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Asking about tough farm economy times
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kagen
Posted 11/12/2012 23:42 (#2694251 - in reply to #2692952)
Subject: RE: Asking about tough farm economy times


Panhandle of Ne.
What I saw where we were farming up until 1999 was a lot of re-financing. Taking land that had equity, re-financing it over a 30 plus year time period and using the equity in the land to try and make things work. I also saw a lot of re-orginazations filed [bankruptcy] The biggest thing I remember is that the older farmers that pretty well had things paid for, were able to expand when the price of land dropped with cash. One of the worst things, unlike todays environment, was the 18% plus interest rates. You would basically pay for the land 4 plus times during the 30 year mortgage. But back then, also unlike todays environment, land did go up in value before things went south, but not to the extent it has today. ie Our land has increased in value 600% from what we gave for it in 1998.

With todays cost of production, IMO, it won't take nearly as long for folks to get in a bind as it did back then. If it gets to the point that a farmer is losing 500 per acre instead of 50-100, it will be dang hard to get operating loans and that kind of losses can eat through a farmers equity really fast.

We are fortunately in much better shape now as we were back then. have the ground paid for, and I have made a solemn vow to my family and myself that I would NEVER re-finance a piece of ground again. As Dave said earlier, a person has to know when to hang it up.
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