Glad I’m Not Farming Anymore

I really liked farming, but I’m rather glad I’m out of the business these days, especially when I see headlines like this one over at agweb.com:

Betting the Farm and Losing: Banks Seek Collateral as Debts Rise

The financial situation for a lot of farmers is pretty stressful right now. Farm income is down 42% from what it was in 2013, farm land prices are dropping and they’re predicting land prices could drop 20% or more over the next couple of years. Corn prices are less than half what they were in 2012, cattle and hog prices are down 38%. Corn and soybean inventories are going to be at the highest level in something like 30 years. The University of Illinois says many farmers in the state are going to be losing about $28 an acre on their corn, and while soybeans are still profitable, they’ll be lucky if they make $67 an acre this year compared to $229 back in 2010.

The situation isn’t good when you look at the financial data. The Federal Reserve Bank of Kansas City is reporting a decline in the financial health of farmers. They have less working capital, are having to resort to taking out loans just to meet operating expenses. In the Midwest banks are reporting that about 22% of farmers will have a negative cash flow for 2016.

As usual the farmers who are getting hit the worst are the young ones who are just starting out or have only been in business a few years. They don’t have the land base or the credit history to get enough capital to buy equipment or to even continue operating.

Farming is a difficult business at the best of times. And it operates under financial conditions that pretty much no other business faces. How many companies would invest huge amounts of money in infrastructure, equipment, land, buildings, labor, etc. when they have absolutely no idea what their product will sell for when it finally gets to market?

That’s the situation farmers face. Farming is a long term proposition. You invest hundreds of thousands of dollars in tractors, combines, planters. You spend tens of thousands of dollars on seed. You invest huge amounts of money buying or renting land. Invest tens of thousands of dollars in labor to plant and tend to a crop.

And you have absolutely no idea what that crop is going to sell for because you have no control over the markets. You could have a boom year like we had a few years ago when the drought drove commodity prices up through the roof, or you could lose your shirt because prices on the commodities markets fell. You can make predictions, run models, listen to the experts, make educated guesses. But in the long run you’re depending on a market that has so many variables; weather, political climate, disease…

I miss farming, but I am glad I’m not doing it any more.

3 thoughts on “Glad I’m Not Farming Anymore

    • That pretty much sums it up. My father said almost exactly the same thing. Every business has some level of risk, but farming… We once lost 16 milking cows. We got up one morning, went down to the pasture to bring them home, and there they were. Lightening strike during an overnight thunderstorm. We were only milking 40 cows at the time, so that was a third of our income gone. Took quite a while to recover from that one.

      Liked by 1 person

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