Brockett’s Ag Advice
« By John E. Brockett
V Farm Management Agent
Lewistown Extension Office
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The gamble* in a farmer
Last week I mentioned a
statement made by a gambler. -A
few days later my youngest son
was playing what he calls his
favorite “exercise” song. It was a
Kenny Rogers hit called “The
Gambler”.
Part of the lyrics go like this:
You got to know what to keep and
what to throw away You got to
know when to hold up, when to fold
up when to walk away and when
to run.
The gambler in the song is telling
a young man how to handle life and
advertsities in the way he knew
best, through cards.
There is a lot of the gambler in
every farmer. Fanning is one of
the big gambles of the business
world. That is why there is a
sentence on the bottom of the
Schedule F that says “Do you have
amounts for which you are not at
W-L Alfalfas.
Why grow anything but the Best?
Hinnn
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risk in this farm?” Risk means
“the possibility of suffering harm
or loss involving uncertain
danger—expose to possible loss. ’ ’
A Major Decisioin
Sometimes a farmer will buy an
asset that at the time appeared to
be a reasonable purchase gamble.
The difference between the suc
cessful and “in trouble” farmer
may be the ability to recognize
when a certain asset is no longer a
feasible investment.
Sometimes the cost of keeping
the asset is greater than the actual
return from the asset. Then the
fanner must make a decision to
either keep the asset at the cost of
reducing family living, selling the
asset to maintain family living, or
finding a way to reduce operating
expenses in order to both keep the
asset and maintain family living.
NO ONE likes to sell an asset for
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a price below the price he or she
paid. However, there may be no
choice.
In poker, the only way to get
additional cards is to throw some
(discard) cards away. In real life,
the only way to keep a viable
business may be to sell some
assets even if they have to be sold
at a loss.
Income has limits
There are three basic things that
must be paid from income if a
family is to remain viable. The
first demand on income is usually
“Family Living.” Many farm
families have trouble calculating
the actual cost of family living.
Family living includes the usual
items such as food and clothes. It
also includes the personal share of
such dual expenses as taxes, in
surance, electricity, phone, and
car.
Then do not forget personal
taxes, contributions, insurance
premiums, and any other expenses
paid from the farm account that is
a personal expense.
For many families the second
most important cost is “Debt
Payment”. No one has trouble
calculating it, because the lender
won’t let the borrower forget.
Third is operating expenses. In
many situations this is the only
flexible outgo. The service or
supply dealer may have to wait
(unpaid bills). Or a family may
become more efficient and reduce
“I plant my 900 acres with W-L Alfalfa
because it gives me tonnage and quality.
We’ve been planting WL since the early '7o's,
and we’ve had all their varieties as they've come
along Right now, we’re using the WL 316
heavily I like it best because it comes back
quickly and stays fine When you’re doing as
many acres as I am, that leaf-to-stem ratio is
important And we haven't had to spray for bugs,
which says something about their pest
resistance
Our customers want to see a good product, so I
need a seed that will give me a good tonnage
and high protein levels With WL, I believe I'm
growing the best"
_ When we have an economic
situation such as we have now,
income will drop no matter what a
farmer does. More cows or more
acres or more units of anything
may be the worst answer.
The additional units may in
crease gross income, but may
increase costs even more than they
Dean Stuart
Corning, NY
* «* m
v Nv » V*
Lancaster Farming, Saturday, March 8,1986-Al7
operating expenses.
Once these three costs are
satisfied, the balance of income (if
there is any) becomes
discretionary income. That means
it can be spent in any way the
family desires. It could be invested
in something outside of the farm,
saved, spent for capital items, or
wasted.
It could even be used to improve
family living. That could be a
danger if income dropped in a
future year after the family got
used to the extra income.
If income drops
State meat output up
HARRISBURG
sylvania’s January commercial
red meat production, dressed
weight basis, totaled 86.4 million
pounds, up eight percent from
January 1985, according to the
Pennsylvania Crop and Livestock
Reporting Service.
Beef slaughter, at 117.3 million
pounds liveweight, was up 21
*rv>m Tannarv 1985. Total
increase income. There may be
additional debt costs or additional
labor costs or additional machine
replacement costs.
If these additional costs are
greater than the income they
generate, they will hasten the loss
of the farm. That is why some
farms are in trouble now.
The manager never figured the
cost-return relationship. I would
hasten to add that some farmers
did figure this relationship at the
time such additional costs were
incurred. Their problem has
primarily happened due to a
change in the farm commodity
prices.
Now these particular farmers
may be faced with the most dif
ficult decision of all; sell hard
earned or acquired assets, reduce
family living drastically, change
direction, or go out of business.
head slaughtered was 98,300, up 18
percent, and liveweight averaged
1,193, an increase of 31 pounds.
Veal slaughter was 4.4 million
pounds liveweight, three percent
below last year. Calf slaughter of
25,900 head was down six percent.
The average liveweight increased
five pounds to 170 pounds.
Hog slaughter, at 30.6 million
pounds liveweight, was down 14
percent from a year earlier. Total
head slaughtered was 131,800 down
13 percent; average liveweight
decreased four pounds to 232
pounds. Lamb and mutton
slaughter was one million pounds
liveweight, down 28 percent. The
number slaughtered was 9,200,
down 31 percent. However, the
average liveweight increased four
pounds to 110 pounds.
Penn-
U.S. commercial red meat
production in January totaled 3.48
billion pounds, up two percent
from January 1985. Comparing
January 1986 with January 1985,
beef production at 2.14 billion
pounds was up four percent. Cattle
kill at 3.33 million head was up two
percent, and average liveweight
increased 20 pounds to 1,100. Veal
production at 46 million pounds
was up 10 percent from last year.
Calf slaughter at 307,000 head was
up seven percent, and average
liveweight increased seven pounds
to 249.
Pork production totaled 1.27
billion pounds, down one percent.
Hog kill totaled 7.19 million head,
declining two percent. Average
liveweight increased one pound to
246 pounds. Lamb and mutton
production, at 31 million pounds,
was down three percent from last
year. Slaughter totaled 518,000
head, down seven percent.
Liveweight averaged 118 pounds,
three pounds heavier than a year
earlier.
ATTENTION FARMERS!
Learn how to improve soil, cut chemical
costs drastically. An experienced farmer
who used this method for approx. 10
years will be sharing at a meeting held
in Twin Pine Basement
I -Tuesday, March 18 —i
I I:3_PM I
for more information call
717-733-0690 or
717-656-8405
ZELLER ENVIRONMENTAL
PEST CONTROL SERVICE
Elizabeth vilfe, PA
Serving all of agricultural, residential and
commercial needs for pest control.
No job too large or too small.
Reasonable Rates