Financing and leveraging

Question:
You need capital to start making money. You need money to get the capital. How do you get one without the other?

In the past few years we have been investigating different options on how we can generate more cash flow (and hopefully profit) on our little farm in northern Huron Cty. Currently it is cropped, with the use of borrowed family member's equipment. I personally have a preference to do livestock due to the current building set-up on farm.
One avenue we have looked at is the dairy sector (we like cows for various reasons). When talking with bankers - "so how much quota do your parents have?" Oh, so we need "sponsorship" program in order to start. :-)
Lately, with the drop in the value of quota, we have talked about it again. One former banker suggested borrowing no more than $20,000 per kg quota. Yeah - that works great when quota is $25,000. So we start with 6 cows. Whatever.
This is where young folk have an issue with beginning farming. We have ideas that could improve efficiencies, labour management, productivity gains, reducing environmental "footprints"... etc. But to get the "elder" generation to agree is about as easy as moving Mt Everest.
One example I recall from Prof. Kohl was a 60 year old man walked up at a family succession planning meeting. He was interested in talking more about succession planning. Kohl was thinking "Oh he wants to retire and get his son more involved." No. His father and his son were walking up behind him. He wanted to get the farm from his 80+ yr old father, who was using a cane. So when would his 40 yr old son be able to farm? After he is eligible for retirement?
A few years ago every banker was willing to lend hundreds of thousands for a pig barn fully stocked. We always said no since I felt there was no future in pigs in Ontario for me. They also were willing to lend the same amount for a modern dairy - if my father would "give" his quota over.
In a super-big-box store in London one day a conversation with another customer came around to "taking over the family farm". She thought ALL farmers literally gave the farm to their children. because that is what happened in her family, her in-laws, and her neighbours - in the old country.
Well with that kind of capital, why do we need to worry about the question at the start?

Replies to This Discussion

Permalink Reply by Andrew Campbell on September 29, 2009 at 3:08am

This raises a lot of great points Wayne - thanks for posting it. I know in our case - we're very fortunate to have parents who WANT us there, and know part of us being there is being owners. It also brings up this video with Elaine Froese on AgVision TV - Barriers to Succession Planning - http://agvisiontv.farms.com/default.aspx?vid=vid_342009135751534

Let's get a good discussion going here. Do you agree with those barriers? Any way to work around those.

I know the thing we really have to watch for is around that conflict. We need to make sure we put those conflicts on the table - rather than trying to avoid them. None of us like conflict, but it is something we are going to have to get better at dealing with.

RSS

Welcome to
Ontario Agriculture

Sign Up
or Sign In

Agriculture Headlines from Farms.com Canada East News - click on title for full story

SaskCrops has sent in their submission for the Federal pre-budget consultations

SaskCrops sent in their annual submission last week for Finance Canada’s federal pre-budget consultations. SaskCrops represents the vast majority of grain and oilseed producers in Saskatchewan through the participating growers' associations - SaskBarley, SaskCanola, SaskFlax, SaskOats, Saskatchewan Pulse Growers, and Sask Wheat. The groups note that research funding remains a key advocacy priority for SaskCrops and want to see significant, predictable, and sustained investment in research from the government. Here is a list of recommendations the group would like to see included in the next budget and implemented. - Recommendation 1: That the government provides continued, stable, and enhanced investments in crop plant genetic research. - Recommendation 2: That the government invests in regional agronomic research to identify best management practices that capture increased yield potential from enhanced genetic innovations across diverse agroecological landscapes. - Recommend

Sask Barley joins Western Crop Innovations

Western Crop Innovations continues to grow. The Saskatchewan Barley Development Commission has joined Western Crop Innovations (WCI) as a voting member. Sask Barley has committed $50,000 in core funding as a transitional grant for the current fiscal year. Western Crop Innovations (WCI) work focuses on developing feed and forage barley, malting barley, and triticale varieties specifically tailored for the Western Prairies. The newly formed organization - formerly known as the Field Crop Development Centre - was founded earlier this year. WCI's Interim Executive Director Mark Olson says SaskBarley's endorsement is important adding there is a reason we named our organization WESTERN Crop Innovations - the work we do is intended to benefit farmers from Manitoba to BC. Sask Barley's Executive Director Jill McDonald says joining WCI as a Tier 1 member allows us to collaborate more closely on projects that will directly benefit our growers, and we’re excited to contribute to shaping

The deadline for the Saskatchewan Pulse Growers Board of Directors is Friday

The Saskatchewan Pulse Growers are looking to fill three positions on their Board of Directors. Nominations are now being accepted for the three-year term positions. SPG sees particular value in candidates with the following characteristics and experience: Active role in the farm operation and its decision-making Pulses are an important part of the operation of the farm Interested in soybeans, faba beans, and chickpeas Interested in learning more about joining the SPG Board from current Directors? SPG’s Nominations Committee would be interested in discussing the opportunity with you – feel free to reach out to the committee members below: Trent Richards – Assiniboia, SK (306-640-7995) Brad Blackwell – Dinsmore, SK (306-846-7091) If you are a registered pulse producer (i.e. you have sold a pulse crop and paid levy to Saskatchewan Pulse Growers anytime since September 1, 2021), and are interested in taking an active role on the board you'll find the 2024-2025 SPG Board of Di

Trade War Looming Between Canada And China

The last time China took revenge on Canada, our canola industry suffered between 1.5 and 2.3 billion dollars in sales. That was the Huawei incident, when a top executive with the Beijing based company was taken into custody at the Vancouver airport at the request of the US government. China quickly retaliated by halting shipments of canola from Canada, claiming some of the shipments contained debris and was contaminated. No proof was ever given and none was offered. The Chinese government knows, when you want to get our government’s attention, go after canola, one of our most lucrative exports to that country. This week, in clear retaliation for Ottawa’s decision to tack on 100 percent tariffs to any Chinese built electric vehicle coming here, Beijing said it plans to start an anti-dumping investigation into canola imports from Canada. It’s not cutting off trade in the oilseed, at least not yet, perhaps using it as a warning for the Trudeau government to rethink its decision on Chine

Ag Barometer: Sentiment improves despite concerns

All three broad-based measures of farmer sentiment improved in July. The Purdue University-CME Group Ag Economy Barometer Index rose 8 points to 113. At the same time, the Index of Current Conditions increased by 10 points to 100, and the Index of Future Expectations at 119 was 7 points higher than a month earlier. July’s sentiment improvement occurred even though prices for both corn and soybeans declined from the time survey responses were collected in June to July, according to a university news release. For example, Eastern Corn Belt cash prices for corn and soybeans declined 11% and 5%, respectively, from mid-June to mid-July. Responses to the individual questions used to calculate the indices indicated the sentiment shift was primarily attributable to fewer respondents saying conditions were worse than a year earlier and fewer saying they expect bad times in the future. Data collection for the July survey took place from July 15-19, which coincided with the dates for the Repu

More…

Badges | Report an Issue | Terms of Service