I'd also like to add the fact that money is easy to borrow and land values have inflated so much in the last ten years its hard not to expand and upgrade, I look around and see the bto's [big time operators] and most are the 1980's bankrupt failures that have come back with a vengence, not all but most, these guys use bankruptcy as a management tool and borrowed money as a means to expand beyond their means. One even told me if it all fails I've got enough corporations one of them is bound to stay afloat and the others can sink, I'll still walk away with millions.
Years ago money wasn't as easy to get and you had to have implecable track record to get more and now, good god 25 years ago they filed bankruptcy and bragged about it screwing hundreds of thousands of dollars out of people and now its going to be millions and they have no conscience about it and lenders are lined up to loan them more. Years ago people couldn't afford to buy stuff and had little money, the economy was stable and had only a little gain in land values so after farming for 40 years they sold out and moved to town and got a little more than they paid for it, now the land sold is going for 2-7000 per acre and their parents paid maybe 200-500 per acre for it. If you took the inflated vaule off this land you wouldn't see whats happening today, it took excellent management to make it in the past but not today today, I know one guy that I grew up with and he owns several thousand acres and rents 3000 more and in school he couldn't even add or subtract any simple math at all, its all borrowed and rode up inflation and all debts and until someone stops loaning him money the sky's the limit, once they do stop he's all done farming because he's never paid for anything. I call them the borrowing generation, their dads were the money making generation and top notch farmers but these guys are in it to be big and farm it all not own it and make a profit and pay for it, one even told me if I buy it I can do as I please and when I sell it I'll use the increase in value to pay for it until then don't worry about it, my question was what happens if its not worth what you paid for it, answer was, bankruptcy and I still keep a lot of it anyhow, I've got enough corportations and ventures some are bound to turn out. Now how many of the older generation had those values??
As far as the equipment getting bigger, yes and its going to continue and most of its leased and will eventually go back because these guys think differently than the older guys, these guys view it as a leverage tool and a resource not a purchase to keep up and own for decades and make money with, there's a whole differnt philosophy behind their purchasing and leasing than years ago. These guys don't generally care about taking care of it because they know it's not going to be around in say five years so theres no need to worry about it, years ago they had to take care of it because they couldn't afford to trade or upgrade not so today.
And another thing in good times nobody can make a mistake and everythings good, if tomorrow when I wake up my net worth has increased say 40% and that trend continues for the next 5 years its kinda hard not to be sucessfull, just wait until theres a downturn in land values and every year for the next 5 years your value drops 40% and then lets see who's left and what takes place, the borrowing generation can only makes money by borrowing and watching values increase, they have no idea how to actually make any money and what happens if their values decrease and they have done nothing different than last year. This maynot be the case everywhere but thats what I'm seeing around me and I stand by my statement because I know way more than I'd like to about some of these guys financial condition and thier management skills, which they have none of as far as I'm concerned.
Yes I agree they have more problems to contend with than years ago but most of them are self inflicted and over financial problems and figuring out how to avoid actually paying for things. As one guy told me in reguards to one of the bto's, "he's a real thinker" he's got ways figured out how to get what he wants without actually paying for it. Another thing to consider is inhertance nowadays, some of these guys are getting their whole parents estates and basically tax free and its not just land worth millions its also millions in cash due to the fact their parents were sucessfull, so tomorrw they wake up and are worth millions more than yesterday and have no idea how to manage anything so they have capital and more free land to borrow against to buy even more yet. Even 40 years ago a farmer with 500 acres was considered large and that was worth maybe 500,000 bucks at most and thats all the net worth they got because most farmers didn't have huge cash reserves, today if you get 500 acres its worth say 3 million and you can borrow against it to buy more land and just go sign a paper and lease all the equipment you need to farm it all. The cash inheritance they get is substancial because nowadays their parents have invested money in differnt things and there is cash to be inherited and can use that for downpayments on more land and overnight they are big time rollers and operate 5 times the amount their parents ever did and expaned themselves into something they really can't handle and did it on borrowed money. These are unprecidented times as far as land values and inheritance and borrowed money and they have all combined in one time to cause what your seeing today. Tomorrow might look completely differnt as times do change and will change. Nobody has ever or will ever borrow their way out of debt and sometime along the way things have to be paid for and you need to turn a profit and make an honest gain, history will repeat itself and when that happens agriculture as we know it will again change, how I'm not sure of but it'll eventually go back to turning a profit and margins will get wider and things will settle down, interest on depositers money will eventually come back up and so will interest on borrowed money and maybe huge farming is here to stay but if so theres going to sound financial practices behind them and not whats going on now.
Skills aren't lost you just don't hear about the ones out there doing the fabrication and repairs and maintance because its not the "in thing" right now but its still going on all the time.
As far as the farm kids being the next yuppie crowd I'd have to agree but seeing the parents and how they are I"m not real surprised at it a bit. Kids driving 50 grand vehicles, yes I see it all the time and their parents drove the best in their day too and a lot of those faced financial problems in the 80's as well and spending hasn't been a problem for the parents either. I see kids who's parents made a descent living and paid their bills and drove sensible vehicles and were good managers and the those kids drive sensible vehicles and have descent jobs and make a modest living so go figure. Sorry to have babbled for so long.
