Farm debts, taxes, wills don’t let them swamp you
agent Roland Freund, to an IT •/
BY DEBBIE KOONTZ
LANCASTER - "In 1980, on the
average, farmers in the United
States owned 85 percent of their
operation,” said Virgil Crowley,
Penn State farm management
specialist, at a Farm Debt seminar
sponsored by Extension. "This
means that he/she. only owed
approximately 15 percent, on the
average.”
And though that may sound like
a very optimistic and often
unrealistic figure, it can be
surpassed by Crowley’s next
statement: “In Pennsylvania the
debt load tends to be lower. Far
mers owned 87 percent of their
operation, on the average.”
But, as Crowley further pointed
out, it’s not "the average” which
should be of concern, it’s the in
dividual farmer’s case; in other
words, the critical point is what
percentage he/she owns and more
importantly, how much someone
else owns of this property.
But he extended his positive
attitude to point out that, "When
we look at total number of farms,
the total of debts owed has not
changed much in the last few
years. The value of farm assets
have pretty much changed with the
debts to balance it out."
Crowley was speaking, along
with Extension farm management
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audience of about 30 farmers and
agri-business workers who
gathered for the day-long seminar.
This seminar was one of three
parts on farm economy as
scheduled by Extension.
Part two of the triad came
Thursday night under the direction
of Fred Hughes, also from the
farm management department at
Penn State, and M. Elvm Byler,
attorney from Lancaster, both of
whom updated and reviewed the
changes of the estate inheritance
act passed last August.
Freund and Crowley attempted
the task of persaudmg farmers to
keep good records during the farm
debt load seminar held Tuesday;
although both admitted to realizing
that fanners tend to leave this task
to the wives while they enjoy
working m the field.
But, said Freund, “You must use
farm records to tell you where
you’ve been and what the farm is
doing to help you decide where
you’re going. You need to in
corporate the use of financial,
production and operational
records m your bookkeeping. Most
people, if they didn’t have to tell
Uncle Sam where they’re going,
wouldn’t keep records. ’ ’
Field work can be.done by just
about anyone but record keeping
can’t-; And to emphasize this point,
Freund said, “Pay tor field work
and farm labor would be about $3
or $4 an hour. But to pay someone
to handle records on your farm
would run about $3O an hour. And
the flow back to you for having
done these records will be about
$5O an hour.”
Freund went on to urge farmers
not to just stop at keeping records,
but to keep tract of all ex
penditures and input. “Don’t give
away things that people can forget
about; get the money then or at
least keep tract of it. And keep
tract of what you owe too,” he said.
"Ideally you’ll want to keep
counts on each enterprise of your
business to see what’s profitable
and what isn’t,” he added. “Keep
one for the cattle, one for the hogs,
one for each major crop. ’ ’
Crowley reaffirmed Freund’s
advise by saying, “If you do one
thing good on your farm, then it
ought to be keeping records. If you
somehow convince your wife to
take care of records, then you
should sit down with her and help
or at least know what she’s doing
so that when she says you can’t
attord something, you can believe
it.”
Crowley also pointed out the
advantages ot having a cash tow
statement prepared. Farm cash
Lancaster Fanning, Saturday, February 27,1982—A29
flow is the flow of money into
(income) and out (expenditures)
of the business during given tune
periods yearly, quarterly,
monthly, weekly and daily. The
complete cash inflow to the farm
business includes not only the
receipts from the sale of crops,
livestock, livestock products, and
miscellaneous receipts but also
services performed such as
custom work, sale of capital
assets, and money from loans
acquired.
On the reverse side of the com,
the outflow of cash from the
business includes operating ex
penditures for such items as feed,
seed, fertilizer, repairs, interest,
labor, capital expenditures and
withdrawals for family living and
personal obligations and with
drawals for savmgs and in
vestments.
His report stated that the mam
purpose of the statement is to plan
financial transactions in order to
have money from income, savmgs,
and credit when obligations
become due for operating ex
penditures, debt repayment,
family withdrawals, etc. Cash flow
can help determine the size of debt
payments and when to make them,
when to make major purchases,
when credit must be obtained, and
when excess funds are available
tor discount purchasing, savings
and investments.
Following their bnet talks,
Freund and Crowley examined
several farm situations with the
audience and let them determine if
each was with good financial
standing and the potential of each
to receive credit through use of
farm records.
Thursday’s estate planning
seminar also dealt with use of pad
and pencil in calculating farm
worth, but this time the topic of
concern was application of wills
and the taxes they don’t incur.
- Hughes, again, urged attendants
to make' wills ahead of time.
“Harmony is much better among
family members when a will has
been made telling who gets what.
You’ve never seen families feud
like they have over inheritance,”
he remarked.
Byler shed a positive light on to
the subject of wills and farming in
general, saying, “Everv change
from this estate inheritance law
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