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Just finalizing the financing on a 7500 acre expansion and I can tell you a solid business plan and one that has a third party review say by MNP etc goes a long way when you go to your lender of choice. A 50+ canola crop insurance average does as well.

Once it works on paper and you've been fair with your projections kick it in the teeth and look at your risk management and your exposure tolerance.

If you still feel good about it after that it's pretty easy pulling the trigger.
I didn't realize Greenland even had 7500ac of grain land, let alone 7500ac of expansion...cool....LOL

Around my area, you'd be lucky to find 10ac to rent,expand etc...
 

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Land has mostly outpaced itself in our area, my old man has been in the game long enough to see a few bubbles burst, and he could easily name a dozen or so neighbours who stuck their head out a little too much by over extending themselves, then the crop failure hits... then another, he said before you knew it, those guys that stuck their neck out got their heads chopped off, some had to sell land even handed to them, some closed the doors.
I for one am keeping my head down the next few years, building the bank account (or at least protecting it). The country is in big trouble you guys, government is looking for every dollar it can find right now, FCC is at record lending. The way things are going these days, an average crop is considered a failure for some farmers.

If you are the type of farmer that can buy land for cash, then it's not so bad, because you are paying what the land is worth, but if you need to be borrowing huge amounts in a market with high land prices, there is no way it makes sense, by the time you pay it off it will have cost you at least 20% more, if it doesn't go up by that much by the time it's paid off, or if you need to sell, you are screwed. Royally.
So when you pencil it out, I hope your pencil takes into account crop failure.
 

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hehe **** some of you guys want to work waaaaaay to hard. Think if I wanted that type of headache I would have tried getting into management for one of the many oil companys I have worked for over the years.:slapping:
 

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I have seen mega flame outs in my area when some big bad boys came in and wanted to farm the world and then the rubber met the road and it was all different than your pencil. We seem to have a bias to the positive when we want something.

Risk is exponential in farming. A disaster on a 1000 ac is not the same in proportion to a disaster on 10,000 ac. And what saves you in a disaster is your land equity. If you are renting, you have none.
 

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Buy land if you have cash for 20-25% down. Big thing with expansion is year 2 that's when cash crunch happens even if you fueled expansion with cash. Just put your head down stay out of cafe of higher learning in town and cancel your western depressor and you'll be a lot happier. And if all else fails get some of the stuff JT is smoking and for sure you'll be happy.
 

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Questions on the logistics of big expansion with typically rented land, and far from home.

1) grain storage, do you immediately build enough storage for the additional acres, and where do you locate it at? Ie. Haul all grain to the home far or spread out? Or is this why so many big operations use grain bags, flexible storage for anywhere? How much long term storage do you invest in for what may be transient rented acres?
2) For those using crop insurance, does your yield history follow you to the expanded acres, or do they start over at the county average?
3) Do you treat every new acre the same until proven otherwise( maybe a more local question given our variable soils and topography) Do you try to find out about previous rotations and chemical applications/residual issues, or just start over with your own regardless?
 

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Competition around here is very fierce. Especially rented land. We haven't had expanded for a while now because during that span we've picked up some ground and lost some ground to big boys ending up with pretty much the same acreage forever. We have been keeping an eye for opportunities and there have been a limited few but were marginal lands. We used to do quite a bit of custom work and even that has become really competitive. We have the equipment to handle double what we are doing now. Still looking.....in year 17 of my farming career and I still haven't been able to buy my first piece of ground yet besides my inherited land simply because I haven't been presented an opportunity to do so that made sense. As everyone above says, keep a sharp pencil and be aware of your financial position, but more importantly, make sure you can pencil out with a conservative approach. While I am disappointed that we are not able to expand, we can sleep at night knowing we don't have the stress of those that are barely getting by by being too confident.
 

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Competition around here is very fierce. Especially rented land. We haven't had expanded for a while now because during that span we've picked up some ground and lost some ground to big boys ending up with pretty much the same acreage forever. We have been keeping an eye for opportunities and there have been a limited few but were marginal lands. We used to do quite a bit of custom work and even that has become really competitive. We have the equipment to handle double what we are doing now. Still looking.....in year 17 of my farming career and I still haven't been able to buy my first piece of ground yet besides my inherited land simply because I haven't been presented an opportunity to do so that made sense. As everyone above says, keep a sharp pencil and be aware of your financial position, but more importantly, make sure you can pencil out with a conservative approach. While I am disappointed that we are not able to expand, we can sleep at night knowing we don't have the stress of those that are barely getting by by being too confident.
Since you have no location, I am guessing your my neighbor judging by your first statement....lol.
 

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Or the majority that have expanded, how have you gone about it? Are guys going and approaching landowners (current farmers or not) and making offers to rent/buy? Or is it more common that an older farmer looking to retire reaches out to a select few to consider renting to?
 

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when I expanded I was 2900 acres asked a neighbour if he would rent me his land (500 acres) and we came to an agreement, in the mean time 2 other neighbours called and asked if I could farm their land another 925 acres! so went from 2900-4400 in 1 year, was a big jump.... I asked the one guy if he would would be interested in working for me at seeding & harvest, he accepted (big win for both of us)

storage - I slowly added storage, but I also usually have a marketing plan to sell 25% of my crop off the combine. Just set up an auger and have a local trucking co. start filling.

added another 850 last year, and might get more again this year.


being organized is key, plan plan plan...
 

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Or the majority that have expanded, how have you gone about it? Are guys going and approaching landowners (current farmers or not) and making offers to rent/buy? Or is it more common that an older farmer looking to retire reaches out to a select few to consider renting to?


It is more common for the older farmer to reach out to his preferred tenants. We have found that approaching landowners is not working and a very touchy subject among landowners especially when they already have their own plans. Keep in mind that this is for this area. There are some that would offer ground to rent through auction, which is not common in this area. There is some that would offer ground through private bids which does happen in this area. It has worked for us and not worked for us.
 

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I should add that, if you are approached with an opportunity to expand, be prepared and organized and keep the landowners updated every now and then.
 

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Discussion Starter #39
Some good advice so far. Here's a little more info about my situation. While working a full time job I started from scratch 2 years ago I bought a 4wd./air seeder/3 tonne and I did maybe 500 acres custom seeding. More or less just wanted to make sure tractor could run air seeder properly. Last year rented 150 acres which I seeded to canola and custom seeded another 150 acres. Made arrangements to exchange labour for the spraying/harvesting I needed. I did add a self propelled swather to my equipment line last year. In the beginning of March my landlord offered me another 300 acres which I accepted. So far so good I just needed to find a combine because I was going to seed 450 acres of soybeans and would need my own rock eating machine. Last week of March some land was offered for rent via a tender process. I put an offer in and was accepted about noon on March 31. Manitoba guys will understand the significance of that date. lol. This added another 1000 acres bringing the total to about 1500 acres. So from 150 to 1500 acres in the last month and now farming full time. On the finance side of things it looks like my biggest concern is marketing enough grain in the late fall/early winter to ensure I pay off crop inputs on time and avoiding stiff interest penalties/default. I'm worried about contracting grain sales Sept/Oct and then the elevator doesn't/can't take it. I have 3 elevators varying from 20-40 miles away should I sell grain to all 3 to help minimize the risk so I have cash flow to pay my inputs bill? My equipment needs have also changed significantly with only about a month to address before hitting the field. I can buy a pt Brandt field sprayer locally but still need a water tender of some kind. I also need a second piece of equipment to get crop inputs to air seeder. Plus the combine/flex header I already mentioned but at least I have more time to find one. So with this extra info I offered does anyone have any further advice/suggestions on how to handle this expansion. thanks
 

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On the finance side of things it looks like my biggest concern is marketing enough grain in the late fall/early winter to ensure I pay off crop inputs on time and avoiding stiff interest penalties/default. I'm worried about contracting grain sales Sept/Oct and then the elevator doesn't/can't take it. I have 3 elevators varying from 20-40 miles away should I sell grain to all 3 to help minimize the risk so I have cash flow to pay my inputs bill?
Not sure exactly where you are located but from here the lower dockage at Bunge pays the freight bill and if you book there and have a delivery window they take it on time. I would for sure deliver ALL canola there. Anything to do with the elevator system all bets are off. Need to have a good relationship with your buyer but even now I have wheat contracts a month past due and the other day they gave me the "we have 90 days to take it" BS.:rolleyes: The more you can deal direct to a miller/processor/end user the better. Harvest deliveries are a joke at the best of times, can never seem to be counted on and line-ups are huge. I plan my grain deliveries for the winter months which is why I am ticked about this wheat not going out on time.

If you are needing a high clearance sprayer then buying a cheap HC unit will save big on custom costs. I used a Hy-Trux sprayer for years, it was cheap and easy to fix. Paid for itself every year with fungicides only.

On the combine there is lots out there, don't rush and buy a piece of junk.

Good luck to you and feel free to ask any questions, we are here to help.:smile:

EDIT: I found a sprayer. http://www.kijiji.ca/v-farming-equipment/regina/hytrux-high-clearance-sprayer/1253722445?enableSearchNavigationFlag=true
 
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