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NEIN | You are correct, with the large amount of "free" working capital it is easy to spend it or give it back in the form of over priced rent and or land purchases. It will take discipline to keep that working capital intact and if by having it available now allows us to keep renting high priced, not profitable land, we are setting up a bigger problem just a few years down the road. I find it interesting that banks want us to have lots of working capital, for what? to spend up and stay in business short term? to expand when its not profitable, to not need operating money so as not to pay them interest? I guess it would help protect their collateral values for a few years . I think everyone, including the banks, thinks we will see 5 dollar corn and 12 dollar beans again soon. Sorry but that will take a major drought. This may not be the eighties but it is definitely the down turn in a long term commodity cycle that ALWAYS results in several years of producing below the cost of production for the average producer. We are about to see the next big wave of consolidation occur as the retirement age guys and older decide to "keep" that working capital, not give it back. | |
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Working capital again
