Tag Archives: YMCA

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. 

 

Tweaking the Plan

Since the first of the year, i’ve headed to the local YMCA just 10 minutes drive away and working out (walking at least 10,000 steps according to Fitbit and lifting weights) for 2 to 2 1/2 hours each morning.  Our YMCA opens a bit before 5am, so this is a perfect time for me to go.  I’m usually awake anyway and it’s far too cold outside to do anything, plus it’s dark.

Anyway, like the others who come in early to workout, i plug into my phone and listen to something.  I really enjoy listening to audio books through our local library‘s subscription to Hoopla.  Granted, i suspect there is not as many books on offer as a paid subscription like Audiobooks, but Hoopla is included in our library membership.  But, i mix up the books with Youtube of grazing and cattle management experts.  This has included Jim Gerrish, Jaime Elizondo Braum, Johann Zietsman, Doug Peterson, Greg Judy, David Pratt, Allen Williams.

Continuing education is necessary in any endeavour and as margins tighten and disappear in cattle production it becomes critical to discover little ways to squeeze a bit of income out of our chosen career despite outside pressures OR to discover that you must forge a totally different path if this one simply can no longer be financially sustained.

Regardless of one’s age, evaluation of your chosen work needs doing regularly, but having just turned 56, it may be time consider winding down and looking at retirement.  Nevertheless, the older we get, we must discover if what we are doing is the most effective use of our time and energy (which physically wanes).  If the activity is marginally profitable, then what can be done to make it more profitable without increasing labor (labor and feed are huge costs in raising livestock).  Or are we better purposed to volunteer, counsel, or help our children more.

  1. Last year, i used a lot of iron (tractors, rotavator, plough disk, no-till drill) to establish, first, 18 acres of annuals, and second, establish a permanent ley on 50 acres.  The first experiment resulted in quality grazing, but not more grazing as measured in cow days per acre, than my poor quality forage already growing.  So, i don’t plan to incur that cost again, though my soil may have experienced some improvement.  The second experiment was severely hampered by the lack of rain for the seeds to grow.  However, it may have been a blessing, 1) a better kill of the toxic endophyte fescue due to dry and hot weather, and 2) the seeds hopefully did not germ and will come up this spring.  Time will tell on that here in about 3 months.  However, this project was extremely expensive at $175/acre.
  2. Last year, i also had lime spread on the 160 at the rate of 2 tons per acre for a cost of $66/acre.  The addition of lime typically doesn’t show any production increase for a couple years.
  3. Bale feeding was used quite a lot on various parts of my paddocks.  This may very well be the fastest way to build soil health, but it’s expensive (like all inputs) and time consuming to place the bales.
  4. Last year, I also synchronised my cows with hormones and AI’d a good portion of them.  The reason was because i was going to shorten my breeding season once again to 45 days vs 65 days.  This is expensive, but it does seem to help.  However, due to ragweed allergies, i am simply unable to remove the bulls from the pasture on 1 September, so i will change my plan and leave the bulls in for 60 days and simply sell those that do not calve within the 45 day window.  This does not, however, address the fact that i don’t want to calve for 60 days.  Nothing to be done for that.  Allergies rule my schedule in this regard.

So, tweaking my plan for this year will be to:

  1. no mechanical disturbance or seed inputs (including broadcast)
  2. no liming or other fertiliser input purchases (save up to $100/acre)
  3. Utilize bale grazing extensively to increase soil health (microbial activity) and organic matter (improve tilth) (the only down side here is the time spent to set the bales in the paddocks in proper manner in preparation for winter grazing)
  4. eliminate the synchronising and AI costs.  This eliminates the time spent in mustering and sorting the cows 3 times, shots and CIDRS, semen costs, and AI technician expense.  All these costs add up to about $80 per cow.
  5. purchase hay early for possible reduced cost per bale (purchasing in winter tends to drive up cost due to increased demand)  (delivered hay costs from 4 cents to 15 cents per pound depending on quality and demand)
  6. Manage my time to allow ultra high stock density grazing (UHDG) at least part of the year to increase forage diversity, water infiltration, and soil health.  (time is a problem here because of my farm being a 35 minute drive from my home, it is counter productive if this increases labor that would be expensed to cows)

OR:

  1. let go, rent out the land, and sell my cows – no work.  the drawbacks are having to quibble with renters on their lack of care and watching your land erode, grow up in brush, and/or wash away.  Repair and clean up can be costly at the end of the renting period.

So, should i continue ranching – and realistically, i plan to – giving it up unless necessary is not really a consideration, although it should be,  then i need to decide whether to reduce the number of cows to what my pastures can sustain during the non growing season (winter  – about 5 months and summer heat – about 1 month), OR increase cow numbers to manage the growing season flush and buy in enough hay to feed them during the winter.  Hay purchase and feeding will also improve the soil, so there is added value to that.

No one else can make this decision, although there are a lot of suggestions and i really appreciate all the expert and seasoned ranchers sharing their experiences – these have guided me .

Just Breathe,

tauna