55 Years And Counting From The Tractor Seat

 By bill whitman

As I sit at my desk this evening pondering the future of farming, as I know it, it has become clear that things are changing so fast that it’s easy to get run over. If you’re not moving forward, you’re sliding backward. There’s no such thing as idling. So how does the traditional family farm fit in?

The answer is complicated and by no means assured. At 66, I have memories of so many family farms, and the vast majority are no more. We’re constantly being taught that we need more acres and more livestock to keep pace. I suggest that size has very little to do with it. It’s all about management of assets. If one farms 500 acres with old but well-maintained equipment, will it produce enough income to feed a family? I think we have to look at the gross dollars generated per acre to determine the eventual outcome. The crop yield really doesn’t care whether the equipment that planted, maintained and harvested it was the latest and greatest or 50 years old.

Let’s think simply. A moderate size farm would be 500 acres. So, we’ll calculate based on 250 acres each of corn and soybeans. If corn yields 175 bushels per acre and is sold for today’s cash price of $4.45 per bushel, the gross income for corn is $194, 687. Using 55 bushels of beans per acre at today’s cash price of $11.86 per bushel, the soybean gross income is $163,075. With a gross farm income of $357,762, you can start doing the costs. Simplest way to calculate costs is to minimum till with limited equipment requirements.

It’s my view that the size of the farm determines the equipment needed. If you can make enough money to feed your family in a tight year on 500 acres, your equipment costs should be very low. You can find plenty of quality used equipment for a fraction of new price and be able to maintain it in like new condition. As long as you don’t ask the machines to do more than they’re capable of, your cost per acre should be minimal. Somewhere between 500 acres and 1,500 acres is the line where the use of newer equipment becomes more appealing. It does come with a significant cost and it can be a back breaker.

Another factor is the standard of living you and your family have. I’ve had an internal debate for years about living on credit and using credit sparingly and sacrificing some of the extras we’ve become accustomed to. When I was in Vo-Ag in high school, everything was about equity and working your way to ownership and operating out of your bank account instead of credit. Fifty years later, I think the guys that did use credit were able to live considerably better and have a similar net worth if not more than those of us that did not use credit “effectively.”

Actually, I would be curious of how the numbers come out for you. Not specific financial information but generic costs. I do also think that the smaller operation has some income potential that the larger farms don’t have the time for. Doing off-farm heavy equipment work can be profitable. Brush-hogging for $100 an hour or small excavation jobs with your grader blade or skid steer, there is opportunity waiting. Or like most of have done, bale hay and sell it.

So run the numbers and see whether this year holds promise of survival or whether you need to mitigate the potential losses. Either way, we survive.

IndianaAg@bluemarble.net