The $10,000 Question

What can you buy for $10,000?

Julie and I drive a 10 year old Chrysler Town & Country. It is big enough that I can fit 4×8 sheets of plywood in it or a couple of 300 gallon tanks or, more simply, our 4 children with comfort. We paid $10,000 for our minivan a couple of years ago when we bought it used. Our previous van had been stolen (along with 5 dozen eggs, my favorite hat and my favorite knife)! $10,000 is about a third of the price of a similar 2014 van.

Our first house cost $30,000 and we had to put in $10,000 worth of improvements before we could move in including hooking on to city sewer and water, repairing the foundation, updating the wiring and replacing the furnace. $10,000 bought all of that…furnace, concrete, wiring and plumbing.

Now, I don’t know who you think I am. I don’t know what you really know about me. I’m not the kind of guy who keeps $10,000 just laying around. My pockets are only so deep. We had a couple of guys out to estimate a pond dam for us and they said $10,000…with more of a firm quote coming.

Sigh.

Can I afford that? I also need a loader tractor. The clutch needs to be replaced on our tractor. Julie wants to build a house…or at least put a roof on this house. I need to plant about a bazillion trees. I need to buy about a bazillion cows…well, maybe 5 or 10 more (easily $10k). There is no end of things I could spend money on…including replacing our minivan. I would love to buy Julie a new ring (lol). Can I really justify buying a 1-acre pond?

You know, I have found that I can justify just about anything. It’s just a matter of approaching the matter from the right angle. SO. Today I’m going to justify building a pond. I don’t know how I’m going to pay for it but at least I’m going to lay out why I think it’s a good idea for us. First, here’s a rough-out of the pond from the top down thanks to Draft Logic.

NewPondMy friend Steve says I will never regret having additional water on the farm. I suspect he’s right but this isn’t the pond he was rootin’ for. He wants me to make a single, larger pond instead of a series of small ponds over time (this is just the first). I would like to have it higher on the landscape than this but still, it’s pretty high. There is a lot of bottom ground I could irrigate from this pond if needed. Beyond the extra water, we will gain a dam we can drive across to get to the pasture beyond. The hills here are pretty steep…steep beyond what I would be comfortable mowing. The creek beds are washed out to the point that it’s hard to get a tractor across them too. The grazing on the steep south-facing slopes is sparse and the steep north-facing slopes are covered in moss. Not much grows here. A couple of thorny trees, a little scrap iron and some sparse grass that went to seed early. There are dry dams on two of the three valleys that feed into the pond area and a pond dam uphill from the other so the pond shouldn’t silt in any time soon. Here is the proposed pond area as it sits today. The dead tree to the left is around 18′ tall.

Pond1

And here is my concept of what the pond will look like. I spent a whole 5 minutes with mspaint making this picture.

pond vision

What we are talking about is a serious benefit to the water cycle, a benefit to the wildlife, a benefit to the livestock, a beautiful feature that will improve my farm’s value and something of lasting value for generations to come. I joked in a post called The Return of Surplus that we needed to bring resources back to the farm and this is a perfect example. Further, by making this investment now we will be able to increase biodiversity and, thus, compound our return over time. Just think of the fish, frogs and turtles. Think of the bald cypress I could plant. Think of the way it will moderate temperature. Think of fried catfish! But the water is illiquid. I will never get my money back without selling the land it is sitting on. Once that money is spent it is gone. That’s it. It’s either pond or loader tractor. Pond or cows.

But once the pond is built and stocked it’s here to stay. There will be nothing more to do for generations to come. Similar to the ponds grandpa built maybe 60 years ago, I’ll be leaving the farm better than I found it.

Can I justify it? Yes. Can I afford it? Ugh.

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16 thoughts on “The $10,000 Question

  1. Mmmm. Biodiversity. Beaver. Damn buggers keep plugging Our big pond…. You might build in a beaver proof system somehow…

    • That’s a question worth considering. In part because cows are the most expensive they have ever been. In part because I don’t have sufficient infrastructure on the farm to survive a drought. Just imagine if a storm took out our power for two weeks in August. Additional water sources give me options for handling unexpected situations. I guess the last bit is because we have whittled our herd down to a core of functional animals. If I go out and buy more I’ll have to whittle away more.

      On the other hand, if I could buy some Holstein steers in the fall and keep them over the winter…

  2. Sounds like you may need a ranking framework to help with prioritizing decisions. At my work we use Kepner-Tregoe style analysis to help rank decisions. The simple version is list all the alternatives (tractor, ring, roof, pond, etc) and rate them all on multiple dimensions in order to get a final ranking. In my day job we use things like NPV, environmental impact, and risk as the dimensions we rate. I think NPV is always applicable, but other items to consider for farm specific uses might include enhancements to productivity, reduction of labor or time, impact on comfort, impact on fertility, or really anything that has value to you. The idea is then to rate each; the simplest way is to assign each a 0-10 rating, then sum the ratings for each (or you could apply weightings to each dimension: 10% to comfort, 50% to NPV or return, 20% to fertility, etc), and sort by relative value to get a prioritized listing.

    • I’m afraid I’m strongly biased toward the pond. It fits the “Do something” criteria, it’s big and impressive, it’s “for the future”. Will it, on its own, cashflow? Probably not. But will it boost fertility by 30%? Will it help me grow 25% more grass? I don’t know what that even means man. The change in management to high-density rotational grazing has given us more grass (and many, many more amphibians) than previous years…or maybe it’s just the rainfall. Or both. How do I rate calves? More work. How do I rate a pond? More fishing. I’m really the wrong person to assign numeric representations to subjective values.

      I understand the theory. I also understand my own bias.

      • It is difficult to overcome a bias, understanding it is the first step. The ranking method helps call them out, but no one says you can’t overrule the ranking. But at least you’d do it deliberately.

        I know, who doesn’t want (another) pond? My humble 3 acres came with a .2 acre pond, and I know exactly where I could fit a second .2 acre pond. But my only reason to do would be because I want to. Maybe that’s good enough? … Well, at least until I talk about it with my wonderful wife 🙂 I guess it’s time to get serious about raising ducks and fish.

  3. Here in the west, water is like gold. And not just now with our drought. My water/pond bias may come from my father being in the water business. You need to store it when you can get it. Cattle seem high priced now, so you can wait on them. Are front end loaders high now? May build the pond and a loader will come along later when other money is available.

  4. The bean counter in me was going to say make your money work for you first. Buy feeder steers, sell them back into the feeder steer market ~5-600 lbs to make the higher feeder dollar vs meat price, take that money and pay for your dugout in the spring. But you were thinking about B&W’s and I don’t know anything about them but have read they are not that weather hardy so might be better to try in the spring? see item F on page 2 of
    http://www.extension.umn.edu/agriculture/beef/components/docs/holstein_feeding_programs.pdf)

    Sounds like your decision is for the pond so moot point. So what do you get for 10k? Is that dug with a hoe? If so what do you think about Greg Judy’s advice to hire a bulldozer for 5k rather than the more expensive hoe? How many # gallons would the pond hold? Is it big enough to store a supply through a 2 yr drought so you are bullet proof and worth every penny for that peace of mind alone? If the power went out for 2 wks it is close enough to the yard you could pump water so that is a plus too. How deep is it? Do you have a high water table to fill the pond or would your still get enough surface run off from your selected higher location?

    On ye olde fish farm we had a series of 4 fish ponds 100’ x 500’ each and you know how you sometimes gently suggest in your blog the idea’s everyone has of romancing the farm vs the truth and the work involved? … Well there could be a little romancing the idea of the pond too. I could suggest that attracting wildlife means bird predation of your fish but I think you already have a stocked pond and that doesn’t seem to be a problem in your area. We had thousands and thousands of frogs which is a nice sign of a healthy envir but… I debated abandoning the arctic char and trout to harvest and make Monty Python Crunchy Frogs instead! lol https://www.youtube.com/watch?v=Dy6uLfermPU

    So that leaves mosquito-breeding area (no the frogs didn’t put much of a dent in them), algae blooms depleting the oxygen in your water and killing your fish, cold winters freezing ponds solid (when pond not deep enough) and killing your fish, moderation of temperature – ? never experienced it. The Cdn Prairies are a dif climate than you though..

    You for sure could make a nice little picnic spot to go fishing and maybe have a little fire pit for pan fry breakfast to go with your fresh milk, cream and berries yum! That private Al Fresco white table cloth restaurant has to be worth 10k alone! How soon can they come and start the dig?! 🙂

    • That’s an interesting article you linked to. January is significantly colder in Minnesota than here. Besides, I haven’t read much in land grant college papers that play out well in the real world. They still rip soils, spray poison and park cattle.

      The holstein thing is another Steve suggestion. He just raised a pair of steers to finish along with his jersery herd. Holy cow! those are big cows. And that’s the point. I kinda need a team of giant solar-powered bulldozers. Or I could just try to put a few pounds on them with my excess stockpile and cheap spring grass, gaining fertility and pasture condition along the way. I mean, heck, we’ll cut our last cutting of hay around Sep. 1. The alfalfa will continue growing till mid-October then it will freeze and leave stems full of weevil standing until spring. It would be better to graze that alfalfa off quickly as it begins to recover from that final cutting but I’ll have a really, really hard time covering 17 acres with 6 cows and 5 calves. And then I’ll have another 40 acres of stockpile to gobble up. If I could buy beef calves I would but I suspect I’ll have to pay an absolute premium for them in the current market. Dairy steers would still be high but not prohibitive…maybe. Gordon Hazard says to buy lower-quality cattle when markets are high, focus on quality when prices fall. But is that for me? Really? I don’t know.

      But as you say, when it comes down to it, I just want another pond. If I can afford it.

      • I hear you on those papers not being that relevant. Once is a while you come across one that seems a bit closer… Cornell did research on MIG grass fed Holstein steers and reported a 2.25-2.44 ADG (ave. daily gain), put them on hay for the winter and had intended to grass finish them but I cannot see a follow up report on that. http://www.nnyagdev.org/reportarchives/NNYADP04BeefReport.pdf
        Your friend Steve has real data having done so himself – any chance he would share details – start/finish weights, ADG, did he butcher them and can report on marbling etc?

        Thinking outside the box on your pasture condition, fertility and excess do you ever think about doing some custom grazing? Like maybe this Fall when you don’t have to worry about the liability of the fescue with someone else’s cattle and to graze the cut alfalfa? With a pond on your slate vs buying more cows, it sounds like you have enough excess to warrant bringing in a small herd? It might be something to think about setting up as you may have surplus for a few yrs while you are increasing your pasture fertility and production, growing your herd and market and with a new pond would have no water worries? You could still be fertilizing and conditioning your pastures using cows you don’t own. With cattle markets high everyone around my parts has extra cattle right now and imagine it is the same down there so might not be hard to find 10-20 head? Maybe even your cousin who used to lease there would send over some of his cattle? Seems like a win/win – mostly thinking of your land fertility but you could make a little cash too? Like getting paid to move your cattle everyday for a change! 😉

        Thinking outside the box again – this time on your ponds … as you ultimately want to build a series of ponds have you considered buying your own equipment? Some people in my area have done that digging their own ponds, plus sometimes charge (discount rate) to a neighbor to dig one for them too. Then they sell the equipment back through the auction within a few mths and end up having very low cost ponds or if they dug a few other ponds for neighbors, maybe even made a little money. Course it all depends on the buyers at the auction you return it too…

        Interested in checking it out? I see you have a Ritchie Brothers Auction in Chicago – check it out at https://www.rbauction.com/ Sign up for an instant acct to get a password then sign in and search the Auction Results. I did Construction, Excavator <20k and see in their IL May auction two 9’ sticks sold – one for 10k the other for 15k. Or if you prefer, switch to Dozers and two sold btwn 10.5k-11.5k. Ritchie’s even provide shipping and will give you a quote online. My ex operated a high hoe one summer mostly digging dugouts and with lots of experience with farm machinery it was easy for him to pick up right away. Btwn you and your dad it could be doable if you wanted to have your own Pond Digging Palooza? Next IL Auction is July 30th. If your dad goes with you warn him this ain’t no farm auction at the concession stand – i.e. I'm pretty sure their pie comes from a cardboard box vs the local farm wives, so you might have to treat him when you get closer to home lol!

        • That’s a lot to respond to. I could borrow some cows. Maybe. I am stopping myself from shooting the idea down and listing the reasons it wouldn’t work “here” because I hate people who shoot things down and list reasons it wouldn’t work “here”. It probably would work…and would work well. It’s way outside of my comfort zone. We did consider allowing city folks to buy cows and pay us to maintain their herd. The ultimate in investment diversification. But sometimes hard decisions have to be made…

          I still have my collection of Tonka toys from childhood. My kids play with some of them. You have no idea how badly I would like to own a bulldozer. And dad can operate one as can a number of nearby cousins. But I think I draw the line before we get there. I can do a number of things and can do them well. I kinda think I should outsource the risk of ownership and the liability of containing a million gallons of water to another party. But it would be cool. And it would probably pay off. I also want a trencher. And a baler. And a no-till drill. And a loader tractor. And…

  5. I know what you mean about bringing other people and their livestock onto your land. When I first bought my farm I said no too, then once I got to know the various neighbors and their husbandry then chose one.

    Yeah I guess with your first pond you are creating a dam too so not quite as straightforward as digging a dugout that just catches runoff. So real Tonka Toys are not in the cards for the first one but maybe after you see how it is done and in the future have a simple dugout to build you might get your chance to drive one! I look forward to hearing about the dvlpmt of this first pond/dam in your future blogs.

    Other people’s Cows vs Other people’s Meat – nothing new to you are CSA presales freeing up your cash but here is one you can take a look at the financial detail on. I recently came across an article about the guy’s father who immigrated from Holland 25 yrs ago to the prairie province of Alberta in Canada. http://www.canadiancattlemen.ca/2014/05/07/you-can-learn-a-lot-about-grazing-yearlings-from-a-dairy-man/ He MIG grass feeds their 65 head dairy herd moving them twice a day using Tumblewheels with his e-fence. These look like a time saver that I had not heard of before – likely would get hung up in your tall fescue but cool… http://www.gallagherusa.com/electric-fencing/portable.component.aspx?mktprodid=771

    He wanted his son to come home and take over the farm but the son is an Engineer out east in Ontario and started a Beef CSA. He presells his beef for the yr, starting in 2010 with 14 head and in 2012 was up to 39 head now at $9.50/lb non-certified organic. He delivers a box of beef to his customers once a mth. He posted all of his “Grazing Day Summary’s” starting in 2010 detailing all of his revenue and expenses – interesting to see – (2010 breaks down more detail than he shows in the following yrs) http://www.grazingdays.com/?s=grazing+days+summary&searchsubmit=

    A dozer, a trencher, a baler, a no-till drill, a loader … if you won the lottery we know what you would be buying!

    • If I won the lottery? Really, my chances of winning are not diminished by not playing. Hmmm. What would I do with a sudden windfall of cash? Would I quit my job? Would I buy more land? Cattle? Iron?

      I think I would ask my four children to claim the prize together, then encourage them to lock that money away in a trust or something that can’t be touched by greed or vendetta. Would a million dollars buy a dozer? Sure. But only if it is part of the vision.

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