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cropsey, il 61731 | It's pretty naive to think it's all about size or growth. Growth has been the demise of all kinds of businesses. There are certainly times where if you are not willing to use economies of scale you can't play. You can't make a profit trying to build transistors in your garage. However, all too often the lure of ever increasing 'efficiency' and 'the way of the future' lead the wrong way. Probably the only place where potentially burdensome scale can exist is where no one really wants to do the work. For example, there are -261 people that want to raise my hogs and 1,247 folks that want to farm every acre I have. So, Smithfield, Maschhoff's, etc. exist in very large scale and probably spend a lot of time and management just keeping the pieces together. 30,000 guys growing hogs in huts could underbid them in a minute, but it's not going to happen because it's too much work.
2388 makes great points about landlord communication and while there are times when no news may work best to avoid a too much information confusion problem, it's best to send out some level of report. Farm managers do it and we should to (I used to do more and really should get back to it - I think we all feel this way).
However, the road to success has little to do with growth. Like 2388 pointed out, it's a business, success at one level is no guarantee of success at another level. The only road that works every time it's tried is WORK. Large farms always had livestock or another enterprise that involved more work than just grain farming. There are exceptions, but that's what they are exceptions. We all want to go the route the band BTO (pun intended) suggested: "it's the work that we avoid", but that's the lottery approach. I just finished spreading 2M gallons of manure. It wasn't free to do it and it was major work, but it's much cheaper than commercial fertilizer. Sitting home and writing a check would have been so much easier. The Hefty guys talk about $100/hr jobs like spreading your own fertilizer and lime or other "work" to boost profitability.
Keep in mind we all have a certain capacity to manage a given size of operation. Going beyond that is a mistake that's made over and over again. I see some opportunity to grow a few more piggies, but unless I have more management at my side (kids, long term hired hand, etc), I would be making a mistake and turning a good thing into a bad one.
So, what to do? What is the ag economy telling you to do? Right now we have potentially unheard of profits. Should we work as fast as we can to make this money go away? Rent more ground at ever increasing risk? Buy ground at 5x to 8x typical values and dispense with a large savings and potentially go backwards on a loan when things correct? Everyone seems to think trees grow to the sky and are spending like they do. This is all normal, but not good for business. Business is about work and opportunity. For sure the ag economy is giving us an opportunity to retire debt and lock in low interest rates that will likely come in handy in the future. Expansion maybe ok where you have excess management capacity and there is opportunity.
On equipment. Large stuff is not being made for the BTO, he pays bottom dollar and, if you watch court orders, often doesn't pay. The large machines are for the guys with sizeable acres and not much help. The past generations of parents decided their kids needed a better life than they had so instead of helping and eventually taking over the kids are marching on wallstreet wanting free everything (that's extreme, but I'm trying to make a point). So, rather than downsize (I wouldn't) the guy buys the largest combine possible with the largest head and gets in done. There are lots of these guys (way more than bto's) and they have cash - this is a market. Small machines are going away because even smaller farmers (like me) need a little size to take advantage of sometimes very small harvest/planting windows of a very high value crop. Also, there is lots of used smaller, older equipment out there that isn't wearing out very fast on smaller acres - not a lot of market there.
thanks,
Pat
PS: Please xcus ani speling erors
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Farming in the future.... one more time....
