Brocketfs Ag Advice
Keys to financial success
You can be whatever you want to
be - maybe - if you are realistic.
If may also take more work and
effort than you are willing to put
forth.
Do you want to be a success as a
farmer? That certainly is a valid
and obtainable goal.
But think about it; are you
willing to make those sacrifices
that will be necessary? They only
start with long hours. After that
come the others:
• Low return for the tune and
effort.
• Making decision after decision.
• Spending time and effort on
records.
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717-463-2161 717-264-3533
VALLEY IMPLEMENT WALTER 6. COALE, INC. OXFORD GREENLINE,
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Harrisonburg, VA 301-734-7722 Oxford, PA
707-434-9961 215-932-2753
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SERVICE Lebanon, pa DISTRIBUTING
Greencastle, PA 717-949-6501 West Clifford, Pa.
717-597-3138 717-222-9020
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By John E. Brockett
Farm Management Agent
Lewistown Extension Office
• Learning to live on a variable
mcome.
• Budgeting income to meet
expenses and debt payment needs
now, two months from now, six
months from now, a year from
now.
• Dividing family income from
business income.
• Learning how to make
decisions as to which investment
will give the best return rather
than make the best impression on
the neighbors.
• Learning to recognize when
you have made a mistake, then
being willing to make corrections
rather than excuses.
Fanning today is not the same
as it was 20 ago. Un
fortunately those of you who have
started to farm in the last ten years
must be superior managers or
have a lot of backing or have a
spouse with a very good job.
If I were to put a grade on the
level of management for you to
make it in farming, it would go like
this:
• Those who started prior to 1960
need a grade of 5 with a 10 being
perfect.
• Those starting between 1960
and 1970 would need to have a
grade of 6 to 6.5 depending on the
type of farm and when and where
the start occurred.
• Those starting between 1970
and 1976 would need a grade of 7.5
to 8.
• Those starting between 1976
and the present would have to
grade in excess of 8.5 or 9.
Is that fair? No, it is not fair, but
what is? Remember, no one ever
said that you had to be a farmer.
Repaying debts
Debt Repayment Ability (or
D.R.A.) is the key for any farmer
or prospective farmer who wants
to be a successful farm operator. It
riots not make any (.uterence how
much equity you have in the farm
assets, if you cannot generate
enough income to pay the debt
service you will fail.
Too often a lending agency will
lend money solely on the equity
value of the collateral offered
against the loaned money, without
considering whether the farm can
pay the loan off or not.
No matter who makes this kind
of recommendation, it is WRONG
and does no one a favor, even the
lender who may be trying to get out
flf a bad situation. All farmers who
truly desire to I be successful
businessmen in their chosen
profession should calculate their
debt repayment ability before
borrowing one red cent. If it is too
late to make this calculation for
that first loan, it should be made
before the next loan.
D.R.A. is actually fairly simple
to calculate. Take your total farm
cash income not counting the sale
of one-time capital assets such as
timber or equipment or land.
Deduct from that the total of (cash
expenses not including interest +
unpaid accounts - prepaid ex
penses made for next year) and
estimated family living allowance.
The difference is the amount you
can pay on interest and principal
(debt service).
Do not co-sign a note or offer
your farm as collateral for a loan
Upjohn offers hog scours report
KALAMAZOO, Mich. A new
management report on the in
cidence of scours in hogs is now
available from The Upjohn
Company.
The report covers both bacterial
scours and bloody scours,
discussing the incidence of both
diseases in a hog operation and
what can be done to reduce the
outbreaks of each disease. Also in
the report is a discussion of the
options available to producer
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Ephrata Exit New Rt 222 •'i Mite West on Rt 322
Turn left onto Pleasant Valley Rd
= STIHL M
NUMBER ONE WORLDWIDE
Lancastertthhlnc, Saturday, April 6,1955-E7
for someone else, unless you can
afford to pay off that note or are
willing to risk losing your farm. If
you are willing to take the risk
because it is your child who needs
the loan, you should at least
require that person to push a pencil
to see if it will work.
There is nothing sadder than to
see a parent lose their farm
because a child bit off more than
he or she could chew. Yes, it may
well be the only way that person
could get a start, but at least see
what the odds are.
Analyze the potential return. For
a dairy farm, a top operator can
probably handle a maximum of
35% of cash income as debt
payment if the family can live on
no more than 10% of the projected
cash income.
An average dairy farmer can
probably handle 20 to 25% of cash
income as debt service if the
family can live on 10% of cash
income.
For crop farmers, use 25% and
17% in place of the 35% and 20-25%.
Add in the ability to put 10% of the
gross aside in above average years
to take care of below average
years.
For livestock farmers, use 20%
and 15% as reasonable debt ser
vice percentages for average
projected gross cash incomes.
Remember that these figures
are based on operating expenses of
55% cash income as being good.
should bloody scours occur in an
operation.
Included in the report is expert
advice on how to manage hogs to
lower the incidence of these
diseases and treatment procedures
to follow when the diseases strike.
A single copy of this report can
be obtained by writing: Hog Scours
Management Report 3, The Upjohn
Company, P.O. Box 5087,
Kalamazoo, Michigan, 49003.