A24>Lancast*r Farming, Saturday, November 26,1988
R r V >
MANAGEMENT
CAN YOU AFFORD
ANOTHER DROUGHT?
Roland P. Freund
Regional Farm Management
Agent
The drought of 1988 has
focused much attention on the
risks and perils of crop production.
As the harvest is gathered in and
yields are calculated it is a good
time to assess the full impact of the
drought Bad years are easily for
gotten, but they do tend to repeat
themselves. It is important to eva
luate the chance of survival for the
farm business should crops fail
again in 1989.
What did the drought cost you?
The cash crop producer’s cost is
the lost production at the prices at
which the crops would have sold.
The livestock feeder has a similar
ON RODENT
CONTROL ft'"H fV
RODENTS carry diseases which
can endanger the health of your
poultry flocks. Your business is
raising them. Ours is protecting
them.
We Specialize In
Sanitizing And Disinfecting
Since 1928 2ilW
Pest control is too important
to trust to anyone else
physical loss, but he needs to price
that lost production at the cost of
the replacement feed which must
be purchased.
There may be other indirect
costs associated with livestock los
ses due to feed quality or interest
on the operating loss. In virtually
all cases a crop loss will show up as
lost equity.
For many farmers in south
central Pennsylvania such losses
could exceed $l5O per crop acre.
Assuming a total of 335 crop acres
on an example farm, the loss might
be about $50,000.
Can you afford another severe
loss?
Some can and some can’t It
Houses
Lancaster, PA
397-3721
Lewistmrn, PA
248-0963
;tate College, PA
does not depend on how good an
operator runs the farm, nor on how
well he knows the banker. It all
depends on how much equity there
is to loose. Let’s look at three
example farm business situations.
Farm A. has assets of $350,000
and debt of $250,000 giving it net
worth or equity of $lOO,OOO.
Farm B. has assets of $500,000
and debt of $250,000 giving it
equity of $250,000.
Farm C. has assets of $500,000
and debt of $50,000; equity of
$450,000.
A crop loss of $50,000 would
impact each of these differently:
Farm A’s equity would be down
to $50,000 and it would probably
not get credit to continue. In such a
situation Farm A would have to be
liquidated, so it cannot risk another
disaster.
Farm B. could possibly survive
with $200,000 equity, but the
banker would start to get quite
nervous about future risks. It needs
risk protection.
Farm C. Might need to “tighten
the belt" for a couple of years, but
should be able to spring back rela
tively quickly. It can afford to be
self-insured.
When can we expect another loss
year?
Let’s not think about that and
hope it will not happen! That
Bailey Elected As Eastern
Director, Fyock Retires
SYRACUSE, N.Y. Dairy
farmer Harold Bailey of Roaring
Spring, PA., has been elected to a
three-year term on the Board of
Directors of Eastern Milk Produc
ers Cooperative.
He succeeds Norman Fyock of
Osterburg, PA., who stepped
down in October after serving
three terms on the board, the max
imum permitted under the co-op’s
bylaws.
An Eastern member since 1966,
Bailey operates a 138-acre farm in
partnership with his brother, Ber
nard. They milk 90 cows out of a
herd of 180 Holsteins. Harold
Bailey took over the farm from his
father, John, in 1969. His brother
became a partner in the operation
in 1972.
As a director, Bailey represents
over 200 farm families in District
13, which covers South Central
Pennsylvania. He has been presi-
.«,<!)■* \ « t t *
*- i 1
strategy doesn’t woric very well.
Those who have had three or more
bad years in the 1980’s will attest
to that
dent and delegate for Eastern’s
Blair-Bedford Local for seven
years. Bailey is an active member
of the Pennsylvania Tractor Pull
ers Association. He and his wife,
Linda, have four children; Robert,
17; Diane, 16; Paul, 13, and Mark,
11.
Fyock also has been a member
of Eastern since 1966. He worked
as a farmhand until he purchased
his first farm in 1941. He came to
his present 148-acre farm in
Osterburg in 1952 - after marrying
his wife, Edythe. They milk 46
cows out of a herd of 80
Guernseys.
Fyock became active in the co
op after joining, and was a long
time delegate of the Blair-Bedford
Local. He also served as president
of the local. During his tenure on
the board, Fyock has had the pri
vilege of serving on nearly all of
the board committees.