A4O-Lancast*r Farming, Saturday, April 20,1985
What does it mean to be able to
maintain liquidity in the business?
In the typical farm operation this
means that the business is able to
pay the bills as they arrive, meet
all the debt repayment obligations
as they come due, and still have
cash to meet family living needs. If
we get behind m any one of these
areas, then we have a liquidity
problem.
A liquidity problem may be
short-term. With planting season
coming up, those who have not
planned for it, are going to have
problems paying for the seed and
fertilizer, because there is no
immediate additional income to
cover those expenses.
A short-term problem can be
avoided by carefully preparing a
cash-flow budget, and then seeing
how you can provide for these cash
needs from farm sales. The cash-
flow budget will help you to
determine if you need credit, and if
so, how large an operating loan you
need to apply for in order to meet
cash needs for the entire year.
If, at the end of the accounting
year, all annual operating ex
penses cannot be met from the
annual income of the farm, then we
have a chronic liquidity problem.
The usual symptoms of this
“disease” are increasing dealer
debt with feed companies and local
dealers, not being able to make
loan repayments on time, or not
being able to buy clothing and
shoes for the children.
What can you do if your bills are
piling up and you can’t keep your
creditors happy?
The old solution was to go, with
hat in hand, to the friendly banker
and ask him for more credit to pay
off these feed bills etc. If he
financed these obligations for you
on a three-year note, then you were
paying for a “dead cow” for three
years.
If you had equity m your farm
land, the bank may have helped
you out by refinancing the farm. In
effect, what you were doing then,
was equivalent to selling your
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farm land back to the bank so that
you could contmue to farm it.
Each time either of these things
happen, your burden of debt, and
your interest obligations grow. In
the longer term your liquidity
problems increase, and the
“chronic disease” can easily
become a terminal one.
If the old solutions won’t work
today, what should we do? Here
are steps to take:
1. Carefully evaluate your
fmancial situation-prepare an
accurate balance sheet which
shows all of your current, short
term, and long-term obligations,
and the current, working, and
fixed assets of your business. Be
completely honest with yourself
and others.
2. Outline the cash-flow
projection for the coming year as
accurately as you possibly can.
3. Discuss your situation with
your accountant, your bankers,
and your financial advisor. Be
open to their suggestions - even if
you don’t like what you hear.
4. If your long-term chances of
survival are not good, plan to sell
out while you can salvage
something, and make a fresh start
where your labor can return you
something on which you and your
family can live and enjoy life.
If you have good indications that
your business can survive if you
make some adjustments, make the
following adjustments on paper:
• Identify unprofitable en-
terprises, and under-utilized
assets, such as machinery or
underutilized leased equipment.
• Discontinue unprofitable en
terprises and concentrate
resources where they can make
you money.
• Liquidate assets. That means
sell those assets that you have that
are not absolutely essential to
maintaining the business in a more
profitable and reorganized form.
This may even mclude selling farm
real estate or a portion of it. Use
the proceeds from sale to reduce
debt.
Ph. (717) 464-3321 or Toll Free
(Area Codes 717 & 215)
1-800-732-0053
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Solving liquidity problems
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• Reduce your cash expenses,
wherever it is possible to do so and
still maintain profitable produc
tion, by using forage testing and
ration balancing, soil tests and
manure analysis, field scouting,
production records, and health
checks.
• Return high cost and un
lessor, and so reduce your
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Search
By Boris Weintraub
National Geographic
News Service
WASHINGTON, D.C. - Because
none of the major food crops is
native to the United States,
American plant scientists are
forced to import seeds from the
parts of the world where those
crops originated.
The result is a nasty in
ternational squabble that some
have called “Seed Wars.” The
developed world stands accused of
“stealing the native heritage” of
developing nations, which in turn
are accused of not helping to breed
new crop varieties.
Most crops originated in the
Third World, where farmers grew
them for centuries on a subsistence
basis. But in recent years,
breeders have taken the germ
plasm-the genes that determine a
plant’s charactenstics--and
developed new varieties that have
vastly increased productivity. This
was the basis for the “Green
Revolution” of the 19605.
HARVESTING BENEFITS,
PROBLEMS
One effect of this development
was that for the first time, Third-
World farmers had a surplus to sell
for profit. This became important
as population in such nations
continued to grow and to become
more urbanized.
Most experts now agree that the
WE UPS
ANYWHERE
• Plan ahead to rent seldom
needed equipment to be sure that
you can get it when you need it.
Renting skid-loaders, equipment,
and even large tractors, from
dealers or neighbors for the few
days in a season that you need
them, is much more economical
than owning them.
• Select from the above those
actions which best insure the
for new crop varieties
helps
touch off *seed
new practice had not only benefits,
but also unexpectedly undesirable
results. In many places, the use of
new hybrids meant that the genetic
diversity provided by traditional
varieties was lost--a serious
problem if an older variety had a
resistance to a disease or pest that
the modern variety lacked.
In addition, burgeoning, in
creasingly urban populations led
local officials to build housing and
new cities in what had been rural
areas or rain forests. Once more,
this led to the inadvertent loss of
wild varieties of crop plants, with
their invaluable genetic diversity.
The more vehement critics of
these developments are led by a
Canadian author, Pat Roy Mooney,
and representatives of several
Third-World nations. They charge
that seed companies are taking
native germplasm out of
developing nations, breeding new
varieties, and selling them at a
profit to farmers in un
derdeveloped countries while
destroying their heritage of
traditional varieties.
At the very least, critics say, the
International Board for Plant
Genetic Resources, operated by
the United Nations Food and
Agricultural Organization, should
make all seeds available to Third-
World farmers at no cost.
Both seed-company leaders and
officials of the U.S. National
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chances of your business survival
and prepare a conservative cash
flow projection of your best
solution.
Put your survival plan into
action. Just as with a fruit tree, it
is sometimes necessary on the
farm, to cut out the dead wood, and
prune back severely in order to
maintain health and fruitfulness.
wars 9
Germplasm System scoff at the
criticism and advice. They say
that no seed company would un
dertake the long, costly effort of
developing new varieties if it
couldn’t make a profit.
UNIVERSAL HERITAGE?
In some cases, Third-World
countries have refused to give
foreigners seed that could have
helped them recover from crop
disasters caused by pests or
diseases.
“Our philosophy and our policy
is that plant germplasm is a
heritage of all mankind and should
be freely exchanged and used,”
says Quentin N. Jones, fhe U.S.
Agriculture Department’s national
coordinator for germplasm.
“Seed collectors collect only a
very small sample, and we always
have local botanists or breeders
with our people in the field,” says
Jones, a collector himself. “The
collection is always split right
down the middle with the local
people.”
Jones finds it ironic that
Ethiopia refused to let collectors
have seeds for a native variety of
coffee to help fight a tree blight in
Central America last year.
“I’ve had Ethiopian government
people right here in my office
asking for germplasm from
Ethiopia that no longer is available
there,” he recalls. “We said.
‘Sure,’ and we gave it to them.
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