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Eastern Iowa | Be very cautious. I don't know who you are working with, and wouldn't offer an opinion on any one of them except to say this:
Some recent contract rates from large integrators I have heard of won't cover the cost of the building before it is worn out. As long as they can keep finding new contract building owners who will subsidize their bottom line by putting up new spaces below amortized cost--just to get the manure---this trend will continue and you will risk taking even less when it comes time to "renegotiate" the terms of your lease. (The fine print on these contracts typically allow such renegotiation after four or five years while your building loan may run ten years or longer.) I've known of guys taking huge cuts in payments just to have some cash flow to cover part of their loan when the integrator sends the letter telling them to accept new terms or sit empty. And "free" hog slurry already isn't all that cheap when you figure interest, repairs, and custom pumping rates these days.
There's still empty sheds out there, but why would these guys pay to fix up an older barn when they can convince a new contract grower to build them a new barn for less? These guys know how to put your pocketbook to work for them--it's the way the business has evolved.
You can make these deals work, many have, but go into it with your eyes wide open.
Edited by GangGreen 6/8/2011 14:37
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Hog finishing contracts
