Wednesday, September 17, 2014
The Farm - How I started the farming part of the farm
I'm purposely leaving out any talk about the financial or money aspects of how I started farming because everyone is in a different situation, has different financial options available, has different risk tolerance, so my financial details would be of little use to almost anyone else except me.
Simply put, if you want to farm, you need access to some land and you need some start-up money. There are a bunch of different ways to come up with the money; you can use your savings, you can get a loan and borrow it, you can win it somehow, you can get a second job, you can sell off some of your assets, or someone can give it to you. I used a combination of almost all of those options.
By the time I actually started farming, my farming plans had changed to the less risky plan of a cow-calf and wheat farm. Everything I had read or heard about farming was along the lines of, "How can you make any money in farming when a brand-new combine will cost you $200,000?". Or, "There's no money in growing wheat since fertilizer costs $xxx/ton and wheat is only selling for $x/bu."
After years of reading those sorts of pessimistic claims, it dawned on me that I didn't need or want to buy new equipment, and it only really mattered how much of that "expensive" fertilizer it took to grow each bushel of wheat (i.e. I'll gladly spend $1 to grow something worth $2).
My first year of actual farming started in about June, right after the wheat had been harvested by the previous renter, but about six months before that had been spent getting some basic equipment ready to grow that first crop of wheat. The initial equipment was a well-used and abused IH 1586 tractor (160 hp of bulldog-ugly tractor), a IH 5100 drill that needed to be rebuilt, a worn-out John Deere disc, an old Chevy wheat truck, and a John Deere combine that needed a lot of work and welding.
It's been awhile, but I think the tractor cost about $6000 to buy and $2000 to put on tires, the drill was about $500 plus $300 in parts, the disc was about $1500, the truck was about $3000 and the combine was about $3000 plus $1000 in parts. But after fixing everything, if I had decided to sell everything, it was all worth more than what had been invested in it, which to my way of thinking was the best way to buy equipment.
I did almost everything wrong that first summer, I tried to disc when it was too dry or too wet, didn't get a good seedbed before I drilled my wheat, didn't fertilize enough, didn't plant at a high enough seed rate, etc. But somehow I lucked out, ended up with a good stand of wheat, got enough rain, and that first harvest ended up giving me both a decent yield and price. That first wheat crop easily paid for all my equipment with money left over. I'm not sure if I'd done a whole lot better if I hadn't made so many mistakes, but I like to think I would have.
After that first wheat harvest, I was making money and that's also when I planted my first grain sorghum crop. I planted about 20 acres of double-cropped grain sorghum and once again did almost everything wrong just like my first wheat crop. I planted it into a horrible seed bed that had almost no moisture, I planted at too high of a seed rate, had weed problems (I was walking the field with a hoe and a machete trying to control weeds), had some crop damage due to herbicide carryover from the wheat crop, had trouble getting the combine set up right at harvest, etc.
But once again I lucked out and got a decent harvest in mid-October just in time to plant the next wheat crop. I didn't make a lot of money on that first crop of grain sorghum, but I more than doubled my money, and had successfully planted two profitable crops in one year (which was supposed to be relatively difficult to do). I think that luck played an important role in being able to do that in the beginning.
I eventually ended up with a chisel plow (it was ugly, cheap, and worked great), a moldboard plow (mainly to fix terraces), and a field cultivator (bought in Iowa off of eBay for cheap) until I eventually switched to a no-till system which only needed a drill, a sprayer, and a planter. Over the years, I've went from tillage to no-till, went from continuous wheat to growing wheat, grain sorghum, sorghum-sudangrass, crabgrass, and a few soybeans, to experimenting with cover crops and pasture cropping (ask me what I think about pasture cropping and I'll probably talk your ear off).
That's the basic story of how I started the farming part of the farm. I doubt if my story is that unique, and if I can do it, then almost anyone else should also be able to do it.
The next part of the story is about the cattle, which I'll talk about in another post.
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I think it is getting harder and harder to start up like you did. Up here, it is hard to buy a small enough parcel of land and the equipment to farm it without going in way to deep in debt. For one, small parcels of land are scarce and when they come up, the big farmers on either side are willing to pay more and can pay cash. It makes me wonder what the future of farming will be. Eventually farms will get so big that only corporations will be able to afford if kids don't inherit them. I'm lucky in that my parents are farmers and I or my kids will inherit the farm but for people just starting out today, I'm not sure they could.
ReplyDeleteIt's always been hard, but I don't think it's impossible (and I'm about as far as you can get from a Pollyanna overly-optimistic think-positive-thoughts-and-good-things-will-happen type of person).
DeleteOf course, my part of the world doesn't usually produce the high corn and soybean yields that are typical in places like Iowa, so land prices and rents are lower than places like Iowa which might help someone starting out.
I've got more competition from people buying 80 or 160 acres of land and building a house that costs more than the land is worth than any corporation. Who is going to be able to afford to buy land for farming that has an expensive house on it? Saying all that, I rent a quarter-section that has a house in the middle of it, which might be the way things will be around here in the future (I'd never be able to afford to buy it with the house, but I can rent it for a reasonable price).
These days we see land going for $6000+/acre for our poor southeastern soil and upwards of twice that for the good stuff in the northern half of the state. That brings the sale price for an 80 acre parcel at almost half a million to a million. It certainly limits the people who can bid on it. I don't know what Oklahoma ground goes for but like you said, it is probably considerably less.
DeleteI don't see a lot of private people buying parcels of land and building expensive houses on it here. I see parcels being divided up into a new subdevelopment and lots of expensive houses going up. The expensive houses I do see by themselves belong to cash rich farmers who thanks to the last handful of years have the means to upgrade their houses. It is unusual anymore to see an old run down farmhouse like what I grew up in as a kid.
About 18 months ago, 80 acres (all pasture with a decent-sized pond) about a mile or so away sold for around $1500/acre. I might have been able to pay for something like that with the prices we're getting for cattle.
DeleteThe people that bought it built a really nice house and a good-sized barn that probably ended up costing at least $200,000 or $250,000 (it's hard to know exactly, but that's a conservative guess).
As that happens more and more, it's going to get tougher to find farmland for sale locally. Ten years ago, I never would have thought that there would be a lot of people wanting to move out here.
Not only will they want to move out there, but in short order they'll want to make there just like the other there, that they fled.
DeleteI happened to go by the 80 acres I wrote about above and I probably under-estimated how much was spent on the house and barns. After looking at it, I'd estimate that it was closer to $300,000-$350,000. So, they easily spent $400,000 for the land and house. Ten years from now when they get tired of living on a dirt road in the country, they're going to be complaining about how they are underwater on their mortgage and how bad the housing market is because nobody will buy their house.
DeleteI could probably start an entire blog that just ranted and complained about some of the people that move out here.
I've seen people shoot off fireworks in the middle of a drought, while there's a state-wide burn ban, right next to their new house, and surrounded by grass that's ready to burst into flames.
People take productive pastures and tear them all up by riding motorcycles and ATV's all over them (there are at least three places like that within earshot that I know of). And, they always seem to have the urge to do that on weekend mornings when I'm trying to deer hunt.
Or, they get a bunch of horses and go into the over-grazing, weed-growing, and horse-starving business (that business must really be profitable, because I see a bunch of people going into it).
If they want to make here just like there was, there must really be a messed-up place.
"If they want to make here just like there was, there must really be a messed-up place."
DeleteIt is, that's why they left.
Land prices are prohibitive here too. I've been able to acquire some, but not enough for a cow calf operation, such as I'd like to have. The problem here is subdivision in part, but also out of state or very wealthy people who purchase ranches as a sort of trophy. If average people are going to have a place in ranching in this region in the future, outside of just renting land, at some point that will have to be addressed.
ReplyDeleteIndeed, even though we're far from it now, I'm fairly convinced that at some point in this century we will join those nations that have had "land reform", legislating who can own agricultural land. It's generally abhorrent to American thought to think that, but our thought on that topic was developed when the country was mostly open land, with too few farmers to farm it, rather than the situation we have now.
"That's the basic story of how I started the farming part of the farm. I doubt if my story is that unique, and if I can do it, then almost anyone else should also be able to do it."
ReplyDeleteI'll bet its more unique than you might suspect, if not wholly unique. I can think of some ranchers around here who started with a roughly analogous model, although just a few.
Do you know anyone else with a similar start up story?
Off the top of my head, I can't come up with anyone that I know personally that has the same story.
DeleteBut, even though I don't know the complete story, I do know a local used farming equipment dealer (I think he's a little older than me) that said his father had some land that he owned, the farmer renting it quit, so he and his brother decided that they wanted to rent that land from their father and try their hands at farming.
The father owned the farming equipment business, so they were able to lease the equipment they needed, but they supposedly didn't get any special deals from their father on either the land or the equipment. He's running the equipment business know, but he's also still farming (cow-calf, wheat, and I think some corn).
It might be because of where I live and the types of farms around here, but I'd guess that a lot of the local farmers started in a similar way by starting small with older equipment, and fixing and upgrading the equipment over time as they bought or rented more land to grow the farm.
They might have had access to family land, but I'd bet that everyone paid the going rate to rent that land.
When I was buying most of the equipment I started out with and talking to most of the sellers, I got the impression that they had either started out small or knew someone that had. Some of the encouragement I got from some of those people helped a lot with my mindset when I was starting out.
Of course, it also helps that most local land is owned in 160 acre blocks, and wheat as a crop isn't as attractive to the typical BTO (big time operator) that might be present in the midwestern corn belt so rents are affordable.
In a weird case of coincidence, I just came across a reference on another blog to this thread about starting up a farm over on the AgTalk forum.
Deletehttp://talk.newagtalk.com/forums/thread-view.asp?tid=501144&mid=4074303#M4074303
Thanks for linking those in. I started to read them, but I confess that I haven't completed them yet. In looking at them, a common thread seems to be that a few of those folks worked for years, sometimes decades, at some other job before they were able to complete the switch.
DeleteI'm curious if, when you determined to make a go of it, you met with opposition from friends and family? I.e., did they try to dissuade you or otherwise act negatively?
ReplyDeleteI didn't really have anyone opposing any of my plans that I know of. I did have a little bit of negativity come from a few people, but they were also the type of people that are negative about anything and everything (Once I realized that fact, it was easier to ignore whatever they happened to say).
DeleteMy best guess is that since I'd "burned so many bridges" and in some people's eyes had messed up a lot in my life, that anyone that had any sort of inkling to try to discourage me from doing something had probably given up trying.
Even though I didn't receive much opposition or negativity from other people, I second guessed my decisions all the time and wondered at times if I'd made a huge mistake. Learning to overcome my own self-doubt was probably a more important step in starting the farm than I realized at the time (if that makes sense).