# Rise and fall of a BTO



## swmnhay

__ https://www.facebook.com/wsj/posts/10157070396263128


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## mlappin

Gotta either sign in or subscribe to read the story


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## Vol

Click the title under the pic of the brothers.

Regards, Mike

That is a great read with lessons to be learned about being content.....and not being consumed with greed.

Regards, Mike


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## mlappin

Weird, first time took me straight to the Journal.

I'm too hands on to ever get that large, telling somebody to head to the next state and hope they do it right would keep me awake at night.


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## Teslan

I wouldn't know what to do with the 5000 acres they farm now. To me and around here that is huge. I think it is interesting this Ron guy still has a lake house.


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## swmnhay

The sad thing is many people that read WSJ will think this is a typical farmer.


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## endrow

I kind of feel sorry for anyone that farms and goes broke. Then there's another side of me that just can't understand or sympathize with these people that think they got a farm at all. The BTO in my neck of the woods just keeps getting bigger and better. His crops look good, he gets very good yields and he has yet to have any financial problems.


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## IHCman

There has been quite a few articles in the Agweek magazine in the last year about this. I remember reading how in 2015 he donated $1 million to the ND cowboy hall of fame, bought cars and homes for family members, and bought a very expensive lake home in Minnesota. I think this guy liked to flaunt his money a little to much.


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## mlappin

Flaunting it may not be bad, just sounds like he didn't put any away for a rainy day. You'd think by time you get that large, you wouldn't need an operating note anymore.


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## danwi

Farmers are our own worse enemy, it seems someone is always willing to pay more to buy or rent land even when someone else isn't willing to pay that.


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## Teslan

Look at all the sales people, bankers, that were enabling him though. Get bigger, buy newer. Then when the hard times come they are no where to be found.


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## swmnhay

Teslan said:


> Look at all the sales people, bankers, that were enabling him though. Get bigger, buy newer. Then when the hard times come they are no where to be found.


And they are the same people that gave him better deals on inputs,cheaper interest rates,service right away when they broke down while smaller operators don't get the deals he did.

So all the savings the BTO's get they dump it into higher rent out bidding the guy that doesn't get the volume discounts.


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## endrow

Does not really say if they were doing a good job farming. I've seen some Btos in this area fail because they were not doing doing a good job farming . They have no yields, weed problems and grain quality problems. The Ten Thousand Acre guy in my County right now who would be considered a BTO here. Has excellent crops an excellent yields


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## IH 1586

My cousin is about to break 600 milking. When helping him chop he mentioned how he was looking to upgrade the chopper. His is getting rough but since milk price down, going to buy cows instead. I don't know, it's fun to watch though.


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## Teslan

endrow said:


> Does not really say if they were doing a good job farming. I've seen some Btos in this area fail because they were not doing doing a good job farming . They have no yields, weed problems and grain quality problems. The Ten Thousand Acre guy in my County right now who would be considered a BTO here. Has excellent crops an excellent yields


This guy it seems was big into potatoes and beets. That is a huge win if it works out, but a huge loss also if it doesn't. Then they can lose a lot in storage even if the crop is good. A BTO for here told us once that if you raise potatoes or onion count on having a bumper crop and make big money 1 out of 3 years. So you better budget and save for the 2 remaining years of loses. This guy doesn't have any new equipment. Except his potato harvester. Not nearly as large as this guy though.

50,000 acres. I can't even fathom how one could manage that. 14 combines in a day to buy. I wonder if that is some sort of record.

I think sometimes with these guys it can be like gambling. You leverage yourself and win for a few years. But then comes one or two bad years and it's all gone. It's the nature of this guys personality. He probably still has that drive.


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## swmnhay

Teslan said:


> This guy it seems was big into potatoes and beets. That is a huge win if it works out, but a huge loss also if it doesn't. Then they can lose a lot in storage even if the crop is good. A BTO for here told us once that if you raise potatoes or onion count on having a bumper crop and make big money 1 out of 3 years. So you better budget and save for the 2 remaining years of loses. This guy doesn't have any new equipment. Except his potato harvester. Not nearly as large as this guy though.
> 
> 50,000 acres. I can't even fathom how one could manage that. 14 combines in a day to buy. I wonder if that is some sort of record.
> 
> I think sometimes with these guys it can be like gambling. You leverage yourself and win for a few years. But then comes one or two bad years and it's all gone. It's the nature of this guys personality. He probably still has that drive.


Well he was heavy in beets and potatoes so why did he need 14 combines?Maybe he was a bit top heavy on new paint?A bit arrogant??

There is a custom harvester not far from here has around 75 combines.IDK how many he trades every yr.


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## Smoothy

Guys having that many combines and equipment are also putting a strain on dealers as well. The manufacturers are pushing the leases and the dealers are stuck with the trade ins in a flooded market. Putting strain on dealers trying to afford to have them things sitting on lots with no buyers. Most average farmers need to watch there spending with prices the way they are so not much buying going on.


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## Teslan

Smoothy said:


> Guys having that many combines and equipment are also putting a strain on dealers as well. The manufacturers are pushing the leases and the dealers are stuck with the trade ins in a flooded market. Putting strain on dealers trying to afford to have them things sitting on lots with no buyers. Most average farmers need to watch there spending with prices the way they are so not much buying going on.


A sales guy told me years ago that dealers have to be careful when the big outfits trade in a number of high dollar equipment. Because while the sale of new equipment is nice. 1-2 year old combines and such haven't decreased their price that much so that the demand is enough to move them fast. That was 17 years ago he told me that. I would imagine it's even more difficult now.


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## endrow

swmnhay said:


> Well he was heavy in beets and potatoes so why did he need 14 combines?Maybe he was a bit top heavy on new paint?A bit arrogant??
> 
> There is a custom harvester not far from here has around 75 combines.IDK how many he trades every yr.


 wow 75, standing here I can't imagine it but out there it's probably very doable. I just got to head out that way for a visit sometime to look around


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## swmnhay

endrow said:


> wow 75, standing here I can't imagine it but out there it's probably very doable. I just got to head out that way for a visit sometime to look around


They are about 80 miles from me.I don't know them at all.

http://www.olsencustomfarms.com


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## danwi

Leasing land and equipment doesn't build equity unless you invest the profits in something that does, Marketing on the crops they grew corn wheat, potatoes, and beets can be critical. When corn lost over $3.00 and wheat went down not sure how much thats big. Then if he was doing some speculating margin calls can add up also. And a few bad operators can tear up equipment in a hurry.


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## mlappin

What struck me was what little land they owned, if they had owned more could have sold it as a last ditch effort to keep their heads above water.


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## Farmerbrown2

I also noticed he didn’t own much land himself sounds like his father still owns 5000 acres though. We have a local guy who is up to his ears in debt that was telling the banks that he owned several farms when in facted all the land is still in the parents name the bankers just never checked . We also have a local guy who is good farmer pays all his bills up front. But his father who lived out of the area would get loans to buy equipment then sell it and finance companies would come knocking on the sons door. This happened several times then the son would take them over the whole farm to prove he didn’t have the equipment. Once or twice the State Police where involved the father was just no good and the bankers just wouldn’t check things out properly. I never wanted a junior just for this reason some people just suck even if they are kin.


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## endrow

Teslan said:


> A sales guy told me years ago that dealers have to be careful when the big outfits trade in a number of high dollar equipment. Because while the sale of new equipment is nice. 1-2 year old combines and such haven't decreased their price that much so that the demand is enough to move them fast. That was 17 years ago he told me that. I would imagine it's even more difficult now.


 you would be surprised how many of those two year old Green Combines make it to Pennsylvania


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## mlappin

One of the most successful guys in our area practically owns all the land he farms, has a fleet of old versatiles he farms with since he was a dealer for em, I mean the older ones, all 855 or 903 cummins powered. Has a few newer green combines that can handle forty drapers but none of his stuff is new but is all paid for. I'm not sure that he even owns a new pickup, what he does drive is paid for though.


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## IHCman

mlappin said:


> One of the most successful guys in our area practically owns all the land he farms, has a fleet of old versatiles he farms with since he was a dealer for em, I mean the older ones, all 855 or 903 cummins powered. Has a few newer green combines that can handle forty drapers but none of his stuff is new but is all paid for. I'm not sure that he even owns a new pickup, what he does drive is paid for though.


That reminds me of one or our more successful neighbors. He bought all his land and got it paid for in his 50s. He always had nice equipment but none of it was new until the last few years. He always bought nice used stuff and made it work. Neither him or his wife drove a new vehicle until probably in their late 50s. Probably owns 3000 acres of farmland and 4 to 5000 acres of pasture and hayland. Drives him crazy to see his kids buying new pickups and better equipment than he had.


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## mlappin

The guy I was referring to played it smart as well, joined the army and placed what land he had in the land bank? from how I understand it, then not only was he a versatile dealer he also hauled steel, knew how to crank those old diesels up a bunch. Rumor was he'd get three loads of steel from Gary when it was going strong, take em back to the farm and split one load between the other two trucks. SO take two, get paid for three. His theory was as long as you had enough horses to keep up with the rest of the trucks on the road then you were less likely to get pulled over and weighed. Then of course he was smart enough to buy all the land he could when it was cheap by todays standards. The family hasn't bought land in a long time as they admit even with paid for equipment it's hard to make $6000-8000/acre land pay for itself, instead they are investing in a lot of new pivots and adding them where they can, all on owned land of course. They still are expanding a little, but they rent any new acres now instead of buying it and since they already have enough to support three of em in the farming business, they don't get stupid on what they will pay in rent either.


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## swmnhay

mlappin said:


> The guy I was referring to played it smart as well, joined the army and placed what land he had in the land bank? .


I recall the Land Bank program.Similar to CRP program of today.Dad bought our home place in 68 and the back 40 was in the Land Bank and seeded to sweet clover,etc.I rember walking it for pheasants or should I say stumbling threw it.Not long after was when we started exporting grain to Russia and we planted fence row to fence row as Earl Butz the secretary of Ag told us we needed to do.


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## swmnhay

IHCman said:


> That reminds me of one or our more successful neighbors. He bought all his land and got it paid for in his 50s. He always had nice equipment but none of it was new until the last few years. He always bought nice used stuff and made it work. Neither him or his wife drove a new vehicle until probably in their late 50s. Probably owns 3000 acres of farmland and 4 to 5000 acres of pasture and hayland. Drives him crazy to see his kids buying new pickups and better equipment than he had.


First generation starts it
2 nd generation builds it
3 rd generation blows it.


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## PaMike

swmnhay said:


> First generation starts it
> 2 nd generation builds it
> 3 rd generation blows it.


Always aggravates me when I hear that. I know you mean no harm in that, and it is true in many cases. However there are many 3rd generation owners (like myself) who have put everything they have (heart,soul and money) into making the business go. The problem is often by the time you hit third generation that there are problems like: Entitlement, family politics, and a changing business economy that drastically affect the outcome of a business. I have two siblings that aren't involved in the business. For every dollar Dad has in the business when he dies, I will have to buy out $.66 of that dollar. That can be a tall order and somewhat overwhelming at times.


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## somedevildawg

Do you know that for sure Mike? What if dad isn't going leave the business to those who expressed no interest in the business. I know I wouldn't.....I can leave them money if I have any left after the Dr and hospitals rob me....my children won't know my last will and testament until I've met my maker.....


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## swmnhay

PaMike said:


> Always aggravates me when I hear that. I know you mean no harm in that, and it is true in many cases. However there are many 3rd generation owners (like myself) who have put everything they have (heart,soul and money) into making the business go. The problem is often by the time you hit third generation that there are problems like: Entitlement, family politics, and a changing business economy that drastically affect the outcome of a business. I have two siblings that aren't involved in the business. For every dollar Dad has in the business when he dies, I will have to buy out $.66 of that dollar. That can be a tall order and somewhat overwhelming at times.


i totally agree with you.And in a lot of cases the non farm siblings are the one benefiting from the sibling that helped build the farm a lot more then they did.So it is still 3rd generation spending it if they have to be bought out.And most often just blow it.

If you are putting your time and money into the farm just to buy it back later is BS but it happens a lot unfortunately.It's hard for some to talk about Estate planning but something that should be done.


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## Tim/South

swmnhay said:


> i totally agree with you.And in a lot of cases the non farm siblings are the one benefiting from the sibling that helped build the farm a lot more then they did.So it is still 3rd generation spending it if they have to be bought out.And most often just blow it.
> 
> If you are putting your time and money into the farm just to buy it back later is BS but it happens a lot unfortunately.It's hard for some to talk about Estate planning but something that should be done.


My father finally came to realize that he did not tell the others they had to leave or that they could never come back. It dawned on him that I would have to rent land from those who never worked it. I told him I was going to buy the land from him. He said I was the one who had kept it together. Kind of a tough realization for him to make.

I owned it 5 years before he died. No one knew.

I am quick to set the record straight when people say I "got" everything. I worked 30 years with no pay.


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## IH 1586

swmnhay said:


> i totally agree with you.And in a lot of cases the non farm siblings are the one benefiting from the sibling that helped build the farm a lot more then they did.So it is still 3rd generation spending it if they have to be bought out.And most often just blow it.
> 
> If you are putting your time and money into the farm just to buy it back later is BS but it happens a lot unfortunately.It's hard for some to talk about Estate planning but something that should be done.


Kind of the same thing I'm doing here now. Renting land and putting money into cleaning and building it up just to hope I can buy it someday. Not renting the buildings but after 10 years of mom renting it out to people who don't care and her husband that will not put a dime into the place, wife and I are left with buildings needing roofs and lot of maintenance. So we will get it fixed up and again hope we can buy it with no idea if we will be paying for it twice.


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## PaMike

I get a double hit. I rent the family farm and pay for all upkeep, and in addition I run the family non farm business fulltime. Both siblings are not in the area and could care less. Dad has an idea of a "family legacy", but the only family that cares/assists/puts forth effort is me. I guess I should be grateful to pull a good paycheck every week, but on the other hand I don't want to spend my entire life building assets for someone else that I then have to buy back...


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## luke strawwalker

somedevildawg said:


> Do you know that for sure Mike? What if dad isn't going leave the business to those who expressed no interest in the business. I know I wouldn't.....I can leave them money if I have any left after the Dr and hospitals rob me....my children won't know my last will and testament until I've met my maker.....


Yeah, I agree... glad my grandmother decided to leave the farms to the ones who were there running it for her all along-- my Dad (and by extension me and my brother). Left Dad's sister half the money in the bank, savings, CD's, mineral rights, etc.

She left the farm when she was 18 so she wouldn't have to chop cotton anymore. She and her husband moved to South Carolina and did pretty well with their Western Auto store until he died in 89. All she wanted was the friggin' money anyway; Grandma wanted the farms to keep operating, which we have.

IMHO anyone who wants their farms to continue and has a grown child who has stayed and is running the farms with them or for them, should leave the farms to them in their entirety... even if they have a houseful of kids who moved "to town" or moved off across the country to pursue other interests... leave them whatever is left of the savings or whatever divided up amongst them. Leave the farm to the farmers...

Later! OL J R


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## PaMike

somedevildawg said:


> Do you know that for sure Mike? What if dad isn't going leave the business to those who expressed no interest in the business. I know I wouldn't.....I can leave them money if I have any left after the Dr and hospitals rob me....my children won't know my last will and testament until I've met my maker.....


I know that the plan is their isnt any plan...I bought my ownership is the business at the appraised price. Only thing Dad did was hold the note at 5%. Mom made comments that I shouldnt "get the farm" cause I "got the business." No, I bought the business, just like anyone else would...the sad thing is if my parents would actually communicate with their other children they might actually find out that the other two have no interest in some of thing things they want to leave in join ownership among the 3 kids....oh well, such is life...


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## Farmerbrown2

It took my mom 5 years to sell me the farm after dad died . She justed couldn’t understand why I wouldn’t do anything around the place till we had some sort of agreement. She has a ten year option to buy the place back if I decide to sell. For the price I paid up front.


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## luke strawwalker

PaMike said:


> I know that the plan is their isnt any plan...I bought my ownership is the business at the appraised price. Only thing Dad did was hold the note at 5%. Mom made comments that I shouldnt "get the farm" cause I "got the business." No, I bought the business, just like anyone else would...the sad thing is if my parents would actually communicate with their other children they might actually find out that the other two have no interest in some of thing things they want to leave in join ownership among the 3 kids....oh well, such is life...


Yeah, I hear ya...

Most older folks just think the way THEY want to think, instead of facing reality. Just a side effect of old age I guess... reminisce and think about how it SHOULD be rather than how it is...

My Granddad, before he died in '83, he had gotten the bug about "estate planning" and went to a TON of different presentations, soirees, and seminars... Did all this research and then did his will, and passed away a few years later rather suddenly.

After ALL that study, consultation, and planning, you know what his will said?? "Share and share alike". REALLY?? How stupid is that?? Could have scribbled that down on a piece of paper, had it notarized, and stuck it in a safe deposit box... one and done in ten minutes, without all the years of study and seminars and crap...

Thankfully Grandma was smarter before she passed. Dad died last year and now it's Mom's-- I run it for her. Don't know what she's planning to do. My brother and I share the responsibility and work of operating the farms, but my sister that lives in town has ZERO involvement, never has had any interest. When we sorta felt her out a little bit one day about her thoughts about the farms once Mom was gone, figuring she'd want to sell out and pay off her fancy brick house in town or pay off their enormous debt or pay off their new cars or pay for their master's degree loans or pay for their boy's college educations, in which case we wanted her to get "her share" of the value from the Needville farm-- Jay and I would like to split the Shiner farm between us, even if she gets the majority of the Needville farm, because unlike Needville Shiner is a NICE place to live; Needville we're up to our eyeballs in CITIOTS and there's a new one moving in around us every month... Our family has been on the Needville farm for 120 years, but it's plain to see that we'll be the last... it's just a matter of time until it goes for development or couple-acre ranchettes-- and honestly I don't care because the entire area has gone to pot since all the citiots started moving in 10 years ago or so... and ONLY GETTING WORSE BY THE MINUTE...

Anyway, "OH, no, we want to be involved in the farm!" she says... I'm thinking "REALLY?? Never been interested in it whatsoever BEFORE, up til now!" Course I can't say it...

Guess we'll just have to see what we'll see...

Later! OL J R


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## PaMike

Her idea of involved and your idea of involved are probably two different things. Your idea of involved means working and making decisions. Hers means control and money...just my guess...


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## endrow

A friend of ours worked something out to pass a decent sized dairy operarion 2farms 180 acres. They had plenty of money and gave alot to the son that always farmed with them . Almost immediately there was a divorce a spouse left with half of what they gifted.. That would make me mad


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## IHCman

latest story about Mcmartin in Agweek.

http://www.agweek.com/news/4377791-agweektv-mcmartin-bankruptcy-update


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## danwi

endrow said:


> A friend of ours worked something out to pass a decent sized dairy operarion 2farms 180 acres. They had plenty of money and gave alot to the son that always farmed with them . Almost immediately there was a divorce a spouse left with half of what they gifted.. That would make me mad


I would say that is one of the reasons parents never get in a hurry to pass the farm down to the next generation. But in some cases not giving the younger ones any control doesn't give them a sense of belonging and may contribute to the divorce. Danged if you do danged if you don't.


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