Financially, thinking differently

Jan 24, 2024 | Uncategorized

I posted this on X/Twitter recently and was surprised at the amount of reactions and engagement it received:

You may have already seen this, as it has 157,000 views and piles of comments, but I’m sharing it here to summarize some of the thoughts and takeaways from people’s reactions.

This particular farmer has indicated he and his family view their farming operation as a family business, nothing more; nothing less. They intend to treat it as they would any investment of capital, time, energy, and other resources. That’s why the question came up and they’re 50/50 on considering some variation of this strategy.

With a young family, they recognize this opportunity to take a step back from the demands and stress of the farming operation to watch their kids and liquid wealth grow, rather than the primary focus of watching the crops grow.

Now, the comments and reactions to this out-of-the-box thinking landed in a handful of camps:

Jealousy

I’ll list this one first to get it out of the way. Some folks are jealous of someone having these numbers and make that known. That’s their prerogative. To note, the farm family said a large reason they might NOT do some form of this strategy is because they’ll feel compelled to move away from home due to the local jealousy.

It’s unfortunate that within the relatively small world of ag, we can’t celebrate each other’s wins and resort to jealousy. I’m of the opinion a rising tide lifts all boats and there are plenty of outside forces against production agriculture… Maybe that energy ought to be used against those anti-ag, rather than tearing down fellow farmers.

Curiosity

Many comments questioned how this balance sheet could exist, or if it was even real. I had the same question. The explanation I received were these keys to financial success:

  • Buying land for “cheap” years ago
  • 25 yrs of frugal farming and attention to financial details
  • Favorable below-market family rent on some of the 2,000 rented acres
  • Capitalized on the last few really good years to clear up debt & avoid “tax-based” purchases

This type of balance sheet is certainly attainable with a focus on a long-term time horizon and doing the little things right.

Advice

There were many tips and pieces of advice given with the majority falling in one of two buckets: investment or legacy.

  1. Investment. The scenario was presented to sell the liquid assets and invest in the S&P. Many suggested investing into more land or treasury bills or other alternative investments. One of this family’s goals is to keep things liquid in case other opportunities come up. Obviously nobody knows the future or what the markets will do (Warren Buffet had a famous “bet” along those lines) so any investment they do will come with some risk. Good thoughts and considerations on the investment guidance in the thread, though.
  2. Legacy. A common concern was the young kids not being involved in the day to day operation of the farm and their willingness to return to the farm. As someone who grew up on an acreage instead of a production farm w/ relatives who farmed, I can assure you we cannot anticipate what the kids will be willing or unwilling to do in 10+ years. No land is being sold in this scenario, so the opportunity is being preserved for the next generation, should they choose to go that route.

Both categories of advice seemed generally well meaning and supportive and I think one of the true values of the internet is being able to gain many perspectives from many points of view and make our own educated decisions.

Congratulatory

These were my favorite comments. Those who voiced support, applause, and the awareness that if this operator has managed his farm business this well, this isn’t a rash decision. And to take it a step further, there were many who truly wanted to say, “well done…how can I achieve a similar outcome?” If you’re in the position of being happy for a producer who has seen financial success and view that as a goal for your own operation, I think you’re coming from a great place.

To wrap it up, I’m appreciative of learning from others who have been there, done that and thank the folks for taking time to comment and educate many of us. If you can filter out the noise and occasional negativity, there’s true value in sharing and learning from others within the industry… and I hope that collaboration will support ag as a whole.

Heck, I guess that’s what Braintrust Ag is meant to facilitate.

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