DlO—Lancaster Farming, Saturday, February 9,1980 BY JERRY WEBB There is a strong feeling among some farm management experts that many farmers are going broke. And worse than that, they don’t even know it. Obviously, farmers have had some good years and some bad ones over the past decade, and maybe they think on the average they’ve done all right. But some of the financial wizards of agriculture are urging farmers to take a closer look at their financial situation and decide whether they’re really making it in farming or just living off of the in flated value of their far mland. Mike Kelsey, a Michigan State University economist, is one of those experts who believes farmers are borrowing money on highly inflated land and aren’t really seeing that their earnings aren’t keeping up. Kelsey sees a lot of far mers that he describes as being “mortgaged to the hilt and on the brink of bankruptcy.” In this opinion, those rising land values are all that are keepmg them afloat. When you look at some average figures for farming enterprises, it’s easy to see why some farmers aren’t getting ahead. A summary of farm management PIONEER. BRAND ALFALFA FOR™ LONGTERM STANDS That’s what you get with Pioneer®- brand “purebred” alfalfas You put them down and they keep coming up year after year after year And with the time, effort and money it takes tc establish an alfalfa field, it’s nice to know you won’t have to do it as often And the latest university yield tests prove it Where long term stands were measured Pioneer brand alfalfa consistently ranked at or near the top in tons per acre In Michigan, Pioneer brand 520 ranked first among 36 entries in average yield over a nine-year period four cuts a year since 1969 It was second in five-year tests At Shabhona, Illinois, Pioneer variety 524 ranked first for the 1975-78 seasons and also tops among 35 entries on a 1977 seeding In a five-year average at Rosemount, Minnesota, our 520 ranked second From 1977 seedmgs, our 524 and 531 ranked first and fourth At Concord, Nebraska, 520 ranked second among 35 entries in tons per acre of 1977 seeding And so it goes We’re not always number one But Pioneer varieties are consistently among the leaders Year aftc r year after year See your Pioneer salesman. He’ll help pick the best alfalfa for you. RiONEER Ml BRED INTERNATIONAL. INC EASTERN DIVISION TIRTON INDIANA «*072 The Limitation of Warranty and ramady appearing on the label la part of the term* of »ale Pienaar la a brand name, number* Identify varietie* •Registered trademark of Pioneer Hi-Bred International, Inc , Da* Moines, lowa, USA. Farm Talk Jerry Webb records from several midwestem states gives an indication of profitability in many farm enterprises. And the picture this analysis paints is pretty grim, especially when you con sider that these record keepers for the most part are better-than-average far mers. They’re being supplied with valuable analytical data that lots of farmers don’t even bother with. In other words, they know how well they’re doing on a year to-year basis. Here are some examples of their returns. Com far mers in the study made money seven out of ten years with an average income, or profit if you prefer that term, of 29 cents a bushel. In 1970 they lost 15 cents a bushel; in 1975 they made a dollar. But on the average they at least showed a profit, and they had more good years than bad ones. Beef men, on the other hand, lost an average of slightly more than a dollar a hundred over the 10-year period, with minus income figures five out of ten years. Their returns ranged from a high of $l6 a hundred in 1978, to a low of minus $24 in 1974. While beef men were losing their shirts most years, hog producers lost PIONEER BRAND ALFALFA SEED money only three out of the ten years, and showed an average profit of $4.11 a hundred. The midwestem records show that soybeans truly are the magic crop. Growers made money every year from as little as three cents a bushel in 1970, to $3 12 in 1973. Without careful record keeping and detailed analysis, chances are a fanner might not even know he’s losmg money Some enterprises do well each year and his revolving operating account is still in the black, and so he assumes he is doing all right. But Kelsey thinks farmers should monitor the situation more closely by putting together an operating statement to evaluate each year’s profitability. They need a monthly cash flow statement to determine exactly how much money is coming in and how much is going out and where it comes from and where it goes. He also thinks farmers should have a net worth statement to reveal whether the business is really making progress from year to year. The Michigan State economist believes that if a fanner can’t see an annual three or four percent in crease in earned net worth, that means excluding in creases in land values, then he should consider getting out of the fanning business. A five-year look at net worth should show a farmer whether his business is making progress, holding its own, or actually losing ground. But that net worth must be amved at without benefit of increasing land values. So first off, that must be subtracted out. Then it’s a simple matter of adding up everything the business owes and subtracting it from everything the business owns Kelsey admits a farmer who is using rising land values as a source of capital may be living quite well and give the illusion of success But, in truth, he’s not really making it as a farmer If that’s not important and his land values will keep him afloat long enough, then don’t worry about it. Or, if he’s a land speculator who buys and sells farmland and simply farms it as he has tune, then his mam interest isn’t farming and it really doesn’t matter how profitable that part of the business is. Some farmers who have inherited land or acquired it through some other non paying means have used that land to get started in business. It’s like money m the bank. But after a while they need to look back to see what they’ve done with that bank account. If they’re living on the spiraling land values and their ability to borrow against that, then their eventual failure seems inevitable. But if they’re making solid progress in accumulating capital and are earning more than they spend, perhaps they’re off and running in a difficult business that requires good managers, accurate records, and whatever toehold a farmer can gam. There’s nothing wrong with using land to get started. The difficulty comes when it hides other short comings and creates an illusion of success Schuylkill sets potato program RINGTOWN - The Schuylkill County Potato and Vegetable meeting will be held on Monday, February 18, 1980 from 10 a.m. to 3 p.m at the Rmgtown Ban quet Hall, Rmgtown. Richard Cole, Peter Fer retti and Robert Tetrault, extension specialist from the Penn State, growers and agriculture industry people will present the program. Topics to be covered will mclude: soil management, potato and vegetable insects, varieties, bhtecastmg and what’s the future of the potato industry. ★ Barn Cleaners, Manure Pumps, Manure Stackers, Silo Unloaders, Bunk Feeders, Feed Conveyors MARVIN J. HORST DAIRY EQUIPMENT 1950 S. sth Avenue, Lebanon, Pa. 17042 Phone: 717-272-0871 All vegetable and potato growers are welcome to at tend this meeting sponsored by the Schuykill County Cooperative Extension Ser vice. If you’d like further in formation contact Dale D. Moyer, County Agent - Agriculture, P.O. Box 250, Schuylkill Haven, Pa. 17972, 717-385-3431.
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