Do's and Dont's Advice

[Newtothis1]

Hello, I've been reading the forum for a while and like all of the knowledgeable info and am making my first post. Any and all help and advice is much appreciated. So here it goes.... I own 50 cleared farm acres that is currently being leased for about $80 an acre. That's about the going rate here in NC. I have a 38 HP 4x4 Kubota, 7 ft disc,2 row plow, a dump truck that I can haul grain with, and access to a set of 4 row planters. I have no interest in specialty crops; just corn, beans, or wheat. What I want to know is everyone's opinion on is if I could make more money investing in a sprayer and cultivator and tending it myself.( I can easily make arrangements to have the crop picked for me.) Please keep in mind that I have a full time job and am not wanting to make a living on the 50 acres, I just think it could be a nice bonus for me since I already have most of the equipment, I have the time, and I enjoy working on the farm. I know the equipment is very small scale but its only 50 acres and I don't care if it takes a little longer or if people laugh.... just as long as I can laugh my way to the bank with a little extra money! Some people tell me I'm crazy not to do it since I own the land. Others tell me I wont be able to make it, but I think they are stuck on the idea that I'm trying to earn a living off of it, when I am not. Please respond with any and all pros and cons and what your recommendations are. I am anxious to see your thoughts and thanks a lot for the input.

 

[paulharvey]

Well, I know there are people who do fine with melons and other crops on small acreage. Ive seen a lot of peanuts that are grown scattered on several small tracks (20 acrrs here, 50 more 3 more down the road, ect) The biggest part to me would be finding out all the details about selling your crop, some crops have allotments, and you probably want to talk to some one in the business, and find out what is subsidized, ect. Without a locked in buyer it's kinda point less,

 

[jaotguy]

not meaning to be negative ... but as everyone in the farming business can tell you,

it becomes a full time job in the end ( even for a couple of acres ) with wear and tear on the equipment and YOU.

if it's just for a side line and extra cash, remember the saying " to make a small pile of money farming , start with a big pile of money "

there are probably easier things to do with your spare time ( and more profitable ) ...

then you still have time to PLAY with your toys whenever you want to.:thumbsup:

 

[TripleR]

My brother and I tried this type of farming to "make a little extra money" and were lucky to break even on small acreage like that. Chemicals, fuel, harvest cost lack of storage, grain dryer etc. just makes the cost of production prohibitive. We cash rent close to 300 acres even though we own quite a bit of equipment. If you can do it, go fo it, I just don't personally know anyone who has with those types of crops.

 

[Newtothis1]

My brother and I tried this type of farming to "make a little extra money" and were lucky to break even on small acreage like that. Chemicals, fuel, harvest cost lack of storage, grain dryer etc. just makes the cost of production prohibitive. We cash rent close to 300 acres even though we own quite a bit of equipment. If you can do it, go fo it, I just don't personally know anyone who has with those types of crops.

I wont have to deal with driers or grain storage with this small amount. i should be able to pick at correct moisture content and haul strait to the grain buyer(only 10 miles away). I guess what I cant wrap my mind around is that an acre cost x amount of dollars to plant and harvest, and profits x amount of dollars, no matter how many or how few the acres. People are telling me due to our long growing season I can turn two crop cycles per year and should be able to clear about $800.00 per acre. Does this sound very far fetched?

 

[Larro Darro]

What kind of crops does your farmer grow now? If it's grains, how many bushels does he get per acre? Ask him about his cost to profit ratio. And find out what it will cost to get it combined. I fear you will be working like crazy, praying for rain, praying for no hail and paying through the nose to buy fertilizer, poisons and fuel, with a hope of breaking even.

If it was me, I would see if your farmer will lease 49 acres and leave you 1 to play on. Grow a garden and don't worry about making or saving any money. To do it right, an acre garden will soak up all the free time you have.

Larro

 

[Newtothis1]

What kind of crops does your farmer grow now? If it's grains, how many bushels does he get per acre? Ask him about his cost to profit ratio. And find out what it will cost to get it combined. I fear you will be working like crazy, praying for rain, praying for no hail and paying through the nose to buy fertilizer, poisons and fuel, with a hope of breaking even.

If it was me, I would see if your farmer will lease 49 acres and leave you 1 to play on. Grow a garden and don't worry about making or saving any money. To do it right, an acre garden will soak up all the free time you have.

Larro

It is currently planted with beans and corn. The corn brings in 150 bushels per acre and i think the beans are somewhere around 60 bushels. Some local farmers that I trust are the ones telling me I should tend it myself. They say I'll make a lot more than what the rent is bringing in and that with the purchase of crop insurance that I would be guaranteed not to lose money.

 

[deerseeker001]

Welcome from Wisconsin

 

[jaotguy]

. People are telling me due to our long growing season I can turn two crop cycles per year and should be able to clear about $800.00 per acre. Does this sound very far fetched?

OK 800 X 50 = 40,000 working your tail off. minus taxes, insurance, etc ....

subtract wear and tear on the equipment .... and you are a full time farmer now .... 7 days a week ... no time off ... no vacation ...no sick leave ... no pension fund .... nothing to fall back on ... ( crop insurance only covers part of the losses ) at the mercy of what the market will pay for your product ( remember, a bumper crop or season = a lower price because there's lots to go around ... and a poor year means less to sell, even at a higher price ... a no win situation these days )

there has got to be a reason that leasing is only 80 / acre .... any more and they wouldn't make enough profit to make it worth while.

Farming is hard work ..... and a gamble at best ... each year brings more restrictions from the fools in big cities , telling us how we can use our land.

plant a small garden , have fun , enjoy life :thumbsup:... get a handle on the real costs and time involved... then make your plans

 

[smstonypoint]

I wont have to deal with driers or grain storage with this small amount. i should be able to pick at correct moisture content and haul strait to the grain buyer(only 10 miles away). I guess what I cant wrap my mind around is that an acre cost x amount of dollars to plant and harvest, and profits x amount of dollars, no matter how many or how few the acres. People are telling me due to our long growing season I can turn two crop cycles per year and should be able to clear about $800.00 per acre. Does this sound very far fetched?

Yes!!!!!!!!

Have you looked at the costs of producing corn, wheat, and soybeans and their current futures prices?

Clemson University publishes prototype enterprise budgets for those and other crops here: Enterprise Budgets : Extension : Clemson University : South Carolina. You would need to modify the budgets for your particular situation. Also, because you can rent your land for $80/acre, that becomes the opportunity cost of using the land to produce your own crops.

You can find futures prices here: http://www.cmegroup.com/trading/agricultural/?utm_source=Google%2B1x1%2B&utm_medium=BANNER%2B&utm_content=Agricultural%2B1x1%2B&utm_campaign=CAMPAIGN&gclid=CILTi7DYybwCFW3NOgodKkMAMQ. You would need to adjust these prices for the basis in your area.

Economies of scale are present in farming, just as in other industries. See Economies of scale - Wikipedia, the free encyclopedia.

Regarding custom harvesting, I wouldn't bet the farm on getting your crops harvested at the "optimal" time. Chances are the farmers who are providing custom harvesting are going to get in their own crops before they get around to your 50 acres.

Have you thought about crop insurance? What happens if a drought wipes out your crop?

Steve

 

[GreenWannabe]

Friend of mine in Kansas goes shares with a farmer who does it for a living, 60% to the farmer and 40% to my friend. My friend bush hogs the perimeter of the fields and sprays weed killer, the farmer does the rest. The fertilizer and seed costs get split 60-40 as well. Since my friend has a regular job too, he would be hard pressed to prepare the ground, plant, and harvest, plus he doesn't have that kind of equipment.

 

[smstonypoint]

It is currently planted with beans and corn. The corn brings in 150 bushels per acre and i think the beans are somewhere around 60 bushels. Some local farmers that I trust are the ones telling me I should tend it myself. They say I'll make a lot more than what the rent is bringing in and that with the purchase of crop insurance that I would be guaranteed not to lose money.

Really? I think I would do some research on my own before I acted on those claims.

Steve

 

[buickanddeere]

I tried the same and was fine until finding somebody to fit my "few acres" into their combine and trucking schedules.
I've made more $$$ share cropping.

 

[smstonypoint]

I have a 38 HP 4x4 Kubota, 7 ft disc,2 row plow, a dump truck that I can haul grain with, and access to a set of 4 row planters. I have no interest in specialty crops; just corn, beans, or wheat. What I want to know is everyone's opinion on is if I could make more money investing in a sprayer and cultivator and tending it myself.( I can easily make arrangements to have the crop picked for me.) Please keep in mind that I have a full time job and am not wanting to make a living on the 50 acres, I just think it could be a nice bonus for me since I already have most of the equipment, I have the time, and I enjoy working on the farm. I

Another issue with small-scale equipment is the time required to perform field operations. If you have a full-time job, your "farming" time is going to be limited. Also, the timeliness of field operations (planting, spraying, harvesting) affects yields. The information at Farm Machinery Selection | Ag Decision Maker should be useful in your research.

Steve

 

[Newtothis1]

Another issue with small-scale equipment is the time required to perform field operations. If you have a full-time job, your "farming" time is going to be limited. Also, the timeliness of field operations (planting, spraying, harvesting) affects yields. The information at Farm Machinery Selection | Ag Decision Maker should be useful in your research.

Steve

The time I don't see an issue with because of my flexible work schedule. I figure about 18 full days of work to turn 1 crop start to finish. I've tried to do some math the best I could and came up with this ..... Seed cost=2,750 Fertilizer=1,500 Harvesting= 2,000 @ $40 per acre Spraying=500 Fuel= 250 I'm guessing around $20 per acre for insurance??? =$1,000.for a grand total of 8,000 in expenses for the 50 acres. I don't wish to include labor because it will be me and my dad doing the work ourselves and I don;t want to list equipment depreciation because I have the equipment and want to put it to good use to justify having it in the first place. Now...........if I harvested a very conservative 25 bushels per acre @ current prices of 13.23 that would give me $16,537.50. Take away the $8,000 of expenses and it leaves a profit of $8,537.50 I tried to be conservative on my figuring but if I can profit anything close to 8K on one crop then its worth my time, as I enjoy it and need something to do anyway. Please remember that I am asking opinions on a side hustle/hobby because I have a full time source of employment elsewhere and will definitely be keeping my day job. Thanks for the comments and please keep them coming

 

[TripleR]

I wont have to deal with driers or grain storage with this small amount. i should be able to pick at correct moisture content and haul strait to the grain buyer(only 10 miles away). I guess what I cant wrap my mind around is that an acre cost x amount of dollars to plant and harvest, and profits x amount of dollars, no matter how many or how few the acres. People are telling me due to our long growing season I can turn two crop cycles per year and should be able to clear about $800.00 per acre. Does this sound very far fetched?

Do you know how long you have to leave corn in the field to get the proper moisture content? We use to do this and wound up with equipment stuck in the fields, waited until the ground froze to get it out or when I was growing up picked by hand. I know of no one who does not pick early, dry their corn and store it until favorable market prices.

Then as mentioned, you are going to be dependent on someone elses schedule as to when they can or will do yours. We tried forward booking, storing and depending on prevailing prices.

My wife spent her career working for USDA doing farm loans, monitoring farmers etc. and you simply cannot appreciate the costs involved and risks. We own one of our farms because the experienced farmer who owned it lost his shirt and had to sell it to keep his other farms and home. I've seen land auctioned on the courthouse steps and one of our other farms was bought this way many, many years ago. Our neighbor had to sell his prime 100 acre farm after trying to farm it about five years ago and he grew up farming that land and had the equipment.

Now maybe I'm all wrong and you can make money with that small acreage and equipment, if you can my hat is off to you and congratulations. I hope everything works out for you.

 

[Newtothis1]

Do you know how long you have to leave corn in the field to get the proper moisture content? We use to do this and wound up with equipment stuck in the fields, waited until the ground froze to get it out or when I was growing up picked by hand. I know of no one who does not pick early, dry their corn and store it until favorable market prices.

Then as mentioned, you are going to be dependent on someone elses schedule as to when they can or will do yours. We tried forward booking, storing and depending on prevailing prices.

My wife spent her career working for USDA doing farm loans, monitoring farmers etc. and you simply cannot appreciate the costs involved and risks. We own one of our farms because the experienced farmer who owned it lost his shirt and had to sell it to keep his other farms and home. I've seen land auctioned on the courthouse steps and one of our other farms was bought this way many, many years ago. Our neighbor had to sell his prime 100 acre farm after trying to farm it about five years ago and he grew up farming that land and had the equipment.

Now maybe I'm all wrong and you can make money with that small acreage and equipment, if you can my hat is off to you and congratulations. I hope everything works out for you.

I know all I am doing is trying to plug in numbers for a baseline and hoping for some positive feedback telling me what I wanted to hear. You are correct that my lack of experience gives me no concept of the costs and risks involved. Your opinion kind of sounds like the others.....to stay away from it. I have to trust what experienced farmers tell me and i appreciate you telling it like it is. I hate that it sounds like I have to settle for $80 an acre rent money

 

[smstonypoint]

The time I don't see an issue with because of my flexible work schedule. I figure about 18 full days of work to turn 1 crop start to finish. I've tried to do some math the best I could and came up with this ..... Seed cost=2,750 Fertilizer=1,500 Harvesting= 2,000 @ $40 per acre Spraying=500 Fuel= 250 I'm guessing around $20 per acre for insurance??? =$1,000.for a grand total of 8,000 in expenses for the 50 acres. I don't wish to include labor because it will be me and my dad doing the work ourselves and I don;t want to list equipment depreciation because I have the equipment and want to put it to good use to justify having it in the first place. Now...........if I harvested a very conservative 25 bushels per acre @ current prices of 13.23 that would give me $16,537.50. Take away the $8,000 of expenses and it leaves a profit of $8,537.50 I tried to be conservative on my figuring but if I can profit anything close to 8K on one crop then its worth my time, as I enjoy it and need something to do anyway. Please remember that I am asking opinions on a side hustle/hobby because I have a full time source of employment elsewhere and will definitely be keeping my day job. Thanks for the comments and please keep them coming

Several points.

The earliest you could expect to harvest soybeans is this fall and November 2014 beans are trading around $11.30/bushel. Unless you hedge (and incur basis risks) or forward contract with a local buyer at his new crop contract price, you are not "guaranteed" a price. If you sign a forward contract, you have to worry about having a sufficient yield to fill the contract. I don't know about the nearby soybean basis in the Rocky Mount area in say October, but I suspect it is negative.

I would recommend that you look at some of the enterprise budgets at Enterprise Budgets : Extension : Clemson University : South Carolina. I think you are too optimistic in estimating the variable costs of soybean production.

Your crop insurance cost is going to be based on your yield history, your coverage level, etc.

What you say is "profit" is anything but. Profit = Total Revenue - Total Fixed Cost - Total Variable Cost. You say that you want to ignore depreciation, a component of fixed cost. Your tractor and equipment are going to wear out sooner or later. The more you use your tractor in row-crop production, the sooner you will have to replace it. If you don't at least breakeven by covering your fixed and variable costs, you are going to have to come up with the money for the replacement from your day-job earnings.

Steve

 

[murphy1244]

I know all I am doing is trying to plug in numbers for a baseline and hoping for some positive feedback telling me what I wanted to hear. You are correct that my lack of experience gives me no concept of the costs and risks involved. Your opinion kind of sounds like the others.....to stay away from it. I have to trust what experienced farmers tell me and i appreciate you telling it like it is. I hate that it sounds like I have to settle for $80 an acre rent money

How is the Renter Farmer making money?

 

[ljohnson778]

The time I don't see an issue with because of my flexible work schedule. I figure about 18 full days of work to turn 1 crop start to finish. I've tried to do some math the best I could and came up with this ..... Seed cost=2,750 Fertilizer=1,500 Harvesting= 2,000 @ $40 per acre Spraying=500 Fuel= 250 I'm guessing around $20 per acre for insurance??? =$1,000.for a grand total of 8,000 in expenses for the 50 acres. I don't wish to include labor because it will be me and my dad doing the work ourselves and I don;t want to list equipment depreciation because I have the equipment and want to put it to good use to justify having it in the first place. Now...........if I harvested a very conservative 25 bushels per acre @ current prices of 13.23 that would give me $16,537.50. Take away the $8,000 of expenses and it leaves a profit of $8,537.50 I tried to be conservative on my figuring but if I can profit anything close to 8K on one crop then its worth my time, as I enjoy it and need something to do anyway. Please remember that I am asking opinions on a side hustle/hobby because I have a full time source of employment elsewhere and will definitely be keeping my day job. Thanks for the comments and please keep them coming

Actually, your realized net gain is only $4,537.50 since you receive $4,000 for doing nothing. Lotta work for $4,500.