This may be entertaining

grandpa Love

Well-known Member
Every now and then I have too much time to think and come up with crazy questions. Especially this year......... Anyway, the one y'all can help with is this. At what point did folks decide that a farm had to be profitable and not just self sustained? Or any small business for that matter? At what point did farmers start justifying a $100,000 tractor? Sure bigger crops.....but bigger bills. Our accountant keeps telling us we should grow our carpentry business. Been there done that. Had 4 trucks and 15 guys at one point. More work than we could handle. Cut back to just us and never been happier. Not getting rich but paying the bills and enjoying life. Maybe I'm looking at it wrong. But I can make square bales of hay and sell them for $2. And still make money. I don't have payments on any equipment. Any insight on profitable vs self sustained?
 
2nd question.....why do cheese-it crackers have a hole in the middle? And how does it get there....... Lol. Ahhh the random thoughts.
 
LOL... maybe the Cheez-its have the hole in the center for more even baking and to prevent them from poofing up in the center.

OR the hole is so you can string 'em up like a candy necklace... eat a snack while you work - no hands required. :)
 
I think it depends on what you want out of life. For many people building a business and earning a lot of money is a challenge they enjoy doing and a form of security for themselves and family down the road but there is a level of stress that goes with that. For other people having enough money just to be uncomfortable in life is good enough and skip the stress part.
 
When some farmers started seeing themselves a 'agribusinessmen',thats when they go from having a small profitable operation to a large farming operation that can only stay afloat by receiving gov't handouts.Then they start calling the small profitable operations 'hobby' farms.
 
Grandpa Love i think the answers to your questions is greed and envy like i heard a car salesman say if i can sell a new vehichel
in a neighberhood or town i will sell many more to others so they can keep up with the Johne's.
 
Having been on both sides, I can say the stress ain't worth the reward. We are happy with a simple life
 
Keith M,

:) I guess I could try it. I do secretarial work. Wonder what my boss would think if he pops into my office and I am grazing a cracker necklace while typing? LOL
 
I've always tried to have multiple sources of income even when I held a 'regular' job I was still farming in partnership with my dad,buying/selling/trading tractors,equipment and about anything else.Always something to fall back on if one went sour for awhile.Many people today especially farmers don't go by the old saying 'Don't put all your eggs in one basket'.
 
It all comes down to having other people and equipment making money for you allows for a cushion in the event something happens and you cannot work. When you stop working now, all income stops. Having a company with 15 people is a lot of work, much easier and less stressful to just be one person. I am 60, just sold my company which was similar sized and could retire, but do like the work so will stay at it. I honestly do not know what is best, it is up to each person.
 
Next question....
What is a comfortable self sustained living.

In times past some kids grew up in a house made of sod with a mule outside.
When I was a kid we had a modest 1200 sq foot home with a family car outside.
Today any home without granite counter tops and a 2 car garage is considered a shack.
If my grandkids were raised under the same conditions my dad was raised under child protection services would be looking to take them away from their parents.
 
A lot of it has to do with the love of money and wanting more for your family. Just like guys in a factory. Some want all the overtime they can get and some would rather stay home on weekends and watch sports on TV. I knew a guy who had a 2 or 3 truck garbage collection business. He said he had some good workers when they were there and showed up for work. He said if he gave them a raise, they would just call in sick one more day a week. They just wanted enough to get by. Some folks are industrius and some just want to float along thru life. Need look no further than the government housing projects filled with welfare recipients when 2 blocks away are stores with help wanted signs in the windows.
 
I don't think there ever was a time when farmers wanted just sustainable farms. Anything I've seen has always had them struggling to produce as much as possible so they had some to sell. Before tractors that was very difficult since horses required almost half the farms production just so they could work the ground. Once tractors came in they left a lot more production available to sell and expansion became easier. Also if you look at the cost of equipment as a percentage of gross revenue the cost has been falling since the first wooden plow pulled behind a horse. Add all that to human nature to try to make our lives better and you get today's mega farms.
 
I don't know....Grandma & Grandpa made a living on a small fruit and vegetable farm back in the day without any Government incentives. Perhaps this is when things began to change when Government got more involved with business and the small family farms....
 
Thanks SweetFeet.
I will now use that as an excuse for being crazy.
You just made life better for me.
Richard
 
You can only make hay on the scale you do until all the old style farm equipment runs out. There is no way that making hay and selling it at those prices could ever pay for the equipment you need if bought new. There just happens to be a lot of old stuff available, but it won’t last forever. And manufacturing companies will stop providing repair parts, then it is scrap. Look how the Amish and Mennonite groups scrounge all over to find horse pulled equipment, same thing but grander scale. Buying a $100,000 tractor isn’t such a big deal if your farms annual sales are a half million.
 

From my perspective at 71 years old, one thing that you can count on is change. Just when you think that you have things figured out and you can see it going the same way for another 20 years, bam, some major change comes along and there goes your long term plan. A friend had a good small excavation business going that he thought would keep him going for as long as he needed income. He had nephews who worked for him part time. He made adequate income. Then insurance of pretty much every kind went through the roof, His nephews were doing other things and three young guys started businesses in the town. He needed to be getting the same amount of work in order to maintain his equipment new enough to be able to be competitive and avoid down time, but he didn't have the resources. He couldn't pay his insurance on just a small job here and there. It kind of fell down around him like a house of cards. I started and ran a business for 25 years. I had three employees which made it tough many times, but I continued to gradually grow it to where I was able to get good money for it when I made the decision to sell out when I was 55.
 
Now Grandpa Love, did you grow your business solely because the accountant said you should, or did you grow your business because you WANTED to be a big shot and had dreams of big money and living in the lap of luxury?

If you were just blindly following your accountant's advice, no offense, but you were a fool.

Many farmers get big because they WANT to be big farmers. Some are fools that blindly follow their accountant's advice too. Either way, the accountant is the one getting rich.

Bruce is right though. There's only so much old equipment out there and it's not getting any newer or less worn. It's pretty bad around here, small farmers selling old worn out junk to each other, the next guy hoping to squeeze a little more out of a piece of equipment that the last guy gave up on and parked in the weeds...
 
In my case what will happen 20 years from now isn't really a big concern if I'm even living.Look back 20 years would anyone really have foreseen what has happened? Farming or anything is a year or two deal on planning these days,no one knows what will happen look at what has happened in the last 6 months to change about everything.To me owning everything I need free and clear and having a decent amount of cash and other assets to fall back on keeps me flexible to change with the economic conditions of the times as they come up.On buying a tractor that costs 1/5 the amount of annual sales is way to much in my opinion and of course gross sales mean nothing really its the net that counts.Companies go broke that have gross sales in the Billion$ because they are still spending more than they are taking in.
 
The commodities market that many farmers sell into is a break even market. We don’t set prices, we take what the buyers offer.

This will always lead to break even.

Some years a scare of shortage will drive the market up into profitable levels, but an equal number of years will be surplus and drive prices below cost of production.

Then, tax laws squeeze a farmer into only gaining assets, not gaining cash, even on the years that are profitable. On money you make to the good, you can pay 33-50% to the govt, or you can buy a piece of land or a tractor. Well, what would you do? You buy something, but yhat means you remain cash poor.

Paul
 
Buying a $100,000 tractor isn’t such a big deal if your farms annual sales are a half million.


And that is probably the answer Grandpa love is looking for.
Years ago kids started moving off the farm for a factory job.
They demanded better wages more benefits and less hours.
This drove up the price for land and equipment.
For a farmer to justify paying $100,000 for a tractor he no longer could be a family farm and needed a half million in annual sales.
 
Old or new equipment is only junk if that is the way the owner does things.I've been to plenty of auctions where 5 year old equipment was in far worse usable condition than my 40 year old equipment.No reason old equipment can't be maintained and kept in good condition to use.I'll put the condition of my hay making equipment mostly from the 1980's up against anyone's equipment old or new.Gets the job done as good as it did when it was new with very few problems.In the over 20 years I've owned my NH 256 hay rake I've spent very little on it,replaced the tires,replaced one bearing in the gearbox and a few teeth,it'll do anything a new one will do.So how would a new rake make me any money?
 
ill agree that a 256 is indestructible but its also slow. I still have one that been on the farm 35 years but now do most with a 20' Claas rotary rake. Not only does it cover a lot more acres faster the rotary rake leaves a fluffy windrow that dries a lot faster, so for me working off farm too time limited.
 
You cant make money at that price
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In my younger days, I worked for a year in a small print shop.

The entire staff consisted of the owner, his wife, two women, another guy, and I.

The owner always said he didn't want his business to get any bigger. He said he was making a comfortable living, and if his business got bigger he'd just have to work harder without making any more money. I saw his point.
 
If you need larger equipment that is a different deal,I don't and hay drying is no problem for me.My point is just because something has some age doesn't mean it can't be kept in good of working order as something new.Of all the many farm bankruptcy auctions I have attend over the years almost all if not all were farms with newish equipment so new equipment and profits do not necessarily go together.If not much money is spent then not much money can be lost.And no matter how good something works,how easy it makes things or how much time it saves if it cannot be financially justified (add to net income) it'll be a sure loser in the long term.
 
(quoted from post at 05:58:04 09/15/20) No reason old equipment can't be maintained and kept in good condition to use.

There are plenty of reasons.

When you can't get parts anymore, you can't keep a machine going no matter how well you maintain it. Things are going to wear out.

Even if you can get parts, when the parts exceed the value of the machine, it does not make economic sense to fix it.

You hold up your example of a 256 rake. Well, New Holland still makes them. Everything is still available, and there is very little to go wrong on them. If all you needed to make hay was a rake, but it takes a lot more than that.

I really don't care how well you maintain something, it will eventally wear out to the point that fixing it is impractical or impossible. Our IH 881 forage harvester is that way. Most parts are NLA for it, and what little can be gotten is so expensive that just one or two parts exceeds the market value of the machine.
 

"maybe the Cheez-its have the hole in the center for more even baking and to prevent them from poofing up in the center."

The little square White Castle burgers have a hole in the center for exactly that reason. They cook evenly and do not warp.
 
The current value of a machine really isn't the most important financial consideration, its the cost to keep running an older machine compared to what a new replacement would cost.When I can spend a fraction of the cost on a used baler to keep it running compared to a new one sure doesn't work for me to buy a new one.The round baler I've used the last 2 years with almost zero problems cost me $300 at an auction,a new one to replace it would be North of $20,000 and my cows eat the same hay with either one.The difference is I still have the 20k$ in hand.I actually have 8 of these balers that I have a grand total of less than $3000 total invested, so even subtracting that I'm still over $17,000 ahead of a new one and its not like the new one will run forever with no repair bills.
 
Keep thinking that and also keep thinking new equipment is
the only kind that you can use and farm or reapair and I’ll
keep my old equipment running
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As long as your able to do your own repairs, old equipment will get you by. When you have to pay for repair work....it's over.
I had a friend had a dump truck business that grew up to 25 or so trucks. Finding good help and tearing up equipment drove him out of business. He ended up with one truck, that he drove, and made a good living.
 
I love this topic, having farmed as my only means of employment for the past 40 years, I am pretty sure very few have ever gotten rich from the proceeds of products grown on their farms. Now I do know farmers that are very rich, and have only farmed their entire working lives. Nearly everyone of these guys sold a farm on the edge of a near by city for many times more than the value of ordinary farm land, and it has been developed into more city since. There are at least 3 growing cities with 100 miles of me, and many of these suddenly rich farmers have moved into our county.
Simply put , the value of farm crops and livestock can no longer pay even the cost of buying farm land let alone make the farmers rich while they are farming. As a kid I always heard said, the only time a farmer has any money during his life, is when he sells his farm. More true today than ever before.
Sure fellas used to make a good living on small farms and raised big families, but.... the price of farm produce and the volume a farm could grow was very different too. I remember corn yields at 2 ton per acre, and the price being $200.00 per ton in 1970. Back in 1970 10 ton of corn could buy a new pickup truck. Gas was .40 cents a gallon and farms cost $500 per acre. The average household spent 30% of the take home pay on groceries, and a house in town could be purchased for $30,000.00 on a 25 year mortgage. Now 10% of take home pay for the average household buys the groceries, and very few homes can be bought in any town near me for $300,000.00 , times are very different. Most farmers are up to their eyebrows in debt, as are most consumers. Cheap credit keeps people buying, and as long as there is demand for things like homes and farm land, the prices will continue to rise. Banks make money available by creating loans and credit cards, and so long as the suckers continue to make payments, banks will create more credit. It isn’t printing money, it is just creating credit. The more credit people have, the more they are willing to pay. And so long as everyone keeps paying, the ball keeps bouncing along. Those of us that are older feel good our property is now worth much more than we paid for it. Are we rich because of this, not really, if you sell your house or farm, you still have to buy something to live in. And inflation devalues your savings faster than interest can grow them, and interest is taxable as well.
The economy of the western world has been changed dramatically in the last 40 years, and people on average are not as well off as they were. Remember when dad could go out to work and mom could stay home and raise the kids? Not anymore, it takes two incomes to earn enough for a household now. And of course the banking industry is doing just fine. Ever notice how much advertising the banks are doing, offering credit cards, loans, mortgages, consolidation loans. Even reverse mortgages to older folks. 40 years ago it wasn’t very easy to borrow money, now they throw it at you. Gold standard ended in 1971, anyone remember that, and money was always tight. In the decade that followed what happened? Inflation, then high interest rates of 20%. Then lower interest rates and more available credit and naturally more inflation.
Farmers have been running on the same treadmill as everyone else, trying to grow a few tons more, or milk a few extra cows, or whatever to make enough to get through. I don’t have any answers, but I do have a good idea what has happen. There has been a steady transfer of wealth ,from the many to the few. And I see less younger people being able to afford to buy homes or farms, and spending their lives paying interest on borrowed money while living in rented homes. The real money is made lending money, or speculative land purchase/sales ,not growing crops.

Got a long way from growing hay with some old equipment on rented or free to use land, but this is why many farmers are doing what they’re doing. Running like heck just to keep from going backwards.
 
Let’s remember, if no one ever bought new equipment, where would you get your used older equipment. And JD and CaseIh don’t stay in business to sell parts for old equipment, they are in business to sell new equipment. And if they couldn’t sell any new equipment, would soon close their doors. All older equipment could only run to fail once replacement parts are no longer available. New equipment has to do enough work to justify the cost of ownership.
 
I agree with much of what you have said. Naturally if a farm gross sales are a half million there is the expectation that there could be some profit margin. And as with any business, having the ability to write off the cost of capital purchase, like a new tractor, will allow the business owners to shelter/defer some of the taxable income from the margin of profit. In other words, why freeze your backside on an open tractor to save money, just to watch the income tax man take it from you? If your making money, you only get to keep the crumbs anyway, we all have to share our income with the tax man. He won’t freeze his backside to help you, lol
 
I grew up on a farm but started from scratch a commercial / industrial construction business that I sold after 43 years in business. I always viewed money / profits as a score. Retaining money (building net worth) is necessary to get through the bad years that will surely come. It is also necessary in construction to obtain bonds. Steady growth is the only way to keep control. You make more money if you do a volume of work you are able to keep control of. How big you could or should get depends on your personality, capabilities, and quality of employees. One size doesn't fit all.
 
What makes you think those like me that use old equipment are 'just getting by'? I could go and pay cash right now for any new piece of equipment or tractor I wanted and the main reason I can do that is I never have done it.Like automobiles my wife bought a 97 Toyota early 1998 for a bargain price to clear the lot of the older models.It now has 270,000 and some miles on it,have spent very little on it over the years.I know people that trade cars for new ones every 3 or 4 years and they have spent thousand$ and thousand$ to ride and go the same places we went in the Toyota. Our money is saved their money is long gone,best money you save is the money you don't spend.I guess if a person spends all the money they make regardless that is a different deal,we don't we live off less than half of the money we have coming in every month.A lot of times I have pulled the cash out to buy something I thought I wanted but after counting out the cash I've reconsidered and decided I didn't need or want the item as much as I thought I did.Spending cash out of hand is totally different than signing up for monthly payments it seems.
 
You may be surprised how many are farming the Government more than their farms....there is a fair amount of Government incentives to make it happen. Tax write-offs are only part of it.
 
I think too LLC. and Incorporated family farms are going to find it tougher and tougher with the Cartels and Government subsidized produce coming in here (USA) from other countries. Our Government incentives are just not enough to compete anymore, however I do think small family farms are always going to be around. People like local Farmers Markets, farm to table restaurants w/ organic fresh produce, etc., but don't quit your day job!
 
Here are my thoughts: charge the highest amount you think fair for what you are producing. Always try to improve quality and increase quantity to the point that quality and your ability to handle the work load allows. Your kids as a labor force will end eventually. The hard physical labor will need to be mechanized. You will need the extra $$$ to do it. Or quit. So, hate to admit it but the money you make now pays for what you will want (or need) in the future. And above all, be safe. Injuries wipe out a lot of success fast.
 
Hey 1948CaseVAI - did you ever make it to Salina to eat a Cozy Burger? I would assume you have heard of it, at least. Bob
 
Up until about eight year ago we used to row crop our ground rented ground costum work on the side,then the price of corn went north of $7and bean$14.Rented ground doubled in price or someone went behind you back and offered more, that is went I got out.We just farm what we own and do a little custom baling.I have five years to go before retirement and people are wanting to put rent my ground all ready.
 
Didn’t suggest that you were “just getting by” . The problem with having cash to pull out and go buy something with is, if you never do, what is the point in working to earn it? It has to been invested into something that is inflation proof , or it looses value. I know you like to invest in Gold, probably a safe bet. You are 68 or 69 , if you went out and bought a new truck, car or tractor once every ten years for the rest of your life, how many could you buy? So you can make do with less expensive used stuff, sure I have and do in plenty of situations. But I am not going to deny my self a few new pieces of equipment that I need to earn my living, just so the tax man and my those that will inherit my estate will benefit from my labor and need to count Zeros in my bank balance.
 
New things don't do a thing for me,now if I could find a 1976 Ford 3/4 ton 4WD like I had one time I'd spend some bucks on that.I'm real happy with what I have only things I buy now as far as equipment or tractors are if they are a bargain,making money has always been one of my most favorite 'hobbies'.The challenge of buying and selling is the fun part for me.
 
Leaving a lot of money on the table at $2 per bale. That’s construction hay price. In my neck of the woods probably $5-$7 for a small square. If you want it delivered and put up in the barn add another dollar a bale.

Maybe things are different in Alabama.

Vito
 
Half a million sounds like a big number but in farm sales , especially full time, I think it would make life pretty hard. I don’t know your percentages of costs to profit but most businesses are 2% net profit. Of course you can skew the numbers anyway you want.

Vito
 
Yeah I don't know SV, that aerator looks awfully newfangled. Lol! Also, yes, YT needs a like button like YT has. :vD Think Hay Talk has one too. And what's that fancy doo-hickus on your 40....20? 4030? The one with the gooseneck on it. I was backing under mine today with the truck thinkin', "boy, I wish I could do this with one of the tractors".

Mike
 

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