00:00 We are. Without any doubt heading into inflationary times. In fact, we've been an inflationary times. What does that mean 00:07 for you? If you are a producer, what should you be doing to protect yourself? What changes might you need 00:13 to make how will this be vastly different than farming just from a few years ago. We're going to cover all that and more 00:19 we're talking about farming and inflationary times with Lee luber's Gregory, South Dakota. 00:24 Welcome to extreme mags cutting the curve more than just a podcast. It's the place for insights. You can apply immediately to your 00:33 farm operation for increased success this episode of cutting the curve is brought to you by AG Explorer. With Innovative products that improve fertilizer efficiency protect yield 00:43 and reduce stress. AG explore helps maximize field potential find out how AG Explorer can help you get more out of your crop at Ag explore.com. 00:52 And now here's your host Damien Mason. Hey there we are talking right now about farming and inflationary times. I've got Lee lubbers one of the founding fathers 01:04 of extreme AG, this is Extreme as cutting the curve and we bring you everything from agronomics to soil Health to new products to trials to the business side 01:13 of farming, you know farming has this neat thing where everybody has this Nostalgia, they like the red Barns and 01:19 the old silos and that's cool. And there's this real family tie to it any folks a lot of emotion, but as 01:25 always point out farming is also a business and there are going to be some business challenges Lee before we hit record. You said there's a lot of guys out here farming that 01:34 are younger than 40 that have no idea what this looks like and what we might be heading into and you and I Agree, we lived through the 80s and we're not pulling that 01:43 walking uphill both ways through a snowstorm, but we are saying we've been here before your initial thoughts. Here. 01:49 We are we're recording this in November of 2022. We got here with a tsunami of inflation data, and we also 01:58 have interest rates that have pretty much doubled or more in the last six months. Talk to me. Well, the era of 02:07 cheap money cheap bikes. Yeah, it was great for the world of Agriculture, but it was not the norm and being a child of 02:16 the eighties and seeing the very high interest cost and what it did to operations just completely wiped out operations. The cost 02:25 of money was too expensive for what they could generate. I don't expect that to 02:31 happen. But one thing I pointed out to people and it Roy caught their attention when we get visiting they go well, it can't go back to 18 02:40 percent and I said, no it doesn't have to because we all handle so much more money and farming is so much more Capital intensive than 02:49 it was but eighties eight to ten percent money on what on the volume or handling is huge. It's a huge 02:58 bite out of your profit margin and cost of money is real and I think people need to You develop that mindset and what's 03:07 in the rearview mirror forget about the cheap money era look real quickly here because we're gonna cover a lot of ground and I like it. I'm glad you suggested this 03:16 by the way. So listeners, I want you to know Lee suggest this topic and I love it because we don't cover in quite enough 03:22 of this angle. I don't think and that's why I'm so glad we're doing this because this is really good stuff inflation doesn't mean interest rates. And I think that there's some people 03:31 that they love growing soybeans and man, they get really dialed into things like the the agronomic talks that we have about making 03:40 sure there's an adequate calcium in the sub soil strata. That's cool. But they usually shy away from the 03:46 business side of this and Lee. You've got an office you sit there you talk to me about making sure you got a great relationship with your Banker, you know your account looking 03:55 at all your numbers because it's a business so interest rate increases and inflation or two different things. 04:01 They've always gone hand in hand in the last time they did this. As you point out interest rates went to 04:07 18% by the year 1982. And you said they don't have to go there again. We're already talking about a huge increase in interest rates. 04:16 Somebody might be listening saying well, I don't understand why that's gonna impact me. 04:20 Give me a couple of the reasons why and and I I've got a couple of things. I like contribute as well. I remember the first year that we hit 04:30 right at a million dollar gross in the operation. And I remember we were working with a local accountant at that time before we moved to our current accountant and 04:39 they just stared at that and they couldn't believe they said we've knew I said I've never seen a farm do that before now we spend more than that 04:48 on fertilizer. Right? And that's because of two things the cost of fertilizers up and your size of operation and the course scale of 04:58 operations usually goes up because when you produce come out of these the margins are usually pretty thin so size and 05:04 scale is usually the game that you have to play to get your to your return. Yeah, and then also there's the 05:12 fallacy. Well, if you get bigger, it just gets cheaper. No the economies of scale will only take you so far then you plateau out then it comes down to 05:21 managing your business plain and simple no matter what your size is and we are definitely an inflationary times and generally if 05:30 you look back over history, it's not a six-month deal. It's not a brief shortage. It's a protracted period it can be two years to seven 05:39 years as things adjust during that period before they Plateau out again, or if they pull back you're still 70% higher than you was before. 05:50 You know fertilizer used to be urea 180 a ton. Now you're there's time for hitting a thousand a ton, you know, it takes a lot more to farm 05:59 than it ever did before so the cost of money becomes a real. Substantial thing when you're taking so much 06:08 more to operate. Okay, so I just want to throw this out there because I I mean we just talked about the commodity production is capital intensive 06:17 it is and usually have small margins. I mean this is whether you're making aluminum cans or corn when you are in commodity production. 06:26 Usually your margins are squeezed down to being not that great and you have a lot of capital tied up. It's the same way, you know again anything you manufacturers commodity or anything 06:35 if you mind copper whatever and so usually you're using loan to money. And so I got I just pulled this up in this 06:45 statement from Farm Credit Now, I don't really borrow operating money cuz I'm not a real farmer like, you know, like my manly 06:51 here but they have a operating loan that I I could use if I wanted to and they're telling me here that it's going up from 7.35% to 07:01 the new rate is eight point one percent. That's double from what it was say one year ago. Now the average person says wait entry operating money. 07:11 If you need to use a operating loan was four percent now, it's eight percent and they'll say it went up four percent Lee. It didn't go at four percent. It went up 100% when 07:21 you go from four to eight. It's not going up 4% It's going up 100% people like no that's not right. Look at it this way. 07:30 You need this pin that I'm holding in my hand for your business. And that's what money is money is an input and I think a lot of farmers don't think that way money 07:39 is an input just like buying fertilizer or diesel fuel money is an input. So if the cost of that money goes from 07:48 four to eight percent it essentially double because it just like if this gallon of Roundup or this 07:54 ton of fertilizer went up from four dollars to eight dollars, it's the same kind of a thing and I think a lot of folks don't get that because it doesn't seem real to them 08:03 that it's a doubling when it goes from four to eight and it absolutely is and you put that over your operating as much 08:09 acres and and Machinery Etc it becomes prohibitive doesn't Definitely, uh back about 08:17 10 years ago. I was sitting there at tpap down in Austin and they're in class and they brought in a 08:26 banking expert. Who consults not just with major banks in the United States and all the major AG Banks, but actually worldwide. 08:38 and he talked about the cheap money era and there was people my age and there was a lot of people that were 15 years younger than me, and they have never seen 08:48 a true cost of money. They have farmed in the era of cheap money easy credit. He said you do realize and this 08:58 person is very intelligent. This is what he does. He goes. The average cost of money is seven and a half 09:04 to nine and a half percent. He says that's what you should be paying and the crowd just gasped and they said we can't do that and they go get 09:12 ready. It's coming back. It will come back. So the shock of what it is now people need to realize we're just starting to enter the more 09:22 normal zone for cost of money. I mean your Capital expenditures. That's how that's what it is. It's that's how you're gonna secure your inputs. 09:31 So that just increase the cost of inputs right there not counting the actual input themselves going up as we've 09:40 all experienced here in the last year, you know, we went to contraction now, it's big ancient. So we're dealing with multiple inputs 09:49 that are 20% to 100% higher. Then we're adding cost of money increases on top of it. 09:57 Yeah, so really the interest rate and inflation stuff goes hand in hand. And if you know the person listening this like why 10:03 is that well, we're raising it. We're not the Federal Reserves raising interest rates to contain inflation. And so it ends up being a double whammy as lead just 10:12 said this stuff you're buying the gallons of stuff the inputs the you know, whatever it is is more expensive. God knows look at diesel right now. 10:21 And then also to you to get money to buy it. You're also paying more for it. So we've got this real increasing cost Arena. And 10:30 so we're talking about how to combat that. So let's get into that. You got really rapid increasing costs for 10:37 the goods as well as the money to attain the goods. What do you do? It's time to make sure you have a very good relationship with 10:48 your lender an open relationship and sit down and talk about it open late and like hey, this is where we're headed. 10:57 What do we need to do and try to come up with ideas in times like this? It's definitely 11:05 Well, there's inflationary pressures and there's also supply chain. We're dealing with so securing your inputs, uh doing 11:13 that earlier is to your advantage for two different reasons. A to make sure you got it and then also usually 11:22 you're getting paid well on it for your cost of money because they're usually going to be higher in three six or twelve months when you're an inflationary 11:31 period. All right, let me stop you right there. So first off your first recommendation was we're we're heading in a 11:37 time where money is starting to have its true cost versus the artificial Arena we played in for really 11:43 what the last decade for sure the last five years when you're talking about 3% money on land at 4% operating money, whatever it even it was even lower than that in 11:52 some cases. So meet with your lender because if things are really good people get that wrong. Oh I got I gotta go with me at the bank or things are bad. Maybe you should meet 12:02 with the banker when things are good. Make sure you've got a plan in place, right? 12:06 Absolutely that relationship is so critical for everyone's success your success and their success because your intertwined there 12:15 you're working partner. We sit down with our bank actually multiple times a year. We have it coming up 12:24 here within the next month and it's not just tax planning, but we're going to sit down and go through our 12:30 whole operation and we are going to be sitting there going to marketing. Also we're going to have our accountant in the room and everything up in the screen and 12:39 we are going to do scenarios for the next 12 months of okay fertilizers up another 20% How does that affect our bottom 12:49 line? We already know seed is going going to go up one of the biggest increase is and probably a decade. We're all gonna deal with that start 12:58 running essentially shocks scenarios, like okay if we're gonna add 20 30% on input 13:06 Died increases how does that affect our bottom line with today's markets? How do we manage that risk? So it's basically it's 13:15 looking a big picture strategy and I think that's very important be more proactive instead of going. Oh man. What do I do? So what I 13:24 like right there you just said when you give it the lender, it's not just hey, how you doing and and drinking coffee? It's let's do 13:30 some scenario ice. Almost I call it situational planning. Here's a 13:36 hypothetical situation, you know, the big bank they talk about stress tests where they do sort of War games. If you will what if we 13:45 have to absorb 20% more cost here, then you're just running through those scenarios and it's pretty easy you're looking at a spreadsheets and then boom it 13:54 punches out what the answer is, right? Exactly and they're and most of them are already doing it internally on you and all the 14:03 customers anyways, because that's how they keep. Competitive Edge and that's what you want to do. Also. So really it's if you 14:12 can just get what you have that relationship where you share that information. You can start to see potential weaknesses months ahead 14:20 before anyone else does and all of a sudden the weakness becomes a strength because you're ahead of the eight you're ahead of that all yeah, you're on top of things. You're 14:29 gonna get it handled. Yeah, so me with the lender, but don't just meet with them and shake hands and yuck. And yuck sit there and actually do situational planning what if and 14:38 then plug those scenarios into a spreadsheet and you're gonna know where your weaknesses are where your vulnerable and what you can do right now to protect that obviously the 14:47 old thing used to be Get short get your money line get your cheaper money lined up as long term as you can well that count that 14:57 you know that horsepower left the barn right? You're you're dealing with current interest rates, unless you somehow have a situation 15:03 where you can retroactively go back and set an interest rate. You're probably dealing with these current rates. Should we lock these in is it going to get worse? Sounds like it 15:12 is in the next year, right? If you haven't done anything by now, I I wish that a person would have 15:21 I mean, they're very good window to do that proactive lenders were actually talking about that. So that 15:27 that's one advantage we have over the 80s. I think a lot of people have done that with their lenders. But yet still day-to-day operating a person 15:37 is exposed to a much higher cost of money and going forward. So I'm not what you call I don't think a pessimistic person 15:47 but when I meet with our accountant and our lender and we look at big picture and we dig down into our operation. I'll 15:53 ask. Woody what do you see that we could do better. What are we doing wrong? Wordy your ratio if it's 16:01 moving from green to Yellow anything's changing. What do you see because we want to stop that yellow before 16:10 it turns the red, you know, that's what we want to do because that's you don't you want to avoid problems so you got 16:18 I find an interesting you talk about sitting down and you even ask what what do we need to be doing? And 16:24 I don't think that enough operators do that. They don't you know, they like the idea that they're independent rather than looking at listen. Let's make the bank our business partner because we 16:33 might have some vulnerability here heading into this kind of a situation and there will be there's gonna be some 16:39 stress. I mean, we're in a really good situation right now Lee commodity prices are good farming comes 16:46 gonna be really good this year and we got But there's going to be some stress. You're thinking come next year, right? 16:54 Well, there's going to be that time coming regretfully when. Being dropped three or four dollars a bushel corndrops two 17:03 dollars start doing that shock testing your operation. Things change in a hurry and it it's not being Doom and Gloom. It's just part of the cycle. And so 17:14 the more you can do to stay ahead of that through meaning your risk by good marketing plan securing profit relationship 17:23 with your lender working relationships with your key suppliers. You're all on the same team you're in this 17:32 together and start treating people like they're on the outside. They're your enemy. It's not it's not gonna lead to good success long-term. 17:42 So we're gonna talk about inputs. That was the next thing because I want to stay on the lender and the spreadsheet stuff which again I know 17:48 this is probably boring compared to folks that just love to talk about how to get an extra bushel of wheat out of a field but this if 17:54 there's not the money and you don't have this going there's no next year to worry about that extra Bush Louie. You've got a substantial 18:03 you said when you first grossed a million dollars your farming operation the accountant just stared at the numbers now, he's been more than that. I'm fertilizer inputs are 18:13 a big expense. You got to have them there's a window to buy them. There's always these deals maybe we should, you know, sign up with the retailer in 18:22 the fall and that companies want to get stuff sold and get the money before the new year. Then there's the tax planning Etc. What's your strategy and inflationary times on input 18:31 Lee? It's a multitude of things. It's a relationship with your lender sitting down going to things to your accountant talking to 18:42 your key suppliers. Well ahead in advance for the next year about availability how to secure things. What's 18:51 our best buying opportunity. It could be buying products and having them in storage and insured because the cost of 19:00 them you don't have a fire take a half million dollars out of your pocket ensuring those with your insurance agent. There's 19:06 a multitude of things it comes down to Look at your risk you define your risk. What are they and then try to come up with ideas? How do 19:15 we manage that? And that's how we look at everything in our operation Define a really, you know, usually Lee 19:21 it made sense to not hold anything. Let let the retailer down the road hold this stuff because a it's something that I 19:33 got to put under a roof and have space for be why let my money be tied up. I'll just go get the crap come March April, but that mind shift 19:43 change mindset changed with availability issues all the sudden we knew that China wasn't producing the inner ingredients. So therefore the 19:52 chemical couldn't work or couldn't even get bottled up or whatever. Now it's a different thing you're saying 19:59 it might be supply chain, but also might be smart to buy the crap when it's a deal and in other words, you're holding it versus waiting and paying 20:08 more for it later. I'm wondering if that's what I'm hearing. Is that what you're saying? Yeah, we will hold the physical product or we will have an 20:17 agreement. We'll have a written contract with the supplier where they are holding it for us, but we know we're guaranteed because 20:23 we went from Easy ready available about everything to just in time inventories as companies were starting to Trends transition into that 20:35 prior to covid to now it's like we don't have it. There isn't even the inventories at times. So the era has changed so we have 20:46 to change with that. Is it cheaper now? I mean, I know that companies want to get rid of stuff these talk about you can buy your seed 20:56 and you pay less if you pay for it by like December 31st. Those deals are going around right now in the 21:02 countryside. Yes. Absolutely and reach out to your people and that you work with and start having those conversations. I am 21:12 surprised that how many deals that there are out there in the industry for as tight as inventories are and how elevated prices 21:21 are compared to even a year ago. So here's the thing. I just talked about eight percent money at Farm Credit. Can I justify buying something 21:30 now that I don't need until May here it is, you know six months from now when I'm paying eight percent the point really simply there is I've got to save 21:39 more than eight percent on the input to justify paying for it now, right? 21:43 Yeah, but I'm surprised how many people are offering retailers are offering much better discounts than that. So you're 21:52 still getting paid well for your cost of money, even though the cost of money is substantially higher. So if 21:58 you can swing it and maybe some folks can't because they're a little bit tight. But if you can swing it if you're paying eight 22:04 percent for your money, but you're saving 15% on an input that you don't need to make is still smarter to buy the input now and pay for the interest. 22:14 Money saved his money made. There you go. All right. So we're talking about farming inflationary times. What about the fact that 22:23 the Machinery my God? It's already always mind-boggling. They're gonna probably be able to push along some big numbers. What's your strategy on 22:34 farming inflationary times on Machinery? Should I just go ahead and roll out? Some old case 1570s Miami 22:40 auction for $8,000 and have 40 year old machines out here, which I do. Uh, I guess really find what works for you. There's individual 22:50 operations where they make the role where they flip everything each year work, but that's going to start that's changing now 22:59 with the cost of money because that's increasing that amount that you have on loan substantially. So that's going to increase people 23:08 that are flipping equipment each year quite a bit. Then when you start taking half million dollar pieces of equipment they go. Well. Yeah, it's going 23:17 up 12% for this next year. Well, there's 60,000 more dollars for the same item as it was a year ago. That's leading this to a bite. 23:26 We're seeing that in combines. We are selves we do every piece individually and then we look at it for how long 23:36 we want to run it to one at pencils out. Actually. I have it in the other part of the office. I have a four-page spreadsheet that 23:45 I went and Every piece of equipment of substantial value which is most things anymore. Yeah. 23:53 but all out and What year it is? How many hours we have on it? How many hours or Acres we put on per year? 24:02 And what we feel we are very proactive in preventive maintenance what we feel the lifespan is in our operation and 24:11 when maybe that's going to come into a trade schedule and that has been a huge tool 24:17 not just for ourselves but for our lender and our accountant because we can use that to our advantage in either low income 24:26 or high income years. We can start moving these pieces around where it makes a lot more sense to the business and also you're not 24:35 walking into your banker and going well. I need trade five things. You can start a bite here a bite. There isn't great times. 24:44 It really comes out to your advantage but that for page Bridge simplified so many decisions. You don't own 24:53 enough Machinery to farm all of your Acres at least Harvest all of your acres and it's you said before we record it. It's not necessarily because 25:02 of the management of the iron its management of human capital. It's you and your brother and what to hired guys that farm those Acres there. Yeah, 25:11 and so that's not enough to run six semis and three grain cards and you know five combines you hire that done. 25:21 An inflationary times does it hiring custom work? Smarter or less smart for your bottom line. It doesn't matter. 25:32 It's worked in Prior times and it's still works for us. Now. The irons always been the easy part of the equation. You 25:41 can always find it. Somebody's always gonna write you a note for it. But at what cost but then you've got to have capable people to run those pieces of equipment then when 25:50 you're not harvesting then okay, we need to have trucks on the road. We have to do this we have to do extra things to keep people employed where we've we 26:00 crunch the numbers on. Buying versus hiring and we look at that every year and we look at what's to our best Advantage. So we own one machine 26:12 that we maximize out and we run a lot of Acres through and it's very in that works out very cheaply per acre for us. But 26:21 to go to three or four machines. Then our cost goes way up for capital of machinery and of people 26:30 our cost breaker gets very elevated in a hurry. So we are doing it this way where our custom Harvester is 26:39 starting in Texas with cruise and all the way to the Canadian border. He's spreading it out over multiple months 26:45 multiple jobs. So we're getting somewhat. We're getting that cost Advantage when we're paying by the acre. I will 26:54 answer me this we we're Wall Street Journal sends me, you know headlines on my phone all day long and I I just got 27:03 the one this morning that you're over your inflation now is up 7.7% We've come down from 8.2. Of course that excludes energy and food 27:12 which are two items which I've always Marvel at the government when they don't admit how bad things are. Well, yeah with the exception of energy and food. Well, there's two things that 27:21 I need every single day. I need my heat to And so I'm not freezing in my house. I need to be able to get to work as gasoline. And I also need to eat. 27:30 But anyway, excluding those things 7.7 percent. What about the person that comes to you and says, hey, I'm a 27:36 younger guy and I really look up to you Lee, you know, you got a good operation you give good advice. I'm having a record year of 27:42 Revenue. I'm having a really good year on my farm because it's a good year. I mean unless you're we're out west where 27:48 the yields were really hurt by the rain, but say around my part of the world looks like we have tremendous yields here in 27:54 Northeastern, Indiana. I made a whole bunch of money. This equipment's gonna keep going up. We got, you know, seven to ten 28:01 percent inflation. Maybe I should just buy a bunch of equipment. Now it get as much money off my books and I can maybe I should be over equipped because 28:10 that machine is gonna be worth. The inflation is gonna make it so much more cost prohibited to buy two one two and four years from 28:19 now should a person go crazy buying equipment this year to a get money off their Folks and B buy it before it goes up another 10% per 28:27 year for the next three years. We're fans of building working capital and Every piece of iron you buy no matter what color it's a 28:38 depreciating asset. It's a cost of doing business. I love what I do for a job, but every piece of equipment we use 28:47 doesn't matter if we wax our tractors and our sprayers are combined. It doesn't matter. It's still a depreciating asset. There's a cost to it. 28:55 And the person the person that says the person is yeah, but that's just for taxes that you depreciate your taxes. The heck of it is if the new ones are 29:04 going up 11% next year and I buy it this year. I made 11% on this thing refute that Not necessarily dealers are 29:14 going to make sure they make money. Who do they make from? Well, they make it from customers. So it does it 29:21 does become somewhat complex because I can see people making this argument. I actually was on your side, but I have proposing the thing for 29:27 Pitt pretending that I wasn't so you'd say just because times are good doesn't mean go out and over equip. Uh, no, I don't think so because Good Times 29:36 only lasts so long and yes bad times only lasts so long, but we know tougher times will be coming in lower lower grain 29:45 prices that that's part of the cycle where big fans of working capital. That's what your lender looks at. What is your working 29:54 capital ratio? Yes, we are updating two pieces of equipment we were able to well we felt was a good deal and 30:03 we are updating a sprayer our second sprayer and one main tractor But we're not getting carried away because working capitals came. 30:16 What about and by the way to the person that's listening this and says, hey man, I really love growing crops, but I'm not sure all this business 30:22 stuff. I didn't really like to take my accounting class working capital Define it in three sentences to really simplify it. 30:32 staying in business That's three words. We're in capital means the money that you've got that you can dig into if I 30:41 would say is the money you can dig into regardless of Revenue. Is that a good way of looking at it? We know that we're gonna build a pay our bills based on Revenue coming 30:50 in but the money you can dig into to keep the business going. That's how I would Define it simply that makes sense. 30:57 Very much. So when times get tough you want to be the last guy in the room when they turn out the lights that's that's the reason. Okay. So from farming 31:07 and inflationary times talked about the lender we talked about the spreadsheet talked about really doing a stress test for your operation. And then you 31:13 talked about inputs. Then you talked about it's smart to go ahead and buy stuff if you can get 15 20 25 percent discounts to pay early. You 31:22 can just buy an 8% operating loan if you can get it because you're getting a deal it might mean you have to Warehouse some stuff, but it could also make you money 31:31 in doing so that's one way combat inflation. You talked about Machinery if it's smart to move it. Yes, but that's not that's not use increasing prices of Machinery raising 31:40 excuse to go on a buying frenzy at the Louisville Farm Show and say I'll buy one of these one of those one of those 31:45 Okay, what else do I need to know about farming and inflationary times? These are these are good times. I mean 31:54 there I I have not tried to come across a cynical during this podcast. I mean there are opportunities out there. I mean, it's a good 32:03 time to be farming. Yes, the business aspect is critically important and yes, the happiest I 32:11 am is boots on the ground out in the field the office is you know, not my first place I want to be but a lot 32:20 of the business ideas that my brother and I come up with they are out in the field. They're not sitting in the office. We're out doing things and then it leads 32:29 to a conversation and then it leads to a conversation with our lender or there's times. I just pick up the phone and I'll call 32:35 her account and I'll say hey Adam. I've got this idea. What do you think and Bounce ideas off your sounding board. 32:45 If you have an actual Board of advisors for your operation, that's great. But really use your working Partners as your sounding board 32:57 to discuss these things and say what are your thoughts or what are you seeing out there in the farming world? And sometimes 33:06 they're seeing Trends developed before you even do. Yeah, and if before the other guy 33:13 Your money ahead. Yeah, I agree on the sounding board and the one thing that we didn't touch on because we talked about a lot of the things that are involved in farming and the one thing we talked about 33:22 scenery all the crop inputs from seed to chemicals fertilizer and we talked about the money the one input we haven't talked about you have 33:28 no farming operation. If you have no land right now land in my part of the world is up 100% from 33:34 75 to 100% from where it was safe for years ago. Maybe it's not quite that where you are right now. 33:43 With inflationary times and higher interest. Are you a buyer? Are you neutral on property? We have just bought a piece 33:53 of property and the numbers made sense and it worked for us. And yes, we are elevated like every other place in the country. It doesn't 34:02 matter where you are prices are up substantially. But we're not getting the mindset of like it's just gonna keep going up and up 34:13 and up and up because I've talked to Land Management groups and some very large egg lenders out there and they said we've seen 34:23 huge increase here, but it's going off and I mean sometimes no matter what it is. Everything's got to go and just take a 34:33 breath for a second and I think that kind of seeing in land does it mean it's gonna drop again? No, but it's kind of like we're kind of at a 34:44 pause period right now and some of the land and by the way, that's probably situational maybe in Arkansas down where Matt 34:53 miles is they're not in a pause, but they'll probably get there because the trend usually is you're saying Lee is when you've 34:59 got elevated prices through inflation Etc demand a bunch of people got case they will put it somewhere and then you've got these interest rates going up. We've 35:08 seen this before it can't run forever. So does it go does it crash? Yeah, probably not but it's also doesn't it doesn't go up 25% 31% 35:17 is what it is here year over year 35% income building that forever, right? 35:24 Exactly up from some of the good sources that I use and work with. When we've talked it's kind of like the consensus there 35:34 is some of that what the excess cash it was there from that period it's been parked in property. Now when you start 35:44 looking at a land note at eight nine percent it starts to lose this luster. So that's what's kind of led to that. I think the plateauing effect 35:53 to a certain degree. It hasn't dropped. It hasn't dropped anywhere from what I'm saying or anyone else, but it's kind of hit. 36:02 It's level for I think now for what available excess money is out there that was willing to get parked into property. Yeah, I mean 36:11 if it hasn't depending on where you're listening, you know, we got people from all over Wisconsin to Nebraska to North 36:17 Carolina's whatever it it may maybe is not right in your neighborhood doing that. But the point is in general that's what will happen and is happening 36:26 in places where that it's a leveling. It's it's it's had a huge Ascent at a level and it probably will decline. So 36:32 your answer there was you said you're a buyer, but you're not going Whole Hog on buying. Is that what I'm hearing? 36:42 If it makes sense, we're all in but it's got to make sense. You know, I mean, it's we don't buy for ego. We don't 36:51 do it on an Impulse. It's a business decision. So if it drops if the land you just bought drops 15% Are you still okay? 37:01 It's not gonna hurt us because we were lucky enough to be proactive. We bought we have a good laying base that was bought at 37:10 a much. You know lower price than what we are now and and no not believe in cost averaging every piece 37:17 of property has a stand on its own. I'm a firm believer in that and so is anybody who's a well-versed and AG econ that 37:26 cost averaging does not work so but even though but we do it but Farmers love to do it. They dollar cost average from the acre. They're buying 37:35 today to what they bought back in 1997 and you're not really supposed to do that, but they do it. 37:43 Oh, yeah, it's it's out there. I mean people everybody can do what they want. Yeah. 37:48 It's it's their operation. But that's not how Lee and Terry lubbers are gonna do it. I mean, we're in 37:57 it long-term. We're fourth generation. It's it's gonna, you know, it'll be the fifth someday and so on. It's it's a it's World Legacy based business 38:06 and we're not gonna stay that way by doing rash decisions. Okay, so you talked about all the inputs and 38:12 including land and your point was if it makes sense and into the person that says right now man, I don't know interest rates are high Etc. It may not make sense for them. But you're saying 38:21 that situational situational based on your numbers. Exactly. Yeah. Sit down with your lender and crunch the 38:30 numbers and run some scenarios. Like you said if it drops 15% how is that gonna affect me? Is it is it 38:39 gonna throttle my business my whole entire business down then you got to ask yourself. Is that pride of 38:45 ownership worth it right? Even if you'd love to own it. Is it going to be worth? Is it worth jeopardizing your operation for that piece of 38:54 property? I love the topic. This is from the from the season veteran. That is Lee luber's Gregory South Dakota close us out here last thoughts farming inflationary times. 39:03 What's your final thought final quip final sound bite for our listeners? If you choose to be a proactive ride the 39:12 wave and you'll be successful through it last time this happened to us. It lasted quite a while. It lasted really from 81 82 until 39:21 arguably the mid 90s. It was a it was not just a year. It was not just a two years. It was about a 10 to 15 year run. I 39:30 don't see that this time to you. It may not probably won't be as long but it's going to be a protracted period and yeah, 39:40 the inflation wasn't a problem for all that time, but the damage to AG with interest rates inflation and then the bottom falling out from a lot 39:49 of reasons for lack of demand foreign foreign problems. And then the interest rate damage. That's what 39:55 lasted I'm saying. Yes. It wasn't inflationary times for the whole run. The hang of The Hangover was rough. It was traffic it. Yeah, it 40:04 wasn't around. So anyway, you're not thinking we're gonna have that. All right. His name's Lee Loopers. My name is Damien Mason. Thanks for being here. So next time we appreciate 40:13 you being here. That's Liam Damian check out more of our great stuff and until next time this is Extreme aspective. Thanks for listening to another edition of cutting the 40:22 curve for more information that you can apply to your farm operation. Visit extreme mag. Duck Farm, are your crops dressed out and explore as 40:31 you covered with a full line of products to help. Picked your crop from environmental stressors such as cold and wet or heat and drought check out AC explore.com and 40:40 start protecting your yields and profits.