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| Certainly there are better operations these days because we all 'manage' - we would only need a coffee shop section on this board if we were not all very interested in managing every part of our business that we can. That said, there are always businesses pushing the limits of risk management, but there seems to be more joining the club. I would say many got their start in the relatively stable mid 90's into the 2000's - there were problems, but generally nothing as devistating or widespread as 1988. Even the crops these days are more tolerant of bad situations. It would almost seem to be responsible to take on more risk since 'standard' management practices are really not risking enough to warrant a return. ie. pay more rent, lock in inputs early, cover production with insurance and options/futures and live off the $5/acre return. Generally it's worked a little more often than not - some failures, but no where near enough to show how risky it really is. It just hasn't been tested. These operations might survive change if it happens slow enough to allow appropriate reaction, but the changes coming will likely happen pretty quick. The smart guys will pull back just before the knife cuts.
To me it's also interesting that we've all taken on more risk - higher inputs, higher rents (maybe not sky high, but levels that used to be sky high) with generally good returns. When things change, we'll all have some fast moving to do.
thanks,
Pat | |
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Land Market
