No matter what size farm you have, you have vendors. Maybe your local farm store is your primary vendor, and you spend a couple of thousand dollars a year for your chickens, or you go to the local co-op or fertilizer plant, which get tens of thousands of your dollars. In either event, every farm is dependent on vendors.

There is one big difference between their businesses and ours. Each business between the farm/ranch and the consumer has a profit margin that is firm and literally guarantees their company profits regardless of the loss(es) we may take down on the farm. Though this is a long-established practice and has been largely accepted by farmers and ranchers, my question is: Should it be?

Recently, my articles have written about ag-related numbers. Numbers that show how many farmers and ranchers there are in the United States. How much this small percentage of the population produces a product that ultimately brings over a trillion and a half dollars into the country’s GDP.  I wonder if there is any group of men and women of similar numbers that produce nearly as much as we do toward our nation’s GDP.

Let’s consider our farms and ranches with the same focus on profit margins as other businesses in the supply chain.  To me it doesn’t make sense that these businesses who profit from our work do not share our losses when we are losing money by the bucket full. A close examination shows that it is the farmer/rancher who racks up debt to cover the losses and is part of a business model that seeks to use equity in one of the last bastions of equity in our country, agriculture. Frankly, I only know of one company that seeks ways to help their customers, even by reducing their own margins, Becks Hybrids. I suspect it is the ownership of the company that allows this consideration as they are family owned.

The real question to be asked is what we do differently to lower the losses we must deal with and maybe, just maybe, find a little bit of profit. One thing is to educate ourselves. We must learn to understand how the vendors we use do business. The agriculture industry encompasses so much more than we see from the tractor seat. It involves politics, world economics, diplomacy, and unfortunately, a last consideration, feeding a nation and other parts of the world.

As an example, I listened to a popular FarmTuber on YouTube talk about financing a new grain bin through his local bank despite the significant interest rate difference from the USDA’s Farm Service Agency because there are so many hoops to jump through. I ran some generic numbers on his project and found that he could just about double the bin size for the additional interest he is paying. Some of us remember years in the late 70s and early 80s when we paid 17-20 percent interest and it took years to dig our way out. Many did not. This is one reason I urge every farm to maximize their use of Farm Service Agency money before utilizing other lines, even in the good years.

In future articles, I will suggest ways each of us can look at our farms and ranches with a new eye toward how to apply different practices effectively.

Horse Sense: There’s a reason why horses make the best therapists. They’re honest.

IndianaAg@BlueMarble.Net