Retirement, a declining cowherd, and an investment for the future
We hear it almost daily and have for years. A generation that loved the cattle business and used a cattle farm to help sustain their families. In a fast paced competitive driven world, the parents of today have had to move to larger metropolitan areas to be able to support and sustain their families and those that still do live in a rural area many times have no interest in farming. So this brings us to our topic. RETIREMENT, A DECLINING COWHERD, AND AN INVESTMENT FOR THE FUTURE.
RETIREMENT… Many people 60+ that have had a lifelong love for the cattle business and have had 80-200 acres that they have farmed are looking to slow down and either their children have moved away or they have no interest in the cattle business. So the next portion comes into play. The herd sellout of the cowherd which is leading to A DECLINING COWHERD nationally. Once the older farmer sells out his or her cowherd they are left with the question of what to do with their land. The upkeep of maintaining a pasture with mowing constantly is to much so they decide to plant the pasture in pine trees. Here is where the INVESTMENT FOR THE FUTURE comes into play. Throughout Alabama and Mississippi established pasture in a rural area consistantly brings $2,500 to as much as $3,200 per acre. And established pine plantations that average 5-6 years old bring around $1,500 - 1,600 per acre. If it is growing your assets for the next generation you are looking at, why not sell the pasture ground and buy timberland. We can take 100 acres of pasture that has a median sales price of $2,800 per acre which is $280,000 and take commission and closing cost out and you are left with roughly $260,000. If you take that $260,000 and use a 1031 like-kind exchange you can grow your acreage 60-70% and have 160-170 acres with a five year old stand of trees. You kept land so your future generations can use and enjoy it, but you increased your acreage and you also got a five year jumpstart on your timber investment. And that would be a WIN, WIN, and WIN situation. You enjoy your retired years… You help out the cowherd by not taking ground out of pasture… and You grow your investment for the future.
As our motto says… “MONEY GROWS IN DIRT… BUY LAND!”
