04-Lancaster Farming Saturday, Jww 21,1986
Brockett’s Ag Advice
Bj&c.v By John E. Brocket!
M Farm Management Agent
S Lewistown Extension Office
The Debt Trap
Our indebtedness as farmers
links us with billions of people
throughout the world for whom
debt has become synonymous with
despair. It also links us with most
of the people of this country in
ways that most of them have never
considered. How many banks in
the country have failed because of
the “Farm Problem”? How many
small businesses have gone under
because of the “Farm Problem”?
How many people in Mifflin County
alone have lost their job security
because of the “Farm Problem”?
I’m sure that somewhere some
social or demographic chartist has
fairly precise answers to all
three of those questions. But even
those answers probably do not tell
the whole story.
In a study made a number of
years ago, a research team found
that farm income had a greater
effect on a rural community than
any other type of income. The
reason was the large number of
support businesses and services
for farming that exist in a rural
area. When the farm economy
lags, there are fewer dollars
pumped into that area. Businesses,
labor, and services directly af
filiated with farming are the first
to be affected. When farmers
reach the “debt crisis” position,
these support businesses and
services begin to retrench (lay off
labor and reduce community
activity).
When a substantial number of
tanners reach the “debt disaster”
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position, these businesses and
services begin to compete with
each other for a piece of an ever
smaller* pie. Eventually the
weaker or more vulnerable or
more local businesses or services
begin to fail. That results in fewer
jobs, less tax base for the area, an
erosion of population, and a higher
cost for those remaining.
Some people would say “Why a
higher cost for those remaining?”
As Sherlock Holmes would say,
“It’s elementary my dear Wat
son”. There are certain costs that
must be met as long as there are
any people in the area. Costs such
as roads, schools, power, and law
enforcement will be present
regardless of the number of people
who live in an area. It is true that
these costs do go down as the area
loses people and businesses, but
they do not go down in proportion
to the reduction in people or
businesses.
The farm debt crisis that
becomes a farm debt disaster
becomes like a cancer. It spreads
and attacks previously healthy
segments of the economy. If one
farmer can not pay his or her bills,
the lender and other farmers must
pay them. If additional farmers
are then pushed over the brink, the
lender, the support business or
service, and other farmers' will
wind up paying their bills. The
cancer of the debt crisis begins to
claim more and more victims.
Some lenders ana supply or
service dealers try to recoup by
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becoming more “competitive” and
selling items at reduced prices.
Others add service charges or late
payment interest (up to as much as
two percent per month) to take up
the slack. Others try to enlarge
their territory to increase or at
least maintain business volume. A
few try to protect themselves by
placing liens on assets or in
creasing the amount of assets upon
which they have a lien (such as
requiring a co-signer for a loan).
The lender or business then has the
co-signers property as well as the
borrowers property to use if the
loan is not paid. These steps may
or may not help the business
survive.
One of the most difficult
decisions for any business to make
is when and how to cut the loss. In
other words, when does the
business tell a buyer “no more
credit”? The buyer may go
elsewhere and never pay the
money owed to the business. Or,
when does the farmer sell a non
profitable item such as a piece of
non-productive land or some
seldom used machinery? The
farmer may want that land for
recreational purposes. Or, when
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Oxford, PA
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PAUL SHOVER’S, INC.
Loysville, PA
717-789-3117
A.B.C. GROFF
New Holland, PA
717-354-4731
CARLISLE FARM
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Chambersburg, PA Williamsport. PA
301-734-7722 717-264-3533 717-494-0060
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Oakland Mill, PA
717-463-2161
MELROSE FARM
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Greencastle, PA
717-597-3138
KELLER BROS.
Lebanon, PA
717-949-6501
DUNKLE ft GREW
Mill Hall, PA
717-726-3115
WALTER 6. COALE, INC.
Churchville, MD
CLW MANUFACTURING, INC.
does a bank decide it no longer has
the equity in a farm it had when the
original loan was made? The bank
may need that equity on the books
Delaware to Host
NEWARK, Del. - More than 700
members of the Eastern
Agricultural Society (EAS) are
preparing to gather for their an
nual conference, Wednesday,
August 6 to Saturday, August 9, at
the University of Delaware’s
Clayton Hall/Christiana Towers
complex on the university’s north
campus in Newark, Del. The
day event will include talks on bet
management, swarm biology ana
orientation behaviors, queen
control in bee colonies,
apiotherapy, pollination
beekeeping in China, bee mites,
bee photography, and the effects ot
acid rain on honeybees. In ad
dition, several workshops on hive
products are scheduled. There will
also be a trade show.
The conference will coincide
with two day-long beekeeping
short courses, one on bee
management (August 5), the other
on honev <August 6). The Tuesday
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717-362-3132
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717-222-9020
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Harrisonburg, VA
703-434-9961
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717-423-6794
to stay out of the bank examiners
reaches. Of course all of this helps
spread the cancer of “debt
disaster”.
bee conference
course will include hands-on ex
perience using gentle University of
Delaware bees. The Wednesday
course will cover efficient ways to
produce and comb honey and
profitably market these and other
bee products.
Registration for the short
courses is separate from that for
the conference and costs $3O a
course or $55 for both courses. For
iurther short course details,
contact Dr. Larry Connor,
Beekeeping Education Service,
P.O. Box 817, Chesire, CT 06410.
Conference registration is $l7 for
the entire 3% days, or $7.50 per
day. Deadline for advance
registration, including room
reservations for those wishing to
stay on campus, is July 26. A $lO
late fee will be charged after that
date. For further information,
contact Dr. Dewey M. Caron,
Department of Entomolgy,
University of Delaware, Newark,
DE19717-1303 (302-4M-2)26).