The Ranching Economy

[BigHornRam]

It is important to note that there are several different forms of agriculture (crops, beef, dairy, etc.) as well as many forms of subsidies. I can only speak to dairy specifically but very little come in the form of direct payments. Most are assistance in the purchase of “greener” equipment or projects that are lead to climate friendly practices. Most of which become necessity based on political policy, the cost to do these things has become more than most farms can afford. You’ve seen the increase in the price of a new pickup over the last ten years now imagine that percentage increase on a new tractor or new construction. All the while commodity prices the farmer receives do not increase at those same levels. Dairy for example, milk prices are set by the government, a dairyman doesn’t have control over the price he is paid for his milk. Agriculture is a world market, agriculture in America continues to have an increased cost of production while the rest of the world can produce those goods at a fraction of the price. American agriculture is held to some of the safest and cleanest food standards in the world, those come at a cost to the producer, subsidies help to offset a portion of those costs. Any other country that also has high standards is subsidized by the government probably even more so than American ag. As world population continues to grow we have to be able to do more with less all the while land is lost every year to development. We produce using sustainable practices and markets continue to drive those practices to become more efficient every day. Subsidies help drive clean, safe, sustainable and efficient practices. If a farmer doesn’t move his business model in that direction they won’t be in business for much longer even with subsidies.

I worked on dairy farms in high school and before college. Hard work, long hours, and low pay. The farmers I worked for (late 70's and early 80's) racked up a bunch of debt and eventually went out of business. Great incentive for me to get an education though. Hats off to the people that can do this for a career and succeed.

 

[JLS]

I have yet to interact with a rancher who really just wants all wildlife wiped off their operation.

I have. More than once.

 

[CUElk]

A lot of the ranching in Mt today is more of a costume party. They are set up to operate at a loss until sold.

that is not just Mt. I grew up on a farm and know many farmers. Some depend on farming for income but many have their “farm” set up to lose. It is a tax write off plain and simple. Yet they get all the govt perks. Including buying nice equipment, trucks, utility vehicles and writing it off. This has been going on for years and will not change because many doing it are politicians. Or a rich fat cat that is a buddy of a politician.

 

[brocksw]

I'm with @SFC B (except for the little meat part ) , I'm always amazed when the "self-sufficient free-market conservatives" of the west look to govt for subsidizing their industries. The markets will work. That doesn't mean the market guarantees a 4th generation business, but it doesn't guarantee that in any other industry either. Fourth-generation furniture businesses didn't make it in the Carolinas, but we did nothing. A 4th generation grocery store didn't make it in just about any mid-sized town in America but we did nothing. In fact, there are extremely few 4th gen businesses outside of ag in the country at all. Why do we need to turn Ag into a welfare state?

This article is obviously bias, but I believe his numbers and I know some farmers in ND who can tell a similar story. Have some farmer friends who've picked up some large checks from the USDA the last couple years.

McFeely: Trump turned farmers into welfare-dependent socialists

Ag producers are dependent on federal government dollars now more than ever thanks to never-ending handouts.

www.dl-online.com

 

[SAJ-99]

The reason for the subsidies and farmer welfare is because our government wants cheap food for its people.

To this point, stability in supply is probably as important if not more. You turn on supply like you can with manufactured goods. It takes time to grow corn and cattle. That said, the profession isn't known for its acceptance of new and better ideas. The farmers around here farm the same way they have for 100 years, just with better equipment. They plow the ground into dust and then lose an inch of topsoil when the winds blow. The government supports corn through ethanol. If that stopped, most would have to grow another crop and they would probably go bankrupt complaining while trying to figure out what to grow. I have found the younger generation to be very different.

 

[SAJ-99]

I'm with @SFC B (except for the little meat part ) , I'm always amazed when the "self-sufficient free-market conservatives" of the west look to govt for subsidizing their industries. The markets will work. That doesn't mean the market guarantees a 4th generation business, but it doesn't guarantee that in any other industry either. Fourth-generation furniture businesses didn't make it in the Carolinas, but we did nothing. A 4th generation grocery store didn't make it in just about any mid-sized town in America but we did nothing. In fact, there are extremely few 4th gen businesses outside of ag in the country at all. Why do we need to turn Ag into a welfare state?

We bail out everybody and everything these days. Money is free. Shhhh. Don't tell anybody.

 

[VikingsGuy]

This article is obviously bias, but I believe his numbers and I know some farmers in ND who can tell a similar story. Have some farmer friends who've picked up some large checks from the USDA the last couple years.

McFeely: Trump turned farmers into welfare-dependent socialists

Ag producers are dependent on federal government dollars now more than ever thanks to never-ending handouts.

www.dl-online.com

I think this is fairly accurate, but having grown up in and around ND farms, this is not news - DC has been turning ag into a welfare state for at least 50 years - Trump was just the latest, Biden will probably double down.

 

[stevejfarms]

Subsidies started under FDR during the depression, they continued during the cold war because of national security concerns. The reason you don’t find many farmers who refuse them, is they can’t compete with those that do. Ag payments are figured in to land rent and affect sale prices. I am philosophically opposed to ag subsidies, but I accept them for the reasons given. On the other hand I support payments for conservation practices that benefit everyone.
I also want to say that I’ve been in business for over thirty years and I’ve yet to see a benefit to operating at a loss. Maybe I’m not smart enough to figure it out.

 

[MarvB]

My dad was a logger, I am forester by trade and degree. Ended up later in the energy industry; natural gas, wind, hydro, coal, biomass... have seen red tape and regulation plenty in my sixty years. Some good and beneficial, some pure pork and ridiculous as it could get.

The one phrase that still make me flinch to this day- “too big to fail”
No ones immune unless someone else pays the price!

 

[longbow51]

Wow, I grew up on a small ranch, and we were incredibly poor. Wish someone had told us about these great government giveaways.

 

[88man]

I'd rather pay crop and cattle subsidies to farmers growing food and caring for the land, than paying subsidies to the production of windmills, solar panels, and electric cars. The "green stuff" should be a stand alone industry or fail on it's own. Just my opinion.

so true but not a majority belief on here i bet.

 

[MTTW]

I also want to say that I’ve been in business for over thirty years and I’ve yet to see a benefit to operating at a loss. Maybe I’m not smart enough to figure it out.

The way you do it is take a few million dollars and buy a ranch. Then you hire a ranch manager and a helper or two. You will need good new equipment because the manager can't fix anything, and miss matched equipment looks ...... well, you know how it looks. You run just enough cows so you have something to talk about, and so you can have a branding for the photo op. Grow just enough crop to keep your employees somewhat busy so they aren't drinking and smokin weed on the job. Good luck with that. Put in a pivot because that high spot in the field always turns brown and is embarrassing. Keep the place looking "just right". New attractive fences, nice roads, and one metric shit ton of custom NO TRESPASSING signs. These will be the only way you will know where your boundaries are and can save you from bitching about the neighbor's cows being on your place.

The manager will need unlimited diesel to patrol the place and make sure nobody crosses a corner. If done right you can lose 6 figures a year. You never even get dirty.

You still get to bitch at the manager because the place is losing more than you expected to lose.

It is called losing money ranching on purpose.

I mean no offense to real ranchers, you know who you are.

 

[stevejfarms]

The way you do it is take a few million dollars and buy a ranch. Then you hire a ranch manager and a helper or two. You will need good new equipment because the manager can't fix anything, and miss matched equipment looks ...... well, you know how it looks. You run just enough cows so you have something to talk about, and so you can have a branding for the photo op. Grow just enough crop to keep your employees somewhat busy so they aren't drinking and smokin weed on the job. Good luck with that. Put in a pivot because that high spot in the field always turns brown and is embarrassing. Keep the place looking "just right". New attractive fences, nice roads, and one metric shit ton of custom NO TRESPASSING signs. These will be the only way you will know where your boundaries are and can save you from bitching about the neighbor's cows being on your place.

The manager will need unlimited diesel to patrol the place and make sure nobody crosses a corner. If done right you can lose 6 figures a year. You never even get dirty.

You still get to bitch at the manager because the place is losing more than you expected to lose.

It is called losing money ranching on purpose.

I mean no offense to real ranchers, you know who you are.

Why would you want to lose 6 figures a year? I still don’t see the benefit, educate me.

 

[MTTW]

It is recreation, you don't expect to profit. Your money comes from somewhere else in large quantities.

 

[stevejfarms]

It is recreation, you don't expect to profit. Your money comes from somewhere else in large quantities.

It’s been my experience that people with large quantities of money don’t get it by losing it on purpose.

 

[Nemont]

It’s been my experience that people with large quantities of money don’t get it by losing it on purpose.

True but if you are able to leverage the tax code to realize a benefit by losing on the farm/ranch while at the same time seeing the value of the asset appreciate because of factors outside of ag. it is a place to park money, manage your taxes, enjoy the allure of owning a ranch and at the end of it having the entire enterprise increase in value. So the bottom line loss isn't really that big of worry as long as you know the underlying asset, ie the land itself is appreciating at a rate higher than inflation. Unlike dollars, which can be printed in apparently an unlimited number, only so much land out there.

Nemont

 

[VikingsGuy]

The way you do it is take a few million dollars and buy a ranch. Then you hire a ranch manager and a helper or two. You will need good new equipment because the manager can't fix anything, and miss matched equipment looks ...... well, you know how it looks. You run just enough cows so you have something to talk about, and so you can have a branding for the photo op. Grow just enough crop to keep your employees somewhat busy so they aren't drinking and smokin weed on the job. Good luck with that. Put in a pivot because that high spot in the field always turns brown and is embarrassing. Keep the place looking "just right". New attractive fences, nice roads, and one metric shit ton of custom NO TRESPASSING signs. These will be the only way you will know where your boundaries are and can save you from bitching about the neighbor's cows being on your place.

The manager will need unlimited diesel to patrol the place and make sure nobody crosses a corner. If done right you can lose 6 figures a year. You never even get dirty.

You still get to bitch at the manager because the place is losing more than you expected to lose.

It is called losing money ranching on purpose.

I mean no offense to real ranchers, you know who you are.

Reminds me of when I used to build steel grain bins on local farm sites across ND. At some point during the day the farmer would drive over to say hi. They were always nice and some brought lemonade and cookies. But the 4 of us on the crew knew at 6am when we came on the jobsite how the following question was going to be answered, "so how's farming?". If we saw a new shiny current year 4x4 pickup in front of the house right next to the wife's caddy and a bunch of shiny new tractors/implements in a big aerospace sized pole barn we knew the answer was going to be 20 minutes on why the banks, and the politicians, and the government and the Arabs and the city folks all made it impossible for a decent man to earn a living farming any more. But if we saw a well maintained 5 yo pickup next to a 6 yo Oldsmobile in the yard, and obviously well used but well-maintained tractors/implements around the grounds we knew that anwer was going to be, "ya get good years and bad years, all things considered, we are doing ok, how about you, must be tough slinging steel all day in the hot summer". They never let us down. They all stayed to script. I gather not much has changed since I left ND.

 

[VikingsGuy]

It’s been my experience that people with large quantities of money don’t get it by losing it on purpose.

I would agree that folks that built large quantities of money from the ground up fit this, but trust fund babies, hollywood entertainers and .com folks who stumbled into money very quickly can have a bit of a carefree attitude with their funds.

 

[stevejfarms]

Reminds me of when I used to build steel grain bins on local farm sites across ND. At some point during the day the farmer would drive over to say hi. They were always nice and some brought lemonade and cookies. But the 4 of us on the crew knew at 6am when we came on the jobsite how the following question was going to be answered, "so how's farming?". If we saw a new shiny current year 4x4 pickup in front of the house right next to the wife's caddy and a bunch of shiny near tractors/implements in a big aerospace sized pole barn we knew the answer was going to be 20 minutes on why the banks, and the politicians, and the government and the Arabs and the city folks all made it impossible for a decent man to earn a living farming any more. But if we saw a well maintained 5 yo pickup next to a 6 yo Oldsmobile in the yard, and obviously well used but well-maintained tractors/implements around the grounds we knew that anwer was going to be, "ya get good years and bad years, all things considered, we are doing ok, how about you, must be tough slinging steel all day in the hot summer". They never let us down. They all stayed to script. I gather not much has changed since I left ND.

Nothing like building grain bins on a hot August day!

 

[ChrisC]

Reminds me of when I used to build steel grain bins on local farm sites across ND. At some point during the day the farmer would drive over to say hi. They were always nice and some brought lemonade and cookies. But the 4 of us on the crew knew at 6am when we came on the jobsite how the following question was going to be answered, "so how's farming?". If we saw a new shiny current year 4x4 pickup in front of the house right next to the wife's caddy and a bunch of shiny new tractors/implements in a big aerospace sized pole barn we knew the answer was going to be 20 minutes on why the banks, and the politicians, and the government and the Arabs and the city folks all made it impossible for a decent man to earn a living farming any more. But if we saw a well maintained 5 yo pickup next to a 6 yo Oldsmobile in the yard, and obviously well used but well-maintained tractors/implements around the grounds we knew that anwer was going to be, "ya get good years and bad years, all things considered, we are doing ok, how about you, must be tough slinging steel all day in the hot summer". They never let us down. They all stayed to script. I gather not much has changed since I left ND.

Not a ranch, but I hear a similar story about cranberry growers around here. They always tell you how bad the year was but always seem to be driving a new pickup truck.