It is a very complex question with so many variables to consider. Back in the 1980s I saw neighbors and some relatives buying farm land and equipment at 15 to 18% interest. The bankers were pushing them to get big. When corn prices dropped to 3.50/bushel and milk went to $13.00 per hundred weight the law of diminishing returns buried a lot of farmers. Fortunately my Dad did not participate in the get big scenario. When I got out of college my Dad and I formed a corporation and were able to secure low interest rate loans.
We targeted the small farm operations going out of business that because of the topography, the land was about 60/40. 60% timber/pasture, 40% tillable on average. To pay off the debt we logged the timber, sold some of the non-tillable to city folks wanting to recreate and hunt and enrolled a lot of the poorer ground in the CRP program. CRP is a good way to pay off a farm.
When the dairy herd was sold we had to look for different revenue. We continued logging and went with beef cows and crops also, land speculation. When Dad passed away I brought on a hired man to help with logging and farm chores. My farm equipment was ageing and some needed to be replaced, but I put a pencil to the situation and found I could hire custom work cheaper than purchasing good used equipment or new. So the land prices in my area with a combination of recreation and tillable track higher than just tillable land. I don't see that peaking yet.
Last edited by roundoak; 07/22/21.
