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Newer to farming and keep hearing stories of how the current crop year expenses and inputs should be fully paid by the previous crop year? I keep quiet around all these people because it’s hard to know what’s truthful. Is that the common situation? Or should I feel concerned for my businesses future if the previous crop year only covers itself, making me finance the next in full. Would be very curious to hear people’s thoughts or ideas. Thanks
 

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If the stories you're listening to are from established outfits then they probably do have money a year in advance, but starting out most wouldn't. Just make sure you're not going backward year over year. You should budget and plan to have to finance less all the time, but that becomes a working capital strategy question, are cash dollars best invested in inputs or something else?


After 40 years, you'll have a year of inputs pre purchased, a year of grain cheques deferred, and a year of grain in the bin, then you can retire :)
 

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I would think it would only be a minority of farmers that would have everything paid for before they put the crop in. Like was said earlier, a well established farm would be more likely to be able to do that. A fairly new farmer, unless he was born with a bank account full of cash, will operate on lines of credit, there is no shame in that. Join the club!
 

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the only way I have heard that working is when you take last years grain checks and pay for this years imputs. Then ask for forgiveness from your banker. Oh, and don't be surprised if they put your name on the auction list after you do it!! In my neck of the woods last time I heard someone say that they paid all of next years expenses with last years money was when corn was $7 and soybeans was $15. That same farmer later said he wishes he would have held on to that cash. The next year he refinanced what he couldn't pay back.
 

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Most have an operating loan. Eventaully you’ll have money to pay for part of next years inputs and snowball it... then you either grow or buy something and start all over again.
 

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Discussion Starter #8
Thanks for responses guys, I really appreciate hearing some real answers, I’m not a coffee shop or elevator type person but it really can make a person feel down when you pass through and just hear modern day success stories.(mostly semi retired farmers farming 100-400 acres with the same equipment there dads left them in the 60s/ the other half being young guys like me telling stories to try compete and fit in with the retired guys) I grow crops to the best of my ability, expand in manageable size portions, and upgrade to used affordable but dependable equipment, just couldn’t figure out why I seem like the only one not making massive progression and paying a year ahead. It’s just a question that a guy can never ask locals and get a straight answer from, or be Frowned on for asking such a personal/invasive question.
* nothing against the semi retired guys either lol. A lot of them have done very very well for themselves, with very little risk. Something that I really admire and am honestly a bit jealous of
 

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use the banks money to move forward thats what its there for. having a budget for the upcoming year before you have the current crop off would be wise to have so you can kind of see what your financial situation will be. lots of farmers who are multi generational have the same amount of land and equipment than there grandparents had 50 years ago. I believe if your not expanding your falling behind and its harder to stay competitive. dont let those guys get you down.
 

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Something that I really admire and am honestly a bit jealous of[/QUOTE said:
Never get jealous of someone else. Everyone gets different curve balls thrown at them in their life, which will ultimately affect your bottom line. Number of kids a guy has, and any kids with disabilities to raise, all sorts of things you can't foresee or plan for that will take up a lot of your money and time. I know many successful people, or at least in the eyes of others, who never had kids or gave nothing to their kids as far as money or time goes, it was all about themselves. Many of these people had all they have now given to them by their parents, and then forced their kids away and never game them a chance to farm so they could sell it all and travel south for the winter. Do you see them as a success story? I don't.
 

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It's a cycle for me, just as I am positioned to have all the inputs paid for, I seem to get a bad crop that year, sucking me back into the operating loan cycle.
That's the one really bad thing about this gig, you can do everything right, but still get the rug pulled out from ya.
 

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Thanks for responses guys, I really appreciate hearing some real answers, I’m not a coffee shop or elevator type person but it really can make a person feel down when you pass through and just hear modern day success stories.(mostly semi retired farmers farming 100-400 acres with the same equipment there dads left them in the 60s/ the other half being young guys like me telling stories to try compete and fit in with the retired guys) I grow crops to the best of my ability, expand in manageable size portions, and upgrade to used affordable but dependable equipment, just couldn’t figure out why I seem like the only one not making massive progression and paying a year ahead. It’s just a question that a guy can never ask locals and get a straight answer from, or be Frowned on for asking such a personal/invasive question.
* nothing against the semi retired guys either lol. A lot of them have done very very well for themselves, with very little risk. Something that I really admire and am honestly a bit jealous of
My theory is “don’t go to the coffee shop or elevator” .send your wife to pick up the cheque. Work your ass off for about 40 years, one year at a time. After about 40 years you will be able to pay next years expenses with last years crop! Been there, no problem it works
 

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Discussion Starter #14
No dust. Good answer, I’m always in and out as fast as possible. Lol. I really can sometimes feel my iq dropping every second I am trapped in the elevator or gas station haha I have no issue at all with putting my time and effort in over decades to accomplish this goal. Was just very curious to what some people real world experiences were in this.
 

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the only way I have heard that working is when you take last years grain checks and pay for this years imputs. Then ask for forgiveness from your banker. Oh, and don't be surprised if they put your name on the auction list after you do it!! In my neck of the woods last time I heard someone say that they paid all of next years expenses with last years money was when corn was $7 and soybeans was $15. That same farmer later said he wishes he would have held on to that cash. The next year he refinanced what he couldn't pay back.
Funny, I don't recall talking to you? :22:
 

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If they aren't putting your equipment on a sale bill you're doin ok...

when I do hang out at the elevators rarely does finances come up. Just some ribbing back n forth and what products are working and what the kids are up to ect.
 

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No worries Trailer
It takes a while to get to the position where you can pay for next years crop inputs in the previous tax year.
For a lot of years now I buy fertilizer in December for next year.
I would rather pay cash for inputs and save the borrowing for land purchases or possibly a needed piece of machinery, more long term debt items.
I used cash advance at the start when I had no money but around the time the canola growers started doing the administration I quit that.
Working hauling grain and get no money because the advance needed to be paid sucks.
If interest rates were to climb significantly I definitely would be using cash advance.
 

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Thanks for responses guys, I really appreciate hearing some real answers, I’m not a coffee shop or elevator type person but it really can make a person feel down when you pass through and just hear modern day success stories.(mostly semi retired farmers farming 100-400 acres with the same equipment there dads left them in the 60s/ the other half being young guys like me telling stories to try compete and fit in with the retired guys) I grow crops to the best of my ability, expand in manageable size portions, and upgrade to used affordable but dependable equipment, just couldn’t figure out why I seem like the only one not making massive progression and paying a year ahead. It’s just a question that a guy can never ask locals and get a straight answer from, or be Frowned on for asking such a personal/invasive question.
* nothing against the semi retired guys either lol. A lot of them have done very very well for themselves, with very little risk. Something that I really admire and am honestly a bit jealous of
Take everything you hear at the elevator or coffee shop (or anywhere else farmers congregate) with the same seriousness as you would a politicians promises during an election. Consider it entertainment and nothing more.
 
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