Category Archives: FARM

Too Many Farmers & Ranchers?

In these slow times made so by inclement weather (snow, cold, ice, wind, mud, rain), my energy level increases because i’m not working as physically hard.  These past couple years, too, i’ve begun going to our local YMCA at 5am to walk and lift weights for a couple hours.  All this contributes to a restless feeling that i’m not accomplishing all that i can.  My children, now grown, are good at reeling in my ambition and crazy ideas a bit, which is good because i have a natural tendency to get too many irons in the fire.

However, the perspective of age has tempered and honed those expansive ideas as either increasing work or increasing investment.  The latter is much more attractive to me now as my physical strength wanes.

All that shared to relate an irony of agriculture in the United States.  Although, some would cry ‘save the family farm’ few actually have a real look at what the family farm is.  Are we dooming the modern family farm by idolizing the farms of the past?  or those small holdings in distant lands?  The reality is that farming/ranching has never been financial lucrative in the sense of ‘getting rich.’  Margins are slim, startup is pretty much insurmountable now, and i never thought i’d say it out loud, but i fear there are too many farmers/ranchers in the United States.  That is to say, that despite the average age of farmers is 58 or 59, farming of the agrarian sort (actually farming/ranching – not some related field) is more competitive than ever!  Outside investors and to an even greater degree, neighbouring prudent and successful farmers with disposable income bid up land to amounts beyond production value which keeps new farmers from entering.  Oh, yes, i know that mantra is that you don’t have to own land to start in farming, that is absolutely true, but at least here in north Missouri, you’ll be hard pressed to find anything to rent – pasture or crop land.  And, to be honest, most of the land in our county is not crop land, yet it’s been under the plough for decades and much has washed down the creek.

How did this happen?  Technology, bigger and better equipment, government support programs, and the never ending pressure to produce food cheaply.  All these contribute to fewer farmers necessary to farm the massive number of acres to produce crops with slimmer and slimmer profit margins.  Often, the only profit is the check collected from the federal government (you, the taxpayer).  But don’t blame the producer!  It’s just our system.

For some time now, interest rates on saved income has been lower than the inflation rate, resulting in outside investors hoping to get some return on their money, whereas farmers buy land to spread out the equipment costs.  Consider that for a row cropper here, land to purchase (it’s a rarity to find) will cost upwards of $4000/acre. (a small parcel just sold in the county next to us for $8000/acre!)

Thank A Farmer Kitchen Farms wheat harvest in Missouri by Finney Aerial Photo

There are a few farms asking less than that, but most are worn out (soil loss, erosion, and fertility may take decades of proper farming/ranching to reverse or restore) and should never have been cropped in the first place (steep slope, poor production indicators, etc).  Yet, the asking price is out of reach for anyone wanting to raise livestock.  One such farm near me would take at least $400/acre up front cost to restore it to even marginal pasture.  Add that to the asking price, and already it’s over $3500/acre! (Racks & Tracks listing)

So, is land more expensive now than in the past?  Consider my property just across the road from the above listing and of similar topography.

1857 – $1.83/acre – Today’s dollars = $53.19/acre

1870 – $13.41/acre – Today’s dollars = $258.87 (this buyer lost the farm)

1872 – $3.90/acre – Today’s dollars = $80.84/acre  (appraised value was $64.67/acre)

1875 – $4.79/acre – Today’s dollars = $110.12/acre

then several surveys and set aside for Morris Chapel Church and cemetery – finally back together in 1945

1945 – $11.97/acre – today’s dollars = $168.17/acre

1949 – $26.95/acre – Today’s dollars = $286.36

1966 – $92.81/acre – today’s dollars = $724.39*

2018 – $3100/acre – today’s dollars = $3100/acre (asking price of farm across the road)

Working backwards – what would a $3000/acre farm bring in 1949?  $282.34

*1966 is when my grandparents purchased the farm, it shows, too, another reason land owners won’t sell property – basis.  Since this farm was gifted to me, the basis from 1966 remains in place.  In other words, if i sold the land for $2100/acre, capital gains tax would be paid on the difference between $92.81 and $2100.  This tax could be as much as 23.8%!  However, if i die and the land passes to my heirs, it can be appraised and establish a new basis.

Tenants compete for acres by bidding up rental fees because of their massive investment in machinery.  Absentee farmers and investors generally accept the highest rent bid (which is usually the one that will least take care of the soil) and hope the fertility and productivity outlives them, then the property will sell.

Change comes one funeral at a time.

Rather than me stumbling about putting together numbers, here’s a great article written in 2017 with sample startup costs for someone wanting to start and make a living farming.

Cheers!

tauna

HOW MUCH $ DOES IT TAKE TO BECOME A FARMER?

THIS IS WHAT IT TAKES TO GO FROM ZERO MONEY TO A FARMER.
I was talking with a couple of farmers recently, discussing the barriers to entry for new farmers. Some numbers were thrown out as to how much capital it would take for a young man or woman to get started into farming.“$1 million, $2 million, more” were amounts bandied about. This made me curious, so I decided to drill down on the actual capital requirement.

First of all, we need to decide what kind of farmer we are talking about here. For this article, I’m assuming someone with no family farm who wants to become a full-time grain farmer in Iowa, Illinois, or Indiana.

The first thing a budding farmer might do is get a degree in agriculture, since he/she would not have learned farming on the family farm. This will cost somewhere between $20,000 and $120,000, depending on where he/she goes and what scholarships are available. The average of those two numbers is $70,000, which will require student loan debt for most young people. Of course, a degree is not required, but it might come in handy for convincing banks to loan money or landlords to lease cropland.

The equipment requirement could be an extensive discussion; however, I’ll try to keep it as short as possible. One could buy all new machines, but to get started, let’s assume the acquisition of decent used equipment – about 5 to 10 years old.

The basic list would include: a combine with corn head and grain platform for $175,000; a big tractor for plowing and planting at 125K; a grain truck for 60K; a planter that runs about 75K; a grain drill for 40K; a disk at around 30K; a chisel-plow for 30K; a field cultivator at 25K; a pull-type sprayer costs 35K; a grain dryer is 30K; a utility tractor for brush-hogging/ditching/grading at 35K; a grain cart for 15K; a trailer at around 15K; an ATV for 10K; and a full complement of tools costs 15K.

The building requirement probably includes a couple of metal buildings ($200,000) and at least a few grain storage bins to hold 75,000 bushels, about $75,000. There is no hard-and-fast land requirement. However, the farmers I spoke with said that someone would need at least 500 owned acres and 1,000 leased acres to make a living.

The quality of the land certainly affects those numbers. For this article, let’s assume 150-plus corn bushel-per-acre land for about $7,500 an acre. If you bought 500 acres as a base of operations, the total land cost would be $3,750,000.

Add it all up, and we arrive at $5,157,500. Wow! That’s a big number, and it’s out of reach for most young entrepreneurs.

Because of the cost of land and equipment today, some farmers are concerned about who will be able to follow them into the industry. How will they fund the enterprise, even with family land and equipment?

Because of greater access to capital, more corporate farms are likely.

The problem is not just start-up capital but also surviving drought years and low commodity prices until they turn around. Unfortunately, even though you are already a biologist, engineer, equipment operator, accountant, carpenter, and mechanic, you have to become an expert financier, as well, to get into farming and stay there.

Written by Shawn Williamson, Certified Public Accountant (CPA) MBA in Missouri and Illinois. This article is designed to be a commentary on the amount of capital required for a row-crop farm in the Midwest. It is not meant to be a guide on how to get started in farming. 

 

Regenerative Farming

One of the best educational conferences, Missouri Livestock Symposium, in the state of Missouri, with an outstanding lineup of speakers every year is free to attend and a free lunch sweetens the pot.  But all that aside, it is an excellent opportunity for farmers/ranchers/beekeepers/horse owners/stock dog enthusiasts to learn, not only from ‘experts’ but mostly from each other.  Like most industry, farmers learning and networking with other farmers often results in more improvement.

Of the many takeaways from the symposium was a brochure that hubby, Allen, picked up from the ATTRA-NCAT booth on “Building Healthy Pasture Soils.”  While the bullet points they make have been known for millennia, it doesn’t hurt to revisit them to see if a return to the old ways will be profitable and regenerative for today’s farming.   The answer is already a resounding ‘yes’ for the hand’s on land owner, but is debatable (short term anyway) for the renter or absentee land owner.  As my son’s fiance pointed out, it takes at least 4 years of regenerative farming practices to turn that soil health around.  Renters will not want to invest in a long term fertility strategy; absentee landowners are typically only interested in immediate returns in the form of annual cash rent.

Excerpt from article:

Strategies for Building Healthy Soils
Let’s consider the agricultural practices that help build healthy soil. In essence, we want to increase aggregation, contribute soil organic matter, increase biodiversity, buffer soil temperature, and minimize soil compaction and disturbance. Sounds like a lot, right?

Well, not really, if we break them down into six basic principles. Let’s take a quick look at the principles that will define our soil management practices:

  1. Minimizing tillage preserves soil structure, encourages aggregation, and keeps soil carbon in the soil profile where it belongs. Tillage brings a flush of oxygen into the soil that spurs microbes into a feeding frenzy on carbon molecules, resulting in CO2 release. We reduce tillage through the use of perennial pasture and minimum or no-till of cover crops.
  2. Maintaining living roots in the soil for as much of the year as possible feeds soil microorganisms all year.
  3. Also, by maintaining living roots and leaving grazing residual, we are covering the soil all year, forming an “armor” to protect it from loss of moisture and nutrients.
  4. Maintaining species diversity is achieved with cover crop mixes and the use of diverse perennial-pasture mixes. Try to incorporate warm- season and cool-season plants, both grasses and broadleaf plants, in the same fields.
  5. Managing grazing is accomplished by planning for an appropriate grazing-recovery period on your paddocks, keeping in mind that plants need various recovery periods depending on the species, the time of year, and the soil moisture content. Overgrazing (not allowing adequate recovery) reduces root mass, photosynthesis, and the amount of carbon sequestered into the soil, decreasing soil life. Proper grazing builds soil.
  6. Finally, utilizing animal impact and grazing impact provides nutrient cycling in pastures, and contributes to soil organic matter. Additionally, the grazing action on forage plants encourages root growth and root exudation of plant sugars that feed soil microorganisms.

For livestock producers, this boils down to a combination of perennial pasture, cover crops in rotation on annual fields, and good grazing management. These simple concepts are described by ranchers Allen Williams, Gabe Brown, and Neil Dennis in a short video on how grazing management and cover crops can regenerate soils. View the video Soil Carbon Cowboys to get their take on soil health practices.

Managing means planning AND implementing.  All the planning in the world will not enact change or improvement; action and motivation drives profitability and regeneration.  If you are not motivated, not able to get things done in a timely manner, then get someone to come alongside you and map out a plan – yet YOU are the one to ‘git ‘er done.  Too many times, i see people with excellent plans stymied by their inability to get out of the chair and off the paper – i call that analysis paralysis.  Don’t be a victim!

Cheers and happy farming!

tauna

 

Pregnancy Check – 2018

Pregnancy check and calf vaccinations for fall 2018 are recorded history.  October 25, 2018 held on to become a pretty nice day.  Veterinarian was hour and half late, but with the changes i’d made in the corral which made it more user friendly, we still managed to finish before dark.  The changes shaved at least an hour off working time.

Results of preg check were far more favorable than i could have ever expected given the very hot, dry, droughty, short grass conditions.

135 cows and heifers were checked.

  • Open/Bred
  • 2/39 of the 2 year olds – 95% bred
  • 3/19 of the 3 years olds – 84% bred
  • 2/15 of the 4 year olds – 87% bred *
  • 0/1 of the 5 year olds – 100% bred
  • 0/6 of the 6 year olds – 100% bred
  • 0/20 of the 7 year olds – 100% bred
  • 1/21 of the 8 year olds – 95% bred
  • 2/8 of the 9 year olds – 75% bred
  • 0/1 of the 10 year olds – 100% bred
  • 0/1 of the 11 year olds – 100% bred
  • 0/1 of the 12 year olds – 100% bred
  • 0/3 of the 13 year olds – 100% bred

Totals – 10/135  = 7.4% open or 92.8% bred

THRILLED with this result even had there not been a drought and i hadn’t changed the breeding season.

Since i was going to Kenya this summer and because i cannot be out past the 15th of August to move the bulls away from the cows (because of severe ragweed allergy), i changed the breeding season from 17 July to 7 July and lopped off 12 days on the end.  In other words, last year breeding season was 17 july – 20 September, but this year is 6 July – 19 August.  Breeding season went from 65 days to 45 days.

According to gestation tables, this puts the first calves arriving April 14th and the last ones on May 28.  I do not like to start calving so early, but since the Corriente cows give such rich milk and combine with heat, humidity, and toxic endophyte fescue of late spring, it was a disaster the two years i calved them out in the mid-May to end of June time frame. (30% calf death loss due to scours despite major treatment).  Add in my allergies, i made the decision for my present season.  We can get some super nasty weather, however, in April, so time will tell.

Measuring for improvement

Cheers

tauna

*(these two young cows raised the biggest calves – not sustainable for my operation)

 

 

 

Beef Sausage Lasagne

Recipe – Beef Sausage Lasagne    (Click on the link for a printable version of my personal recipe.)

I’ve been using this recipe for over 30 years and it never fails to please!  Since i don’t eat pork, i use our home raised ground beef which i’ve turned into beef sausage and using these same spices, it turns out awesome.  Make your own egg noodles and simple cut them about 1 1/2 inches wide and whatever length you like (they’ll get wider and longer when you boil them).  I use cottage cheese instead of ricotta and i often buy full fat mozzarella and shred it myself.  Usually have my own tomatoes to chop and cook down.

Here’s the original recipe printed in Betty Crocker’s International Cookbook circa 1980.  Great cookbook and you can see that page 159 has been open quite a lot! The cookbook must be out of print, but there are several vendors offering it at deep discount, but i’m not parting with my copy!!

Recipe - Lasagne beef

 

 

Consider the Future by Kit Pharo

This goes for any business, but is specifically written by a rancher to ranchers/farmers.  It is sad how few ranching businesses stay as such from one generation to the next.  Kit explains again one reason for this.

 

PCC Update

November 7, 2018

Cowboy Logic: “The future ain’t what it used to be.”

Consider the Future –

By Kit Pharo

Have you noticed that the most successful and happy people throughout history have been those who made decisions that were based on the future?   It’s true!   Successful people know that nothing stays the same.   The present is different from the past – and the future will be different from the present.   Those who make decisions that are based on the future will always have a HUGE competitive advantage over those who continue to make decisions based on the past and/or the present.

Unfortunately, nearly all people from all walks of life are afraid to make decisions that are based on anything but the past or the present.   It has always been this way, and it will probably always be this way.   Even though they can see things transforming before their very eyes, they are reluctant to make any changes in what they are doing.   It’s as though they would rather fail doing what they have always done than succeed if success requires change.   That is a shame – but it gives you the opportunity to move your family and your family’s business to a very sought-after position.

Based on what you think about the future, what kind of management decisions should you be making in your cow-calf operation?   I’m not going to tell you what I think.   I want you to do your own thinking.   You may come up with something different and/or better than what I have.   The decisions you come up with, however, need to be based on what you think the future holds.   Be bold in your actions.   Those who are slow to take the appropriate actions may lose all they have – forcing their kids and grandkids to get jobs in town.

Quote Worth Re-Quoting –

“The past cannot be changed.   The future is yet in your power.”   ~ Unknown

PHARO CATTLE CO.

Phone: 800-311-0995

www.PharoCattle.com

Facebook Pharo Cattle Company

About the Farm this Fall

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Late afternoon break from work to enjoy my workplace view shed.  Missouri is having splendid fall color this year!
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One of my pretty Corriente cows.
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Bald Eagles seemed skittish this year, thus difficult for casual snapshots.
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Another corral improvement for this year, is that i set up these old panels across the upper part of my round gathering pen.  This way, the calves could be sorted into it as they come by, whilst the cows go on by to another pen.  Worked slick as a whistle.  Someday, though, i’m going to have to get some help, these panels weigh at least 75 lbs a piece and moving them into position to hook together is getting more difficult for me.  However, since it worked, these will stay put now.
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Showing how difficult it is to shift cows from one paddock to another.  HA HA!  Open the gate and get out of the way!

 

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Buckbrush, as we call it in north Missouri, grew prolifically this year, i guess due to excessive heat and dry weather.  Bonus for the deer and many other wildlife this winter.  
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Improvements to my corral.  Here i’m hanging gates and cutting a hole in my corral to make it easier to sort off animals which need to go back in a pen rather than let loose.

 

IMG_4847
This gate is used to make the runway (race) more narrow for young calves.  Once installed, it reduces the passageway from 28 inches wide (for cows) to 16 inches wide (young calves).  Everything i do, i try to repurpose stuff we have.  Profit margin in cattle is too narrow to spend money unless absolutely necessary.  Here, i’ve added this black plastic taken from a busted feed bunk and drilled it onto my gate.  This way the calves don’t stick their heads between the bars.  It worked!

Have a great weekend and Shabbat Shalom!

tauna

What Is Sweat Worth?

What Is Sweat Worth?  By Dave Pratt, owner of Ranch Management Consultants

 

What is Sweat Worth?

by Dave Pratt

Most family ranches are subsidized with free, or underpaid, family labor. Sometimes the difference between what family members get and what it would cost to hire someone else to do the work they do is made up with the promise or expectation of sweat equity. But sweat is not a recognized form of currency and people counting on sweat equity usually have a grossly exaggerated idea of what their sweat is worth. This often leads to serious disagreement and disappointment.

If you are going to count on sweat equity and want to avoid the inevitable misunderstandings that happen when it comes time to cash in on your sweat, then you’d better start actually counting it. How many hours? For how many years? At what rate of pay? With what interest on the unpaid balance?

I mentioned the perils of relying on sweat equity in a workshop recently. I suggested we stop using the term sweat equity and call it what it really is, “deferred wages.” My comments apparently struck a nerve with one 30-something rancher. He approached me after the program and asked if I could help him calculate what his sweat was actually worth. He said that he’d come back to the family ranch after college 10 years earlier. He’d been drawing a low wage and banking on sweat equity. As is usually the case in family ranches, there was no formal agreement documenting exactly what his sweat was worth.

He was being paid $25,000 a year, but his compensation package included a nice home, a vehicle and insurance for his family. All-in-all a compensation package worth well over $50,000. “Maybe I’m not as underpaid a I thought I was,” he said.

I suspect that he was probably being underpaid somewhere between $10,000 to $20,000 a year. I showed him that for every $10,000 he’d been underpaid, he earned 0.1% equity in his family’s $10,000,000 ranch.

($10,000 ÷ $10,000,000) x 100 = 0.1%

I showed him that over the previous 10 years, compounding interest at a rate of 3.5%, he’d earned a whopping 1.2% equity stake in the ranch. Like a lot of young ranchers returning home, he hadn’t ever thought about how much his sweat was worth but had assumed that it would add up to a lot more than that.

Sometimes sweat equity isn’t just about compensating someone for the work they do. It’s about acknowledging the sacrifices someone may have made, foregoing other opportunities to come back to the ranch to support the family. If there are several kids in your family, but only one has invested time and energy working on the place and has shown a desire to continue the business, it may be fair to give them an equity position.  After-all, as succession planning advisor Don Jonovic points out, fair doesn’t necessarily mean equal.

But whether sweat equity is a substitute for a paycheck or acknowledging a sacrifice, we need to be clear about what we are compensating and its value. We need to convert assumptions and expectations into agreements. We need to figure out what our labor is worth (the topic of the last ProfitTips column). We need to document the value of our sweat while we are still sweating.

For more on documenting the value of sweat equity watch the video below:

What is Sweat Worth? youtube video