The Perfect Storm of Farming: Welcome to Financial Hell #Finance

welcome to financial hell inside of today’s CashNews.co I’m going to talk about the perfect storm inside of farming that is honestly going to sink a lot of family operations going into the next two years and I’m talking about 24 25 first part of 2026 as well and most of

these things are preventable but most of us are completely blind to where we are at inside of this process and inside of today’s CashNews.co I’m going to talk about the three distinct phases that Family Farm operations go through that leads them from a place of abundance and prosperity

to just in a few short years a place of absolute Financial Rec AG hell and ultimately bankruptcy so let’s get to it all right guys so we’re going to have a little bit of Story Time inside of today’s CashNews.co when I’m talking about phase one here of the process here that

ultimately leads Family Farms to massive Financial struggles and even bankruptcy phase number one we’re going to call the phase of greed and the reason that I call it this is because this type of phase and just so you know everything I’m talking about I witnessed firsthand in the

banking industry back in 2012 and 2013 and then I saw everybody go through these phases here but the thing is though is just replace 2012 2013 with 21 and 2022 going in the last few years here and that’ll be a good starting point for you so in those years if you think back to 21 and 22 what

did we have we had higher grain prices right everybody for the most part was making money just like back in 2012 and 2013 I had customers at that time we had $1 1384 wheat one of those years out in Western Kansas and I had some customers that were making a million dollar cash right just straight up

million dollars cash but on their tax return guess what it showed it showed zero dollar right because in these grp great years where we have high prices and everybody’s Profitable and stuff like that we start to buy things right because when we get stuck in this phase of

greed then we’re in this abundance mindset to where you think it’s never going to change and so you start buying things and most of the things that you do buy you’re buying them for the wrong reasons you’re not buying them because you actually need them inside your operation

you’re buying them to avoid a tax bill for the most part and again this is why I’m saying I had customers that were making a million bucks cash but paying zero dollars in Taxes because they went out and bought you know three new combines back then you know those prices

have obviously changed now you may only need to buy one combine now to cover that but putting up buildings and just taking advantage of Section 179 depreciation than the IRS tax code there and ultimately those types of decisions yes they seem great at the time it seemed like the logical and wise

things to do to not pay that tax bill but I’m just also going to talk about where that led them as well now the problem with the greed phase is not only is the farmer stuck in greed but the banker is as well because back in that time frame just like back in 21 22 we had extremely low

Interest Rates and so it was like this freaking Spotlight was just pointed at all these potential things that you could buy for a lot of people that was Real Estate and this is why we saw a massive Inflationary time in Real Estate

where prices went up substantially 30 to 40% from 21 to 22 in a lot of places and even more over the past 10 years back in in 12 and 13 it was similar price jumps there as well but some things you know at least out in Western Kansas we had irrigated ground out there double literally double in a

year um just cuz we at $384 you know some of our Corn Growers out there making over 100 Grand on a circle now in Western Kansas that’s really good for some of you guys up north it may be a little bit different obviously you’re you’re raising a lot more bushels up there and

everything but the the truth stands though that these people they got blinded by greed because all this money was flowing in and the problem with this type of situation is when you have Real Estate prices going up then you have people that are going to start selling right the smart

people are going to start selling and then you have cheap Interest Rates and then you also too not only do you have greed on the farmer side of things you also have greed on the banking side of things as well and I tell you this because I lived it right from the when back in that

time in my life there being in my mid 20s and everything I didn’t know what I didn’t know things like that I didn’t experience this type of cycle before happening in farming and so from a perspective of a banker yeah you’re looking to make Loans right

because your commission or your bonus at the end of the year is going to be dependent on the amount of Loans and stuff that you were able to close and if we have cheap Interest Rates and we have everybody’s Balance Sheets that look super

solid because grain prices are high and guess what they also went ahead and changed the Real Estate that they did have to current market prices not expecting a rollover it blinded the bankers as well and it was super easy to lead people into giving them the money or the financing

they needed to go out and buy multiple million dollar pieces of ground there that ultimately long term they worked and priced out at today’s prices but the thing that we didn’t do back then and neither do farmers do is they don’t actually price out how that payment and how that

Loan will work out once we go back to $5 week or $6 week back at that time and so the reason I bring bring up the story to you is because the same thing happened in 21 and 22 and for a majority of our customers inside the likey farmer when they had these Profits

coming in I told them to sit sit just wait hold on to these Profits pay whatever tax bill you have and I’m not saying do zero tax planning do things that are logical and make sense don’t make careless Financial purchases that you’re making strictly so you

don’t have to pay Taxes versus actually being able to make a purchase that’s going to be useful inside your operation that’s what we see where we see people making this massive mistake but I told everybody to sit hold on to those Profits do not

make crazy purchases cuz John Deere was offering 0% financing these other institutions were offering you know 3 to 4% land Loans on 30y year 40-year terms at those prices ultimately that’s the first phase here that we get into and it’s this greed phase here that

everybody is blinded by and this this last time we went through this cycle here again 2122 I tried to tell all of our customers hey just just sit just chill do not use these Profits do not buy things you don’t don’t need or anything like that wait for the Fallout and

the Fallout is what we’re going to talk about inside the next two phases all right so phase two is what we’re going to call the fear phase because when you’re in this situation and again if I’m talking 2012 2013 are going to be phase one or greed years or 2021 to 2022 being

greed years this time then back then 14 and 15 were the fearful years where reality started to set in because we know longer had $13 184 wheat then we had things like $6 and $7 wheat porn dropped significantly and things just continued to go down just so you know back in that time frame on the run

up which was basically from 20 or from 2009 essentially Maybe 2010 up to 2012 and 2013 if you look at the numbers and look at some of the reports there put out by the USDA there was I think if I remember correctly don’t freaking quote me on this but if I remember correctly there was over 5.2

billion dollar made on the way up inside the a industry but guess what on the Fallout there was almost $6 billion do lost because people were not planning for this they were not paying attention to what actually is happening in the cycle and they were so caught up in that greed stage that they

bought things they could not afford and once you go through that stage and now you enter the fear stage which is a couple years later 23 24 for example we have Interest Rates increasing drastically and we have grain prices dropping and everybody that made these massive financial

decisions in 21 and 22 the fear is starting to set in as they’re going in they’re starting to update numbers they’re looking at all these purchases and if you’re not updating numbers then you’re screwed either way this is why all of our customers on Legacy farmer using

our software farmer metrics we’re able to plan for this because we were looking at hard numbers not just things hanging out there and going based on your you know your happy feelings you like to tell yourself there ours were based off the facts inside the numbers there but through these years

though is when that fear starts to set in and you can feel it I know you can feel it right people start getting scared you see grein prices drop and you see your operating line of Credit note go from 4% or 4.5% clear up to nine and a half or 10% there in one year right and so the

thing is though is that when you get into this year the freaking out phase really starts for you you start losing sleep you start stressing over the future years here and reality steps in and slaps you in the face and now you start guilting and shaming yourself or at least regretting the decisions

that you made in 21 and 22 because you did not make sound financial decisions you did things based on how you felt in the moment you were stuck in abundance you were stuck in greed your Banker told you yes we had 0% Interest Rates at the dealerships you were able to buy things you

were able to pay no Taxes and all this type of stuff here and now you’re stuck in the position where you know it’s coming because you can see what prices are doing and you know for a fact that where prices are at today next year when it comes to making your

Loan payments you’re probably not going to be able to make them you can maybe make them in 23 because you still have carryover Profits from 21 to 22 totally get that but the Fallout starts to happen in 23 and 24 when people are forced to try to make these

payments and guess what else is lurking in the darkness behind you that tax bill that you avoided and it’s coming right it’s coming and this now leads us into phase number three of this entire situation which is what I will call the convergence or the Collision phase here now back when

I was in the bank you know we had 2012 2013 with the greed years 2014 2015 were the the fearful years and then really back half of 2015 going into 2016 were the Fallout years so right now I would compare those years back then to 24 and 25 this year because if you’re paying attention and

you’re looking around your county or looking around your region and stuff like that you’re going to start to see some people start tightening up you’re going to start to see some things popping up for sale and things like that and it’s always going to be for the best reasons

you got talk to any Banker today if they’re willing to share any information with you they will tell you that they are freaking out right now because everybody every one of their customers is showing losses for 24 and 25 and these are the customers again that just lived high and mighty in the

greed phase right and because their Banker allowed them to do this as well and so I’m not just you know putting all the blame on Farmers or ranchers yes at the end of the day we’re the ones leading the business we’re the ones writing checks and stuff so at the end of the day yes

it is your responsibility but the bankers get attached to Greed as well and we start throwing out money there that is not always going to be in the best interest of you it may just be in the best interest of the bank and so during these years here the the Collision years here this is when

everything come to fruition right everything that you were worried about in Phase number two everything that you was keeping you up at night well now you have to actually live with it right and years like this year where we have $4 corn and five or $6 wheed and and things like that grain prices

just not near at the level they were a couple years ago now people are having to sell more grain in 24 and 25 because they have to make those payments from those decisions that they made carelessly back in 21 and 22 because they did not think about about pricing that purchase decision in a down

year they only looked at prices at that current time and not recognizing the cycles that we go through inside of the a industry so now they’re going to have to sell potentially all their grain that they raised in 24 this year just to make those payments but guess what they had to sell at the

beginning of the year the grain They carried over from 23 right or last year the grain They carried over from 22 into 23 and this is where the problem starts where you have this convergence of yes I’m GNA have to sell all my grain this year because I have to in order to make these payments

and to be able to you know fund my operation and things like that but then you have this carryover Income catching up to you and so not only are you broke be in trying to make your last payment but now you have this massive tax bill that you can’t avoid because you

there’s nothing you can afford to go buy and you’re not going to go buy new things at the higher Interest Rates that they’re at and your Banker is not going to none;">Finance it for you okay but the other part here too now is you have to pay all your your bank notes totally get that but then you have to take in all this Income and now you have this massive tax bill and so so now you have no way to avoid the tax bill and guess

what it’s built every single year because you avoided it back in 21 and 22 and now I’m sorry but you are going to just experience maximum level pain here this year and going into next year if you have lived this cycle that I’m talking about because now your operation is going to

have to be borrowing more money to pay these Taxes you’re going to look back and say why the hell did I buy the equipment why did I make this Real Estate purchase whatever it is and yes maybe you made it at cheap you know bought the ground at three or 4%

interest rate great good for you you still got that but can you make the payment at the end of the day Cash Flow is King and Cash Flow is what matters especially in bad years so the reason I bring all this up is because in these years 24 and 25 we’re going to

see a lot of sales happening in my in my opinion because this is what I saw back in 15 and 16 when I was in the bank is this is where people when reality hits them and they have to start making these payments and then then we have this Collision of all these phases coming into coming to a head here

yeah this is where people are going to go out of business and I saw this myself and we are going to see this time and time again and guess what history repeats itself over and over and most of the time the number one thing that gets us trapped here is our addiction to Greed right and so the thing

the reason I was telling you that I was telling all of our customers to wait to be patient to hold on to their Profits is because in years like this you know they’re scared just like they see everybody else around them buying stuff and buying ground all this stuff and

I’m like hey wait just wait because all those people that are buying ground going through the phases that I just talked to are going to be selling the ground as well and they’re going to have to sell it at a discount because they have to get it sold or the equipment or whatever

Assets they have there and so I want our customers to be in position where they were patient they waited and now they’re buyers at this low point in the overall economic cycle and then when the cycle goes high again now we become sellers or maybe you don’t become a

seller but you just hold on to your Profits at the time and wait for the people that are run by their emotions that are experiencing the greed that are buying things they shouldn’t to get to this Final Phase here where now they have to sell and then our customers are going to

be ready to start purchasing things at a discount I have seen this happen time and time again the farmers around you and the really good business owners that you see continuing to get bigger and bigger year after year what type of path do you think they take through these phases you think

they’re living in greed when everybody else is or are they holding on to their Profits waiting for these people that are driven by emotion and greed to get into phase three this final Collision phase and now they’re going to be ready to buy stuff at a discount put it on

their Balance Sheet and they’re going to repeat the same thing over and over again and this is why you see them getting bigger and bigger and more Profitable year after year so at the end of the day my friend if you are sick and tired of going through these

phases yourself I’m just going to tell you it starts off with not knowing where you at financially and it is your responsibility to become a student and really master your none;">Finances so that when we get into the phase of greed again you’re making calculated strategic financial decisions based on the realities of the market and where we at right now but while you’re doing that you’re also planning for what could happen in the future

so for example pricing out a purchase and the the greed stage and pricing it out at those grain prices they were at at that time but then also pricing them out in the downturn of the economic cycle as well that always happens so at the end of the day my friend if you are sick and tired of going

through that and you’re ready to make significant changes inside your operation then i’ invite you to click the link below schedule a call with our team on that call we’re going to learn more about your operation and your goals and your future and what you want to build there but

then it’s also going to give you an opportunity to learn more about us right and the way that we think about how a farm operation should be run you’ll get to see our system and our and our process that we built out working with 300 plus Family Farms over the past 5 years and ultimately

at the end of it we’ll decide whether or not we are a fit to work together if we are we move forward if we’re not no harm no foul so click the link below and schedule your free call with our team