renting 100 acres for tillage

Harrier1980

Guys,
Just a notion at the moment... Concidering as a short - medium term investment..
Renting 100 acres and growing wheat. The works would have to be done by a crontractor and I mean all of it initially - maybe after a year or two I may be in a position to take on the harvesting..

In terms of an investment over 5 - 10 years i was wondering what sort of return you might get on it.. I was guestimating 15 - 18k from seed to harvest each year as a cost.. Possibly taking out 10k ish each year.. provided weather etc.. thats why i am concidering over 5 - 10 years to account for a couple of ****ty growing seasons..

In terms of risk i was thinking it was not to high if you plan for 5 - 10 years of it but just one or two years is a big rish with weather etc...

Has anyone here ever done this before??

Downsides is you are at the mercy of a contractor to get things done, sowing, spraying, fert and even crucual harvest....

Is it just another hairy fairy brainstorm of mine or a viable investment???

blue5000

I think you'd have to own your own sprayer at least.

reilig

Harrier1980 wrote: »

Guys,
Just a notion at the moment... Concidering as a short - medium term investment..
Renting 100 acres and growing wheat. The works would have to be done by a crontractor and I mean all of it initially - maybe after a year or two I may be in a position to take on the harvesting..

In terms of an investment over 5 - 10 years i was wondering what sort of return you might get on it.. I was guestimating 15 - 18k from seed to harvest each year as a cost.. Possibly taking out 10k ish each year.. provided weather etc.. thats why i am concidering over 5 - 10 years to account for a couple of ****ty growing seasons..

In terms of risk i was thinking it was not to high if you plan for 5 - 10 years of it but just one or two years is a big rish with weather etc...

Has anyone here ever done this before??

Downsides is you are at the mercy of a contractor to get things done, sowing, spraying, fert and even crucual harvest....

Is it just another hairy fairy brainstorm of mine or a viable investment???

I'm not from a tillage farm and have no experience in it but I do know that a lot of men carried out your above plan in 2008. Things looked good. Long term grain prices were on the up - as they are now.

Then about a month before harvesting there was a lot of rain and crops suffered a bit of damage. Then the price collapsed to a 10 year low. A lot of men got burned and many put their land back into grass.

You have to lay out an awful lot of money in comparison to someone who has their own machinery because you will have to pay for everything while others will have machinery that can be used for other jobs all year round. If there is a downturn in prices or a weather disaster then you will have the biggest loss in comparison to someone who owns their own land and their own machinery.

On the other side, prices could continue to rise and you could make a killing.

But that's the risk you take.

Harrier1980

reilig wrote: »

I'm not from a tillage farm and have no experience in it but I do know that a lot of men carried out your above plan in 2008. Things looked good. Long term grain prices were on the up - as they are now.

Then about a month before harvesting there was a lot of rain and crops suffered a bit of damage. Then the price collapsed to a 10 year low. A lot of men got burned and many put their land back into grass.

You have to lay out an awful lot of money in comparison to someone who has their own machinery because you will have to pay for everything while others will have machinery that can be used for other jobs all year round. If there is a downturn in prices or a weather disaster then you will have the biggest loss in comparison to someone who owns their own land and their own machinery.

On the other side, prices could continue to rise and you could make a killing.

But that's the risk you take.

Excellent point and i remember that in 2008.. However at that time a lot only provisioned for one to tow years and if they went **** then they were up the swan.. So as i said if provisions are made for 5 - 10 yeas then that at least lowers the risk of failure however it does not eliminate the risk.. Then again there is no such thing as an investment of the possible returns here without risk. Simply needs to be planned and allowed for.

F.D

if you have a tractor, why not buy a cheap second hand plough fert spreader and sprayer and do them jobs your self, get a contractor to sow and harvest, maybe get a good second hand drill if its a success.
you could probably sell them on again without making much of a loss if it turns out to be a disaster, the contractor will set up the tramlines to suit what ever kit u have
we only have 20 acres sowed and the contractor and merchant get more out of it that us, if i keep doing crops i will try and pick up a decent plough, and use our own fert sprerader and sprayer and like i said get him to put in the tramlines to suit ours

ihatetractors

Harrier1980 wrote: »

Guys,
Just a notion at the moment... Concidering as a short - medium term investment..
Renting 100 acres and growing wheat. The works would have to be done by a crontractor and I mean all of it initially - maybe after a year or two I may be in a position to take on the harvesting..

In terms of an investment over 5 - 10 years i was wondering what sort of return you might get on it.. I was guestimating 15 - 18k from seed to harvest each year as a cost.. Possibly taking out 10k ish each year.. provided weather etc.. thats why i am concidering over 5 - 10 years to account for a couple of ****ty growing seasons..

In terms of risk i was thinking it was not to high if you plan for 5 - 10 years of it but just one or two years is a big rish with weather etc...

Has anyone here ever done this before??

Downsides is you are at the mercy of a contractor to get things done, sowing, spraying, fert and even crucual harvest....

Is it just another hairy fairy brainstorm of mine or a viable investment???

I think your stone mad, we have it guesstimated out to average out about €60-50 per acre pure profit across 900 acres in total. 850 of which is rented onlong term contracts for €87.50-€100 per acre. We have all our own machines and no outside labour needed. Where you get €100 per acre is beyond me.
We have 400 ton of wheat forward sold for €175 ton with a 70:30 bonus on anything over that at average 17.5% pmoisture with low moisture bonuses etc..
Have feed barley in a kind of similar agree ment, and have some W rape.
Half thinking of doing a free straw for all the dung deal also as price of fert doesn't look like going anywhere.
Oh ye, WW is atleast €300 acre to grow and spring wheat won't be too far behind.
Wheat doesn't like continuos rotation and so you need a break crop atleast every second year. ie we use WW,SB,WRape,WW,SB,Oats(seeing about beans instead maybe or something!!). So unless you have 200+ acre or take grassland for a year as a break, could give monster crop of WW!! liable to lodge tough

F.D

ihatetractors wrote: »

I think your stone mad, we have it guesstimated out to average out about €60-50 per acre pure profit across 900 acres in total. 850 of which is rented onlong term contracts for €87.50-€100 per acre. We have all our own machines and no outside labour needed. Where you get €100 per acre is beyond me.
We have 400 ton of wheat forward sold for €175 ton with a 70:30 bonus on anything over that at average 17.5% pmoisture with low moisture bonuses etc..
Have feed barley in a kind of similar agree ment, and have some W rape.
Half thinking of doing a free straw for all the dung deal also as price of fert doesn't look like going anywhere.
Oh ye, WW is atleast €300 acre to grow and spring wheat won't be too far behind.

one thing that always puzzled me with big tillage farmers is why they wouldnt stick up a massive strawbedded shed buy cattle cheap in the back end and winter and sell them in the spring, growing silage /maize would give the land a break in the rotation and the dung / slurry would surly build up your organic matter, did you ever consider this? maybe i'm wrong, just curious,
i agree with you on your profit if we didnt use and sell some the straw off our few acres it wouldnt even break even

ihatetractors

F.D wrote: »

one thing that always puzzled me with big tillage farmers is why they wouldnt stick up a massive strawbedded shed buy cattle cheap in the back end and winter and sell them in the spring, growing silage /maize would give the land a break in the rotation and the dung / slurry would surly build up your organic matter, did you ever consider this? maybe i'm wrong, just curious,
i agree with you on your profit if we didnt use and sell some the straw off our few acres it wouldnt even break even

Tell you the truth never,ever thaught of that!, we share that with the uncle who owns/rents alot more than us. We are deeply considering a grain store, which would kind of help. I suppose we'll just have to wait,plan and see. Last two/3 years some of our longer held land has become abit depleeted. Soil tests came back fairly ok, buuuut still yeilds are back .3-.4 ton on similar average land which is fresher out of grass. Could chop straw, or make someone else pay for nutrients and we get the ****e what's left;)

Casinoking

Few quick figures might help you make your mind up. Firstly the cost of growing Winter wheat breaks down along the lines of the following:
Contractor costs all-in €173/ac
Seed, spray, fert etc €276/ac
Total cost €449/ac

Now your returns:
3.5t/ac @ €170/tonne = €595/ac
Straw = €70/ac
Total €665/ac

That leaves you with a margin of €216/ac. At the minute good tillage land suitable for growing Winter wheat is making anything from €200-€250/ac for lease up to 5 years. Of course all this assumes the sun shines for July and August and the price of grain stays reasonably good.

Harrier1980

Thanks for the responses guys... Obviously my guess at figures was way out... and i sat down with a teagasc friend when doint it... he is gona get an earfull netxt time we have a pint ha!!

Clearly its not wort the risk as the return is too small unless you are doing the work yourself to help margins.

Was just another of my hair brain thoughts.

Carlow52

Casinoking wrote: »

Few quick figures might help you make your mind up. Firstly the cost of growing Winter wheat breaks down along the lines of the following:
Contractor costs all-in €173/ac
Seed, spray, fert etc €276/ac
Total cost €449/ac

Now your returns:
3.5t/ac @ €170/tonne = €595/ac
Straw = €70/ac
Total €665/ac

That leaves you with a margin of €216/ac. At the minute good tillage land suitable for growing Winter wheat is making anything from €200-€250/ac for lease up to 5 years. Of course all this assumes the sun shines for July and August and the price of grain stays reasonably good.

On the math here, where does the single farm payment [SFP] come into the sums?
My limited knowledge of the SFP is that it is c 145 euro and acre and since 2005 belongs to the applicant on the paperwork and is not assigned to specific land.
If the applicant 'farms' regardless of what land is used he can claim it.

I am also told that if you let the application lapse it is lost for ever.
All insights appreciated:)

reilig

Carlow52 wrote: »

On the math here, where does the single farm payment [SFP] come into the sums?
My limited knowledge of the SFP is that it is c 145 euro and acre and since 2005 belongs to the applicant on the paperwork and is not assigned to specific land.
If the applicant 'farms' regardless of what land is used he can claim it.

I am also told that if you let the application lapse it is lost for ever.
All insights appreciated:)

Will there be an SFP on tillage land???

There is no set rate of SFP per acre. It varies from farm to farm depending on how intensively the farmer was farming during the reference years.

The SFP is assigned to specific land but it can be detatched and sold also. If you rent land, you will be able to claim the SFP on the land but it is usually in the rent agreement that this SFP is paid directly back to the landowner as part of the rent or it is reflected in the rent price at the very minimum.

I have no insight into lapsed applications (thank god).

ihatetractors

Carlow52 wrote: »

On the math here, where does the single farm payment [SFP] come into the sums?
My limited knowledge of the SFP is that it is c 145 euro and acre and since 2005 belongs to the applicant on the paperwork and is not assigned to specific land.
If the applicant 'farms' regardless of what land is used he can claim it.

I am also told that if you let the application lapse it is lost for ever.
All insights appreciated:)

Sfp goes to land owner always as part of rent agreement, tenant may claim it but recieves none of it.

hillclimber

F.D wrote: »

one thing that always puzzled me with big tillage farmers is why they wouldnt stick up a massive strawbedded shed buy cattle cheap in the back end and winter and sell them in the spring, growing silage /maize would give the land a break in the rotation and the dung / slurry would surly build up your organic matter, did you ever consider this? maybe i'm wrong, just curious,
i agree with you on your profit if we didnt use and sell some the straw off our few acres it wouldnt even break even

A lot to be said for traditional mixed farming;)

Casinoking

This is generally the case alright, although illegal and more than likely going to be stamped down on in a big way. I should have mentioned that tillage land is currently making €200-€250/acre PLUS the SFP whatever that might work out at, usually anywhere in the region of €80-€160/acre.

ihatetractors

F.D wrote: »

one thing that always puzzled me with big tillage farmers is why they wouldnt stick up a massive strawbedded shed buy cattle cheap in the back end and winter and sell them in the spring, growing silage /maize would give the land a break in the rotation and the dung / slurry would surly build up your organic matter, did you ever consider this? maybe i'm wrong, just curious,
i agree with you on your profit if we didnt use and sell some the straw off our few acres it wouldnt even break even

Half mentioned this and when we thaught about it decided it wouldn't be worth the hardship. Say what 100-150k for a shed for say 3-400 head, making on average only about 25€ per animal.... in a rare good year. Making maize or arable silaage isn't cheap at a cost of about €750/per acre on a yeild that can vary greatly. Getting bedding/ some concentrate at cost price, but much easier to just draw it to a field from a dung stead imo, and at a cost of say €-300-350 to move say 100 ton a day and say get a cheap spreader. Get someone else pay for added nutrient in the s~~~~ :rolleyes:
On one positive note, could help justify a telehandler, which is need to change the drill up, but personaly don't see the point in starting a new buisness venture to suit one machine..