you don't really understand what a tax shelter is. A tax shelter is reducing your taxable liability by using the tax code to your advantage. Whether it is buying a new truck, tractor, or other expenditure. A smart farm uses the tax shelter to increase wealth. I would rather enjoy spending more of my money than let the government play with it.

I didn't say farms can't be profitable (another ASSumption you made). In these lean times you're not making as much money and amortizing your equipment over larger acres only means you're going to be replacing it sooner. Have you not seen the inflation of equipment in 15 years? Commodity prices have not maintained that trend. You might make some extra money now but down the line are you really coming out ahead? Sit down a figure out a financial projection for 10 and 15 years from now, it's really sobering.


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## OhioHay

No assumption made. Your words..."simple they are not making money. Every financial literature i've read says so". Once again your words. Not offended here at all. To many get offended over everything. No bone to pick either, Just once again pointing out there are profitable farms. There are operations thriving in this environment. I am sorry to here that your 10 to 15 year financial projections are so sobering. I hope it turns around for you.


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## BWfarms

OhioHay said:


> No assumption made.  Your words..."simple they are not making money. Every financial literature i've read says so". Once again your words. Not offended here at all. To many get offended over everything. No bone to pick either, Just once again pointing out there are profitable farms. There are operations thriving in this environment. I am sorry to here that your 10 to 15 year financial projections are so sobering. I hope it turns around for you.


Now I know you don't truly understand the correlation of inflation and commodity trends. The sobering reality is the profit margin is going to shrink even tighter.


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## OhioHay

BWfarms said:


> Now I know you don't truly understand the correlation of inflation and commodity trends. The sobering reality is the profit margin is going to shrink even tighter.


Some see shrinking profit margins, some see opportunities. I guess it depends on how you are wired.


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## hog987

Some people in order to make money need to know there figures. An example is my neighbor. After last years drought he didnt like our crop share agreement because he didnt get enough bales for his cows and didnt like buying my share. So he wanted me to custom farm it instead. After all said and done this year it cost him more to custom farm the land than if he just bought my share. So i am actually coming out ahead, but he thinks he is coming out ahead.


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## stack em up

hog987 said:


> Some people in order to make money need to know there figures. An example is my neighbor. After last years drought he didnt like our crop share agreement because he didnt get enough bales for his cows and didnt like buying my share. So he wanted me to custom farm it instead. After all said and done this year it cost him more to custom farm the land than if he just bought my share. So i am actually coming out ahead, but he thinks he is coming out ahead.


This is the point I'm trying to get at, are some people not looking at their bottom line that hard? I get it some don't do it for the money, but I think it's a good idea to know your cost of production regardless, otherwise you're kind of shooting yourself in the foot.

Need to make a decision by Sunday, not sure what to do. 2 neighbors rented their farms out to this guy so that's 2 less small farms in the county. One was 350 acres or so and one was about 700 I think? I have no idea where this will all end up but this kind of consolidation cannot be good. But then again, if the check doesn't bounce, not my pasture, not my bull shit.


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## OhioHay

stack em up said:


> This is the point I'm trying to get at, are some people not looking at their bottom line that hard? I get it some don't do it for the money, but I think it's a good idea to know your cost of production regardless, otherwise you're kind of shooting yourself in the foot.
> 
> Need to make a decision by Sunday, not sure what to do. 2 neighbors rented their farms out to this guy so that's 2 less small farms in the county. One was 350 acres or so and one was about 700 I think? I have no idea where this will all end up but this kind of consolidation cannot be good. But then again, if the check doesn't bounce, not my pasture, not my bull shit.


Obviously you know your figures of your operation. If you are making enough profit, but renting it out is a better roi, then you have to choose between, the lifestyle or the better income. No right or wrong answer, just personal choice. If on the other hand, your operation isn't netting enough then that's a whole other question. That is a tough decision. Are there other family members involved in the operation, or just you? If so, where do they stand?


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## stack em up

OhioHay said:


> Obviously you know your figures of your operation. If you are making enough profit, but renting it out is a better roi, then you have to choose between, the lifestyle or the better income. No right or wrong answer, just personal choice. If on the other hand, your operation isn't netting enough then that's a whole other question. That is a tough decision. Are there other family members involved in the operation, or just you? If so, where do they stand?


It's my brother and I. He works full time as a custom applicator so he's busy when we need to be in the field so most of the work falls with me and our 77 year old father. He is very dollar motivated, and looks at every decision with dollars in mind. He knows we would make more farming it and I agree. However he has another income and has health insurance with his job, whereas I buy mine outright. Renting it out would afford us income from rent as well as time to work off-farm, basically doubling yearly income.

On the other hand, I've never not farmed and I think I'd go insane with nothing to do. Potential renter does not want partial farms, he wants all or nothing. Long term contracts (5-7 years) We have farmed next to him for 25 years, nice enough but kind of an arrogant asshole. When he stopped by Dad said boy you sure want to get bigger, he says well you can't stop the train. Dad said doesn't take much of a pebble to derail it though. 
Deep down in my heart I know what I will do, but my head is fighting it with what I should do.


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## swmnhay

Just think of how you will feel if when they finally figure out the crop is not there and corn price goes up a $1 or more and you have it rented out already.

Ultimatum on renting it by Sunday?? F him and his arrogance if you want to rent it out you could rent it out anytime until next April and get that money.I hate arrogant pricks and wouldn't ever rent to one.Sounds like he wants to call the shots,well he don't own it so it's your dessision not his.


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## r82230

stack em up said:


> Deep down in my heart I know what I will do, but my head is fighting it with what I should do.


I usually tell folks 'emotional decisions are usually quick, rational decisions take longer, the quicker one, isn't always the best decision either'.

Yesterday, spoke to a long time friend (I was best man in his sister's wedding), that just quit milking cows. He figured that all he has done for the last 40 years was milk cows, the 220 head are gone (sold last April of this year), might have the 4 robots sold (he hopes). He is still wrestling with what is he going to do now. He is missing the monthly cash flow (milk check), even though he new he was 'losing' money milking cows. He knows he will have to get better at marketing/raising cash crops. Seems that with dairy cows, you can bury a few mistakes raising crops that you can't cash cropping.

Good luck Stack, I don't envy your position.

Larry


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## endrow

r82230 said:


> I usually tell folks 'emotional decisions are usually quick, rational decisions take longer, the quicker one, isn't always the best decision either'.
> 
> Yesterday, spoke to a long time friend (I was best man in his sister's wedding), that just quit milking cows. He figured that all he has done for the last 40 years was milk cows, the 220 head are gone (sold last April of this year), might have the 4 robots sold (he hopes). He is still wrestling with what is he going to do now. He is missing the monthly cash flow (milk check), even though he new he was 'losing' money milking cows. He knows he will have to get better at marketing/raising cash crops. Seems that with dairy cows, you can bury a few mistakes raising crops that you can't cash cropping.
> 
> Good luck Stack, I don't envy your position.
> 
> Larry


 my son look very seriously at robots and he had even taken the initial trainings because we thought that was something he would do. I have to wonder if the robot thing is going to work out several people who've had him several years in this area are not happy with it
.. I bet the resale value on used robots is not good but I have no idea. 2 robotic milking operations are for sale right now in this area with the real estate... two of the state-of-the-art operations that were shipping one tractor trailer load of milk each day we're just sold. Less Than 3 years ago my son attended an event put on by the local University and they said this 6oo to 700 cow dairy was the only way to go. Now they're saying that is too small. 
I would be willing to bet these two hundred cow Dairies, will be profitable again in this area in time. Surely not in time for me and probably not in time for me but I'm too old anyway. I would love to transition to farming operation over to my son tomorrow. They just don't trust it the bank don't trust it no one's happy with it..


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## danwi

So did he get the 2000 + the 700 and 350 just this fall? And he wants your 660? What is the going rate for land in your area if I may ask? $200 range more or less? Shake him up a little and tell him when they heard you may be renting out the farm you have another person interested and you cant give him an answer by Sunday.


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## endrow

stack em up said:


> Actually BWFarm, the reason I ask is we were offered damn good money to rent out the farm (~660 acres tillable) and I can't quite figure out how the individual is doing it with current crop prices. I guess my question should have been worded differently.


You said in the past you farmed with family maybe parents and brother would the rent proceeds be someone's income?. Is there dept on the land ?And a big one the current equipment used on the land you proposed to rent what is the Dept /value ? In the past you talked about loaning money for equipment in a manor that would indicate you would have dept. . My neighbor rented his fam for $300 and thought he could lay in front of the TV and eat cheese curls . The Bto paid rent in full April1 the money was long gone before real-estate taxes were due Sept 1 .


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## stack em up

danwi said:


> So did he get the 2000 + the 700 and 350 just this fall? And he wants your 660? What is the going rate for land in your area if I may ask? $200 range more or less?.


Mostly around $225-$250 if it's a great piece. As far as I know he has rented close to 5500 acres this fall. Everything he has rented this week has been $300, along with an option to any landowner he will pay $300 no questions asked. His goal is to be at 20,000 acres before he retires. His daughter told my wife he is well on his way to 20k. He owns maybe 1,000 acres, has 20 hog finishers putting up 6 more. Not sure how many farrowing barns he has.

Endrow, we do have some debt in the land in the form of property tax and tiling payment.

Not going to rent it out, I like to have control of things I own.


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## haybaler101

stack em up said:


> Mostly around $225-$250 if it's a great piece. As far as I know he has rented close to 5500 acres this fall. Everything he has rented this week has been $300, along with an option to any landowner he will pay $300 no questions asked. His goal is to be at 20,000 acres before he retires. His daughter told my wife he is well on his way to 20k. He owns maybe 1,000 acres, has 20 hog finishers putting up 6 more. Not sure how many farrowing barns he has.
> Endrow, we do have some debt in the land in the form of property tax and tiling payment.
> Not going to rent it out, I like to have control of things I own.


Sounds like a few in my area, the only way the bankers will keep bankrolling them is to add more acres. A day of reckoning is coming. Biggest problem is, when these guys go down, they take a wide swath of a little guys with them.


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## swmnhay

haybaler101 said:


> Sounds like a few in my area, the only way the bankers will keep bankrolling them is to add more acres. A day of reckoning is coming. Biggest problem is, when these guys go down, they take a wide swath of a little guys with them.


Yep local yahoo rented a bunch of ground a few yrs back.Filled a bunch of hog barns also.New line of machinery.Built a $600,000 house.All while working at local elevator as feed salesman.Stuck the elevator for 1.2M feed bill even tho the elevators policy was no over due accounts or get cut off.Manager and him were buddies.All the guys that were feeding pigs never got Pd the last round of custom feeding either.A lot of people are effected when these yahoos go down!


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## haybaler101

swmnhay said:


> Yep local yahoo rented a bunch of ground a few yrs back.Filled a bunch of hog barns also.New line of machinery.Built a $600,000 house.All while working at local elevator as feed salesman.Stuck the elevator for 1.2M feed bill even tho the elevators policy was no over due accounts or get cut off.Manager and him were buddies.All the guys that were feeding pigs never got Pd the last round of custom feeding either.A lot of people are effected when these yahoos go down!


But the coops, banks, equipment dealers all cater to them like they are God himself and then are just beside themselves when they are taken for millions.


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## swmnhay

haybaler101 said:


> But the coops, banks, equipment dealers all cater to them like they are God himself and then are just beside themselves when they are taken for millions.


And landlords were calling him to rent him their farm because he offered higher rent.


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## hog987

haybaler101 said:


> But the coops, banks, equipment dealers all cater to them like they are God himself and then are just beside themselves when they are taken for millions.


What gets me is not only what you said is true. But after everyone is taken, all the companies and banks tighten the purse strings for everyone else. And forget about being anyone new and applying for credit right after. Its an automatic denial.


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## Draft Horse Hay

We're seeing the same rental pressures from large farming ops here too. Plenty of folks renting out ground that they or their family used to farm. One result ---- the large farming ops need bigger equip AND need to trail it from farm to farm. This yr alone I've seen more ag equip rolling down the hwy almost clipping the reflector posts on the right and still covering half the oncoming lane.

Add on that we're also seeing more rural "homes" being built and it's scary watching idiot drivers get so impatient and make stupid moves to pass and almost cause a wreck.

I'll take larger farms over people subdividing decent farm ground to sell as 5ac "ranchettes" or whatever you call those things. Nobody can rent farm land at the rate homesites bring. And once it's done, it's done.


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## VA Haymaker

endrow said:


> my son look very seriously at robots and he had even taken the initial trainings because we thought that was something he would do. I have to wonder if the robot thing is going to work out several people who've had him several years in this area are not happy with it
> .. I bet the resale value on used robots is not good but I have no idea. 2 robotic milking operations are for sale right now in this area with the real estate... two of the state-of-the-art operations that were shipping one tractor trailer load of milk each day we're just sold. Less Than 3 years ago my son attended an event put on by the local University and they said this 6oo to 700 cow dairy was the only way to go. Now they're saying that is too small.
> I would be willing to bet these two hundred cow Dairies, will be profitable again in this area in time. Surely not in time for me and probably not in time for me but I'm too old anyway. I would love to transition to farming operation over to my son tomorrow. They just don't trust it the bank don't trust it no one's happy with it..


Why do you think 200 cow diaries will be profitable again?

Just curious.

Thanks!
Bill


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## endrow

leeave96 said:


> Why do you think 200 cow diaries will be profitable again?
> Just curious.
> Thanks!
> Bill


 . There are many many beautiful 200 cow dairy facilities bill in this area someone will make them go. . Kind of reminds me when we went to the Mega grocery stores, The Mega grocery stores really never made it big year in the East. The mennonites took over these medium size grocery stores And they are full Of buyers from the time they open up at 6:00 a.m. until the time they close at 9 PM,,6 days a week . Once we figure outThat the Mega dairy facilities Can start to gobble up farmland at a fast pace And we see the amount of foreign money involved in these Mega dairies. Some would laugh at it But there is already a lot of push behind Striving to buy local


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## swmnhay

endrow said:


> . There are many many beautiful 200 cow dairy facilities bill in this area someone will make them go. . Kind of reminds me when we went to the Mega grocery stores, The Mega grocery stores really never made it big year in the East. The mennonites took over these medium size grocery stores And they are full Of buyers from the time they open up at 6:00 a.m. until the time they close at 9 PM,,6 days a week . Once we figure outThat the Mega dairy facilities Can start to gobble up farmland at a fast pace And we see the amount of foreign money involved in these Mega dairies. Some would laugh at it But there is already a lot of push behind Striving to buy local


Would you say a 200 cow dairy does more of the work themselves and not having to pay and deal with employees a reason they will be profitable?

I see some smaller grocery stores going up right next to Walmarts in the area.They seem to be busy and I also go to the smaller ones myself 90% of the time.


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## Draft Horse Hay

I see a real struggle for the smaller retailers here. People talk about buying local but aren't willing to spend a dime more than WalMart's price ... so they go to WalMart. I see no sign that small dairies are going to make a go of it if they stay in the same milk markets as the big guys and we don't have enough demand for niche dairy products to float the few < 10 cow "backyard" dairies around here let alone a 200 cow one. The dairy I get some calves from milks 6000 w/ 2 parlors and running both Holsteins and Jerseys.


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## endrow

In this area the mennonites and Amish want to farm and they will work 365 days a year 7 days a week , 18 hours each day , i it is there Love, there life there hobby and there livelihood . And the people that live in this area want those type of farms . If you drive a three county area in central Pa . You will see farm after farm in a beautiful rural scenery . People other than farmers really like that. I know a hand full of mega dairies could replace them. The problem is the farmers own the land . Some think these big coops have gotten the cattle cheap for pennies on the dollar and the big dairies have benefitted and if they can keep prices low for a while they can end up with the farm land . The plain people stick together and some call it the Mennonite mafia .


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## endrow

https://www.agweb.com/article/opinion-get-get-big-or-get-out-outta-here


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## Draft Horse Hay

endrow said:


> https://www.agweb.com/article/opinion-get-get-big-or-get-out-outta-here


I think that article is splitting hairs. Perdue didn't directly say "get big or get out" but his comments were clearly in that direction ...
>>>>"a reporter asked the Secretary about the hard financial times in Wisconsin's dairy farming. Secretary Perdue answered the question with comments about "efficiencies of scale" - which included a reference to U.S. dairy herds getting bigger, smaller operations exiting the business and the cows from those smaller operations changing an address rather than leaving production. <<<<


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