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Contract farming

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thendrix View Drop Down
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    Posted: 21 Nov 2017 at 1:35pm
We're looking at a piece of land for a new chicken farm and it's just a little high to cash flow with the chicken houses without a big down payment. There's about 50 acres there that is in flood plain that we can't build on but can pasture or plant. It's a 100 year flood plain and the folks around there that I've talked to say they only saw it flood once in 2007 when EVERYBODY had flood issues. Is there an integrator that will sign a contract to plant on 50 acres? We need to have a contract or an established business on the property for the bank to count it toward the cash flow. Any ideas?

Edited by thendrix - 21 Nov 2017 at 1:37pm
If you raise your kids you can spoil your grandkids. If you spoil your kids you will raise your grandkids.

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Michael V (NM) View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Michael V (NM) Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2017 at 6:46pm
All I know to tell ya is, get your pencil sharpened up, get ya a big chief tablet, dollar store calculater, an go to work...
What kind cash crops will grow on the 50 acres that you can't grow chickens on? Are you look in at a cash lease out or farming yourself? Lots variables here...but if ya can buy it an get it paid for,,, land is a good investment..
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thendrix View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote thendrix Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2017 at 6:56pm
We can't build on the 50 acres because it's in flood plain. There's 126 acres total and I'm looking for a use for the 50 that's in flood plain. For the bank to be able to count it toward cash flow it has to be a viable business (contact or established) and it doesn't have either. I have hay equipment but no contract (guarenteed money) so they won't count it towards cash flow which is what they look at as whether or not to loan.

At the present time I have the go ahead on 6 chicken houses. 6 is going to be close to paying. 8 would definitely cash flow. If I can get the ok on 8 houses then this is a moot point but I'd still like to know where to look in case I don't get the ok. You guys know a lot more then me about crop farming so I just thought I'd ask about contracts on this side instead of the poultry side

Edited by thendrix - 21 Nov 2017 at 7:00pm
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thendrix View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote thendrix Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2017 at 9:27pm
I just reread your post and figured out I didn't answer anything. It's all river/creek bottom land. Don't know what'll grow best there as there's been no soil samples and I haven't talked to the extension agent to get his take. If I can get the ok for 8 houses I'll stump it, plow it, plant a grass hay, and use the equipment I have and that'll be ideal

Edited by thendrix - 21 Nov 2017 at 9:28pm
If you raise your kids you can spoil your grandkids. If you spoil your kids you will raise your grandkids.

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Gary in da UP View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Gary in da UP Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2017 at 9:41pm
KISS keep it simple , if it's hay ground then you get some seat time on your favorite Allis , why not doversify ? Raise hay, and look for another banker if this one balks.
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HD6GTOM View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote HD6GTOM Quote  Post ReplyReply Direct Link To This Post Posted: 21 Nov 2017 at 9:48pm
Won't you need that 50 acres for corn to feed the birds?? Bank it at the coop and have them crack it and fill the bulk bins. Son is one of the head guys for one of the largest egg producers in the USA. FYI Make sure you have a market for your eggs. Everyone wants cage free eggs today. Make sure you have a place to get rid of the chicken waste. Good luck with your farm.
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thendrix View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote thendrix Quote  Post ReplyReply Direct Link To This Post Posted: 22 Nov 2017 at 6:26am
It's a little different then that. My contact is to raise meat birds for Pilgrim. They're the largest poultry producer in the world. They supply the chicks (around 240,000), the feed, and medication if required and I supply the housing, labor, and utilities for around 40 days then they pick the birds up and process them and pay me a set amount per pound of live weight. If you go to Chick-fil-a, Arby's, Zaxby's, Wendy's, or a few grocery stores (don't remember which ones) then you might have eaten some of my birds. I've asked them about contracts to grow feed ingredients but they don't do that.

Edited by thendrix - 22 Nov 2017 at 6:26am
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jaybmiller View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote jaybmiller Quote  Post ReplyReply Direct Link To This Post Posted: 22 Nov 2017 at 6:41am
I know some guys up here are growing 'hay' and hauling into FLA for the race horses. Maybe you can do the same. Grow high quality feed for ponies. You're a dnag sight closer that me to FLA.
The sweet deal would be to just grow /cut into 'big bales' and load onto 'their' rigs and get paid ! It's be that 'bonus'  from the flood plain 50 acres. I'm guessing you can make a LOT of bales from 50 acres ??
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Tbone95 View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Tbone95 Quote  Post ReplyReply Direct Link To This Post Posted: 22 Nov 2017 at 6:50am
That depends on your definition of "a lot". 
 
If you don't know what your ground will grow, I certainly don't.  Jay's idea ain't all bad, but hay is risky, especially for a "high fallutin'" market like race horse hay.  I don't know, but I'd bet they would want it tested, not too coarse, not too dusty....What you gonna do with it when it rains on it.....
 
Wild ass guess, I'd check out soybeans.  I could be waaaaayyyy off for your area!
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thendrix View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote thendrix Quote  Post ReplyReply Direct Link To This Post Posted: 22 Nov 2017 at 7:24am
There's a Cargill in Gainesville that takes soybeans. That's about 50 miles away. There's another elevator in Calhoun, which is much closer, but I dont know anything about them. Does anybody take bean growers on contract?

I think most of the soybeans are east and south of here. Few corn guys but I think they're selling to cattle folks straight from the field

Edited by thendrix - 22 Nov 2017 at 7:28am
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Stan IL&TN View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Stan IL&TN Quote  Post ReplyReply Direct Link To This Post Posted: 22 Nov 2017 at 7:34am
What about putting that 50 acres in CRP?  It is a contract with a fixed amount they pay to keep it out of production.
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Tbone95 View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Tbone95 Quote  Post ReplyReply Direct Link To This Post Posted: 22 Nov 2017 at 7:51am
Originally posted by thendrix thendrix wrote:

There's a Cargill in Gainesville that takes soybeans. That's about 50 miles away. There's another elevator in Calhoun, which is much closer, but I dont know anything about them. Does anybody take bean growers on contract?

I think most of the soybeans are east and south of here. Few corn guys but I think they're selling to cattle folks straight from the field
 
Seems if corn can be grown.....beans can be grown...
 
Contracts, I'm not following 100% of what you're meaning, but you can get a futures contract for beans in my neck of the woods, so.....?
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thendrix View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote thendrix Quote  Post ReplyReply Direct Link To This Post Posted: 22 Nov 2017 at 9:34am
Our chicken contract works like this: average live weight x $.06 per pound x number of birds sold regardless of the market price. I'm guessing futures contracts work the same but are they multi year or single year contracts and who do you talk to about them?
If you raise your kids you can spoil your grandkids. If you spoil your kids you will raise your grandkids.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Ray54 Quote  Post ReplyReply Direct Link To This Post Posted: 22 Nov 2017 at 1:08pm
If I understand your looking for know income from 50 acres of flood plane before you plant ????? Which I have know idea how that would be in your part of the world.


The first thing is how often and how long will this ground be underwater? If the chances are good of getting a crop,maybe organic with all the fertilizer the chickens are making. But of course organic is 3 years or more down the road.The biggest money in organic is fresh vegetables,but vegetables are the biggest gamble there is.

 So for the bankers and your sleep a cash rent to hay or grain farmer looks to me what your asking about. 






 
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thendrix View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote thendrix Quote  Post ReplyReply Direct Link To This Post Posted: 22 Nov 2017 at 5:42pm
I'm asking about a contract for me to use the land. Grow something on contract for somebody in other words. The whole reason for the contract is to show the bank there is a guarenteed buyer I guess. I don't really want to rent it because I just don't want somebody else there. As for being underwater, the locals I've asked said it flooded in 2007 when we had rain almost everyday of September so I'd say it takes a lot to flood.
If you raise your kids you can spoil your grandkids. If you spoil your kids you will raise your grandkids.

Paitience is a bitter cup from which only the strong can drink
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JarrodACFan View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote JarrodACFan Quote  Post ReplyReply Direct Link To This Post Posted: 22 Nov 2017 at 7:24pm
As far as grain farming goes, you are completely in charge, there is no required contracts with anyone. You pay for seed, fertilizer, chemical, equipment, labor, crop insurance if desired, trucking of grain, and whatever else is needed. It's your choice where to market the grain you produce. You can wait to sell all of it until harvest time, or you can do a futures contract if you want.

With a futures contract, you basically "lock in" a price earlier in the year for a certain number of bushels. They don't contract acres unless it is a specialty variety or something. Say your farm would make 150 bushels per acre of corn. This is a wild guess because I don't know your area. On 50 acres, this would be 7500 bushels. You could contract none to all of these bushels with whatever elevator you want to deliver them to. I wouldn't recommend contracting any more than 50-67% unless you are darn sure it will raise that much.

This doesn't really help your cash flow dilemma. If I were you, I would try and figure up a budget for what could be raised on the land, less expenses, and then use that to present to the banker. You will be at somewhat of an advantage because your manure will take care of a majority of your fertilizer needs. I can help you with some ballpark cost of production figures for corn/soybeans if you'd like.


I don't know if this helps or not, but if you'd like some more insights into grain farming, PM me and we can talk on the phone.

Edited by JarrodACFan - 22 Nov 2017 at 7:30pm
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