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12—Lancaster Farming, Saturday, April 14,1984
Brockett’s Ao Advice
Bt aB By John E. Brockett
B Farm Management Agent
Lewistown Extension Office
Capital spelled with a big “C” is
one item that is required in a farm
business. The range in farm land
value in much of rural Penn
sylvania is 1000 to 4000 dollars per
acre. Dairy cows even in today’s
reduced market cost 800 to 1500
dollars each. The average
established dairy farmer has a
machinery investment of $45,000
and a building investment of
$55,000. Replacement costs for this
investment would be two to three
times their present investment.
Cash crop farmers would have a
bigger machine investment but
probably a lower building in
vestment.
A typical com and alfalfa farmer
needs about 100 dollars per acre to
“get the crops in the ground each
spring.” That is for seed, pesticide
spray, fertilizer, lime, twine, fuel,
and other cash machine costs.
Small grains such as wheal or
soybeans require somewhat less.
Many sources
Borrowed capital comes from a
number of sources. Most people
are aware of the usual sources
such as banks, Farm Credit and
Farmers Home Administration.
Other sources are from the cash
value of life insurance policies,
machinery and supply dealers and
individuals. The cash value of life
insurance can be a low cost loan
for crop needs or to pay off a short
term note. One word of warning -
even though the cash value part of
insurance is your money, the
amount you borrow from it will be
deducted from the face value of
your policy if you die. Therefore it
is not money to be wasted.
Farm machinery, supply and
service dealers are often forced
into being lenders. That usually is
not their business, thus you may
expect to pay a premium for the
borrowed money. Sometimes that
borrowed money is in the form of
an amortized note. Sometimes it is
just an unpaid bill. Individuals are
probably the biggest source of
borrowed money. Some of it is in
the form of installment sales
where one peison sells an asset to
another person over a period ot 2 or
more years. Other people lend a
farmer money on a demand note.
Co-signing a note at the bank can
be a form of mdividaul lending. It
can also be disatrous to the co
signer if the original borrower gets
into financial trouble. No one
should co-sign a note that he or she
could not pay if the need arose.
Non Borrowed Capital
Some people can save enough
money to provide start up capital
for a farm business. This is dif
ficult but certainly the discipline
learned in the saving process can
help that person succeed in a farm
business. One source of non
borrowed capital is the 4-H project
breeding animal. It may produce
offspring that become the nucleus
of a herd of cows or pigs or goats.
Capital may be acquired by gift
or inheritance. Wisely used it could
help a person start a viable farm
business.
Capital Replacement
A farmer does not have to own
all of his or her assets. Some assets
can be rented, some can be
borrowed, and some can be
acquired by trading. Land and
buildings are the easiest to rent
and can usually be rented cheaper
than owning. Machinery that is
used for relatively short periods of
the year is a good candidate for
renting. Neighboring farmers can
cut capital costs by trading work
or the use of machinery.
Share cropping may help one
farmer get some crops without
owning or cash renting land, while
it helps the other farmer get crops
without owning machinery.
There are other types of share
farming - some of them may be
considered as joint ventures while
others are actual rental
arrangements. Example I: Far
mer A owns a farm with a dairy
barn. He no longer wants to milk
cows but does wish to continue
producing crops. Farmer B wants
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to build a dairy herd and likes to
milk cows. They form a joint
venture where Farmer A furnishes
forage, corn, bedding and facilities
and Farmer B furnishes cows."
Farmer A pays all crop expenses
and Farmer B pays all dairy ex
penses. The milk check is split 50-
50. This would be a joint venture
with both parties actively engaged
in their own part of the farm
business.
Example II: Family A owns a
farm in Mifflin County, but lives in
Chester County. They have no
intention in working on the farm
but do want to keep it in the family
for a number of reasons. Family B
wants to farm but can’t afford to
buy all of the assets. The two get
together and agree that Family B
will pay Family A fifteen percent
of all income as rent. Thus, Family
A shares some of the risk of the up
and down cycles of the agricultural
markets. This would be a rent
arrangement.
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Available From: Your Pioneer sales representative.
NEWARK, Del. Scientists at
the University of Delaware will
again be participating in a national
plant pest survey during the
coming growing season. The
survey is funded in part by a grant
from the U.S. Department of
Agriculture’s Animal and Plant
Health Inspection Service
(APHIS). Over 30 conventional
and no-till corn field sites
representing a variety of soil types
around the state will be involved.
The joint plant pathology/en
tomology project is being super
vised by entomology technician
Lisa GaUivan. Under her direction
field scouts will sample plantings
for insect, weed and disease pests.
Their findings will be reported
weekly on the University of
Delaware Cooperative Extension
Service crop pest hotli"°
IONEER
BRAND
SILAGE INOCULANT
MAKES GOOD SILAGE EVEN BETTER
Del. survey
to continue
Much of the information will also
be transmitted to a computer at
Fort Collins, Colorado, as part of
the National Plant Pest Survey and
Detection Program. Scientists m
Delaware and other participating
states will be able to access weekly
summaries of survey findings.
According to extension pest
management specialist Joanne
Whalen, the survey is intended to
detect the presence of new crop
pests as well as to determine when
and where common major pests
are active, so that they can be
more effectively controlled. By
computerizing this information,
local entomologists and plant
pathologists in pest management
programs such as Delaware’s can
predict insect and disease out
breaks based on pest activity
further south.
1177
m.
PIONEER.
SEEDS and* INOCULANTS