SD | Womp - 3/15/2017 19:36
I don't know how many financial statements/cash flows you've prepared but this is the worst I've seen in 2 decades.
Interest rates, commodity prices & profitability are not trending in the operators favor.
The only salvation for most places is where inflation has taken their land values.
That being said,
I've told a few customers this and I have a feeling it will play out this way again.
Back in the 80's when farmers were hemorrhaging cash/equity the best thing they could've done was sold an 80 or quarter and clear off some debt and obligations. That little bit of land wouldn't have made a huge difference in the scheme of their operation but it had the most firepower to wipe off debt and save the operation.
Some did this, most didn't.
The places that didn't and couldn't get profitable later had to sell multiple quarters if not all to clear up debt as the market began to be flooded with land sales.
What is high isn't high enough, and what's low isn't low enough.
In short, you are saying once landowners start selling ground to payoff short term debt, the sales will start to snowball pushing land values down by 30-50% or more due to the sudden growing supply of land availability and only a limited number of buyers who can afford to expand? All of a sudden, producers who thought they had a solid equity position in their balance sheet cant believe their eyes as a large portion of their equity is lost?
Would rent come down because of this? I'm assuming so. |
Land values
