# Some big decisions to make soon



## bensbales (Jul 18, 2011)

I've spent the last 14 yrs slowly building my hay business. My first year I only sold 40 tons of hay now I'm selling about 800 tons. Out of that 800 I make about 500. The other day my hay mentor offered to sell me his hay business about 900 tons a year( clients and hay suppliers) ,150 acres of land and a 40 x100 pole building with cement floor for half a mill. This would effectively double the size of my farming enterprise. This land is capable of producing 450 tons of hay or 6000 bushels of beans. With the current state of the commodity and hay markets what would you do? My equipment would favor growing beans I would only have to add a grain bin and maybe my own sprayer to make it work if I go notill. Now if I keep it in hay I would have to change from handling everything by hand to a stack wagon setup or a accumulator cause I have NO desire to physically handle 1700 tons of hay two to three times. Also were would I even borrow a half mill? One other thing to consider is if I continue to slowly grow like I have and not go into debt I could be 100% debt free in ten years or less but is it wise for me at my age (35) not jump into debt?


----------



## swmnhay (Jun 13, 2008)

1/2M for 150 acres is cheap compared to here.Is that tillable acres?

The customer list is Blue SKY.It can be good but not gaurenteed.They could go elsewhere to buy the hay for what ever reason.

No idea what your hay price is there so can't say if it would work or not.

Do you have other land to borrow against?Or other assets.No bank will borrow you 100% of purchase price.Typicaly you would need at least 1/3rd down.

Agstar is the major ag land lender here.Or local banks.

Would he sell it on Contract for Deed?

If the numbers worked I would do it at 35 its better then 55.It should be pd for before u retire then.Lock in a interest rate so if that rises you don't have to pay higher rates.That broke a lot of guys in the 80's.

Your situation is similar to what mine was 17 yrs ago.Bought a farm,Took over another failed hay operation and land.And went into debt up to my eyeballs.After a lot of sleepless nights and a lot of convinceing the banker it all worked out.

Good luck to you what ever you decide.


----------



## ontario hay man (Jul 18, 2013)

What are grain oats worth there here they are going for $280/ ton. You could make alot of money on that because they are low input. As for the hay you could go with a bandit then you could do double the hay in probably the same time it takes you know. Dont count his list for squat. Like cy said they can come and go unless its a contract then thats a different story. It sounds very cheap for the land but you know the land market there better then us. If it was me I would do it.


----------



## JD3430 (Jan 1, 2012)

Do it. If you don't buy it, someone else will and he won't be your mentor he'll be your competitor. 
Who will loan you money? A bank. Show them a profit loss statement from the seller. Show them the math. If they like what They see, They'll loan you the money.


----------



## Teslan (Aug 20, 2011)

I agree with Swmnhay about the client and supplier list. Wouldn't you know some of the same suppliers anyways? What I see is if you bought the farm you are now going to be raising 950 tons of hay without having to go find hay at all for your 800 tons of hay sold and will have to find more customers. My personal preference is to never broker hay. But then some do like doing that. Also raising 500 tons of hay already why are you handling it by hand? You need to change that no matter what before you kill yourself.


----------



## rjmoses (Apr 4, 2010)

swmnhay said:


> 1/2M for 150 acres is cheap compared to here.
> 
> .....
> 
> ...


Lots of good ideas above.

40 b/a bean ground hereabouts has been going for as much as $7-8000/ac, so that price sounds real good to me, IF it produces 40 b/a.

I think I would check out the contract for deed idea in that you might be able to save a couple of percentage points on the interest rate. And, since he was a farmer and understands the risks of farming, you might be able to negotiate a clause that waives or reduces payment due to exceptional weather conditions.

40 b/a ground would net you somewhere around $100/a. So, play with the numbers and see what it nets you. Then make sure that it covers the annual nut and can pay it off in 10 years.

Another thought--doing it at 35 is a LOT easier that 50. Gives you some bounce back time if things don't go according to plan.

I would also think about cash renting enough to cover a good portion of the mortgage. That way, you are laying some of the weather and crop risk off onto somebody else. It also reduces the amount of ground that you would have to absorb into your operation all at once.

You know your area better than any of us. If I was you and that ground was here, I'd jump at it because $3000/ac ground is a really, really good price in my area.

Develop a plan, take a deep breath and make a decision. You're already headed in the right direction by asking for other people's thoughts.

Good luck with which ever way you decide.

Ralph


----------



## Chessiedog (Jul 24, 2009)

I agree with everyone else. Farmers around here in their mid sixties still buying ground any where from 5k to 10 k an acre . I'm 52 if the right piece came up for the right money I'd be on it . As far as lending you could get a FSA loan or a FSA guarantee loan or possibly check with your FSA office to see who does ag loans in your area if you can't find one . Interest rates are good now would be the time to buy .

AT 35 YOUR STILL JUST A KID ! :lol:


----------



## somedevildawg (Jun 20, 2011)

See if he'll owner finance it for a period of time.....with a good chunk down.


----------



## Bgriffin856 (Nov 13, 2013)

I agree with somedevildawg that's how we bought all our properties. Tell him that he'll make the interest not the bank that usually convinces them.

I'd jump on the opportunity if you don't you'll be kicking yourself


----------



## ANewman (Sep 20, 2012)

In my area that's a fair price for the land, not considering anything else. Row crop ground here goes for $3-5k. Since you're already in the hay biz it sounds like a good deal to me.

You might check with Farm Credit in your area for a loan.


----------



## bensbales (Jul 18, 2011)

Thanks for all the advice so far.Ill answer some questions. My hay market is small squares for pleasure horses. Im getting 225-250 a ton for 1st cut mixed grass hay which includes delivery and stacking within a 30 mile radius from the farm. I also sell hay in NH, NY, Ct and Ma which raises the price 50-100 a ton. My equity is in my house and ten acres and my equipment which would roughly be about 300K. His client and supplier list are all people that i know. Over the last few years he has gone south for a month or two in the winter and he has hired me to deliver his hay it would be a smooth transition and i would only take the cream of his customers. I've avoided debt my whole life except for my house the thought of owing someone 500K put Grey hair on this KIDS chin  but like my gramp said getting into debt for something that appreciates or thats going to make you money is ok, not for frigin toys! For me i need to figure out what the best plan is, more hay? or more beans. More hay means more money but also more investment if want to mechanize. More beans i would only need a bin if i can successfully grow soybeans in a notill. Currently we do full tillage and over the last 5 yrs we averaged 45bupa with this year being the worst weather wise we still got 40bupa. Im leaning more towards beans but if the market drops to less than $10 beans i would be screwed because that land is going to cost me 35k a year whether it grows hay or beans


----------



## Teslan (Aug 20, 2011)

bensbales said:


> Thanks for all the advice so far.Ill answer some questions. My hay market is small squares for pleasure horses. Im getting 225-250 a ton for 1st cut mixed grass hay which includes delivery and stacking within a 30 mile radius from the farm. I also sell hay in NH, NY, Ct and Ma which raises the price 50-100 a ton. My equity is in my house and ten acres and my equipment which would roughly be about 300K. His client and supplier list are all people that i know. Over the last few years he has gone south for a month or two in the winter and he has hired me to deliver his hay it would be a smooth transition and i would only take the cream of his customers. I've avoided debt my whole life except for my house the thought of owing someone 500K put Grey hair on this KIDS chin  but like my gramp said getting into debt for something that appreciates or thats going to make you money is ok, not for frigin toys! For me i need to figure out what the best plan is, more hay? or more beans. More hay means more money but also more investment if want to mechanize. More beans i would only need a bin if i can successfully grow soybeans in a notill. Currently we do full tillage and over the last 5 yrs we averaged 45bupa with this year being the worst weather wise we still got 40bupa. Im leaning more towards beans but if the market drops to less than $10 beans i would be screwed because that land is going to cost me 35k a year whether it grows hay or beans


 Could you do some hay some beans?


----------



## bensbales (Jul 18, 2011)

Teslan said:


> Could you do some hay some beans?


Yes i can do a mix i will have to find the right balance between the two. I visited with him some more today and he offered the use of some of his extra hay equipment for the first couple of summers. He will still own 100 acres with 60 that will be in hay and the other 40 in beans so he plans on keeping his machinery for the next few years but wont need the use of all of his equipment for the whole summer.


----------



## Chessiedog (Jul 24, 2009)

I must have missed something . How much ground are you farming now ? ( your making a lot of hay some where ) You already have the roll crop equipment to put it out and harvest it ? Of course I'm not in your shoes but sounds like a good deal . Then again maybe this is more work then you want ? I missed if you farm full time or have another job


----------



## Bgriffin856 (Nov 13, 2013)

bensbales said:


> Yes i can do a mix i will have to find the right balance between the two. I visited with him some more today and he offered the use of some of his extra hay equipment for the first couple of summers. He will still own 100 acres with 60 that will be in hay and the other 40 in beans so he plans on keeping his machinery for the next few years but wont need the use of all of his equipment for the whole summer.


I hope you can get along and make that work. Definitely would have a balance of hay and beans and maybe another crop especially for years when one does better than another and to have a good crop rotation


----------



## bensbales (Jul 18, 2011)

Chessiedog said:


> I must have missed something . How much ground are you farming now ? ( your making a lot of hay some where ) You already have the roll crop equipment to put it out and harvest it ? Of course I'm not in your shoes but sounds like a good deal . Then again maybe this is more work then you want ? I missed if you farm full time or have another job


Yes i'm farming full time now. Currently i'm haying about 150 acres and cropping 70. The land that i'm using now is either free use or really low rent so i'm not going to give it up, i want to do both. with my current labor force and equipment line up it takes all summer to hay it now so if i add 100 to 150 acres of hay at the very least i would have to add a 2nd baler, 10 more kicker racks, bigger rake and another full time guy to get the job done or do i invest in a balewagon or accumalator and grappel setup?


----------



## ontario hay man (Jul 18, 2013)

From what I see I would go with the kuhns. Their add is on the sidebar.lots of guys on here like them. I dont have one.....yet lol.


----------



## swmnhay (Jun 13, 2008)

I'm going to guess you will not qualify for a beginning farmer loan from FSA.You probably have to many assets.But still check it out.You may find that there is a lot of BS with getting one also.I looked into it yrs ago(a lot of yrs) and their was a lot of requirements they had that you had to follow.At that time the max assts you could have was 100K

I'd think you would be much better off with a accumulator and grapple forks then kicker wagons.Alot less manual work and option of reloading out of storage.


----------



## Chessiedog (Jul 24, 2009)

All sounds like a big investment ,but at 35 I would go for it . One of the guys I sell freezer beef to owns and runs a machine shop that's done well over the years . He told me that he felt if your not moving forward , then your going backward .


----------



## barnrope (Mar 22, 2010)

Opportunities like this come very few times in a lifetime. My advice is to go ahead with this deal. If I would have had this forum to seek advice on several years back when a couple similar opportunities came my way, I probably would have had a bunch more land.

Do you raise soybeans more than one year in a row on the same land? That doesn't work well here. You need to rotate crops here. If you can raise 45 bushel beans I would think you could raise 175 bushel corn without too much problem or wheat or oats if there is a market for any of those where you are at. If you can raise beans continuously until you are ready to put it back to hay then more power to you though.


----------



## bensbales (Jul 18, 2011)

barnrope said:


> Do you raise soybeans more than one year in a row on the same land? That doesn't work well here. You need to rotate crops here. If you can raise 45 bushel beans I would think you could raise 175 bushel corn without too much problem or wheat or oats if there is a market for any of those where you are at. If you can raise beans continuously until you are ready to put it back to hay then more power to you though.


Yes we can grow beans on the same ground for a few years. Before this land deal came about my 5 year plan was to add add soybean acreage by renting more land and take the income from that to build more bin space and a batch dryer so that we could try corn again. As far as wheat or oats there isn't much of a local market for the grain but the straw is worth about $225 - $250 a ton. One of my fertilizer suppliers buys and sells about 160 tons a year from from quebec.


----------



## ontario hay man (Jul 18, 2013)

Nothing wrong with that for oats they are low input.


----------



## Maryland Ridge Farms (Mar 1, 2009)

Look at it as retirement. Put your head down and go! By the time your 55 you will be free and clear


----------



## aawhite (Jan 16, 2012)

A couple of things. I would figure your cash flow at less than 40 bu/acre if you are switching to no-till, in the beginning. Usually see a yield drop as you work thru the transition.

You should also assume we will see beans under $10 in the next few years. I was a grain trader for Cargill, the market always cycles and with global production driving prices, you should expect to see low prices some years. Aggressive marketing can offset this, but if you aren't comfortable with that, make sure you can absorb a bad year. The market is driven by the midwest. You could be in the drought of the century in VA, and still see price tank because the midwest is having a good crop.


----------

