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Thread: Identifying Value

  1. #1
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    Default Identifying Value

    As always in the circles I move in there are farmers who are doing quite well and those who really struggle no matter what milk prices are . I've been involved in dairy farming for a long time now and it's always been that way .

    Here in Australia the Analysts are saying we will be a net importer of dairy product in just a few years which seems incredible really . National production lower than what it was 23 years ago !

    Some farms are for sale which seem like great value . The last few years it's been pretty hard to sell a dairy farm for reasonable coin . In fact , at the moment bare land has been selling for not much less than well developed land with hundreds of thousands worth of improvements .

    Sure , finance might be a little tighter to get . There has certainly been a lot of volatility in prices but anyone who has played the long game has done quite well . Demand from Asia is not going away for our product.

    Yesterday I was talking to a stock agent who was saying that no one has any money and it is incredibly hard to sell cows . He just had to send a bunch to the meatworks .

    A friend of mine has made a net profit of $1000 per cow the last two years running !

    Some things never seem to change.
    "Those people who say they have no time for bodily exercise will soon have to find time for illness ". Joseph Pilates

  2. #2
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    Sounds about the same here on the other side of the pond in the states. Debt is most likely the largest factor in most operations profitability.


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  3. #3

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    I think your friend has a funny way of looking at numbers, I don't buy that profit for a minute!

  4. #4
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    If they are making 1k per cow net than they should expand that model. It must work so than it's time to replicate it if it is sustainable

    Not many... if any.... doing that in the states at the moment. Bankruptcies just hit a high for my federal reserve district... which is impressive as there are less farms every year regardless of the economic situation. Thus, having more bankruptcies (it's a raw count, not percentage) seems almost crazy.

    There's definitely people making money right now here.... but not that kind of money!
    DiederichFarm
    "You are only as good as your next success, not your last" Sir Jock Stirrup

  5. #5
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    When I think back , it has been drought more so than milk price that has impacted profitability. In many ways we have to be thinking and planning for a worst case scenario with our fodder reserves and looking at forward contracting a large chunk of our grain requirements when it makes sense .

    I've been caught more than once withnot enough haygoing into the autumn and had to pay high prices for bought in hay . Doing that or ending up in that position can devastate an otherwise ok year .

    Bankruptcy of farms in my area is relatively uncommon . Unlike bricks and mortar retail businesses which are under pressure with all the disruption that ecommerce has brought.

  6. #6
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    Many farmers make a few extra dollars with selling surplus heifers to the export market as well . I have 52 head that have been selected and are due to go to a quarantine feed lot soon . So we just have to be mindful of other revenue .
    "Those people who say they have no time for bodily exercise will soon have to find time for illness ". Joseph Pilates

  7. #7
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    Selling extra heifers used to be an income stream but not lately. They are selling for about $1000- $1100 here, which is less than what they have invested in them. People without too much debt, or running a lean operation are still making a little bit of money around here.

  8. #8
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    Yes , the money for export heifers is not what it was . Way back in 2002 we were selling 8 month old animals for about 1100-1200 and I think there was a peak again in around 2012 .

    What I like about it is that it's a clean deal when they're gone . There's no one ringing up complaining about a light quarter or anything else.
    "Those people who say they have no time for bodily exercise will soon have to find time for illness ". Joseph Pilates

  9. #9
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    Most of our heifers have gone to China over the years . It's been a handy bit of extra cashflow ?
    "Those people who say they have no time for bodily exercise will soon have to find time for illness ". Joseph Pilates

  10. #10
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    Quote Originally Posted by drdiederich View Post
    If they are making 1k per cow net than they should expand that model. It must work so than it's time to replicate it if it is sustainable

    Not many... if any.... doing that in the states at the moment. Bankruptcies just hit a high for my federal reserve district... which is impressive as there are less farms every year regardless of the economic situation. Thus, having more bankruptcies (it's a raw count, not percentage) seems almost crazy.

    There's definitely people making money right now here.... but not that kind of money!

    Are these bankruptcies mostly all farmers or various individuals and small business?
    "Those people who say they have no time for bodily exercise will soon have to find time for illness ". Joseph Pilates

  11. #11
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    Quote Originally Posted by Lead Cow View Post
    Are these bankruptcies mostly all farmers or various individuals and small business?
    All of them are classified as "farm"
    DiederichFarm
    "You are only as good as your next success, not your last" Sir Jock Stirrup

  12. #12
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    I still think that right now is a fantastic time for anyone to get into the dairy business.

    I'm seeing great opportunities all the time . Even if you don't own land and do a joint venture with a land owner by way of lease or sharefarm arrangement . You can get cows for not much more Than meat value .

    If you can take a 10 or 20 year view then even better . Huge demand for value added product from the wealthy Asian middle class .
    "Those people who say they have no time for bodily exercise will soon have to find time for illness ". Joseph Pilates

  13. #13
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    I concur. Lots of long term opportunity
    DiederichFarm
    "You are only as good as your next success, not your last" Sir Jock Stirrup

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