55 Years And Counting From The Tractor Seat

By bill whitman 

 All indications are that if you’re a crop farmer, 2024 is going to be a very tight year. While we have had a few years of profitable agriculture, about every 20 years or so there comes around a season or two that causes us to evaluate our life choice. I believe that 2024 is going to be one such year.

There are many of us that remember the late ’70s and early ’80s with interest rates 17 percent and higher and crop prices that wouldn’t support a third of that rate. Isn’t it pretty close to half of that now? We watched as thousands of farms and ranches and a whole bunch of dairies went out of business. What I remember is that this followed a time when lenders were begging farmers to borrow more money.

I still remember my PCA rep coming out to the field and asking me to borrow more. I declined, but I still remember thinking what I might have been able to do with it. I started farming in the late ’70s following an enlistment with the Air Force. I had a couple fairly good years where I worked full time and farmed part time. Twelve-dollar beans came along, and I thought, now is the time for me to go full time farming and took on quite a bit of ground. I clearly remember trying to purchase a used big tractor and was turned down, but hey, you can buy this big NEW tractor with little down. I still remember trying to figure out the logic of this. Point being, so many things of the last five or six years remind me of those days.

There are some fundamental things experience has taught us. First, take time to evaluate every decision that affects your finances. I like to use the anacronym, G.E.D. to make decisions: (G)ather the facts, (E)valuate the facts, make your (D)ecision based solely on the facts. Take the emotion out of your financial decision making. I saw a study once that indicated that 90 percent of decisions made by emotions were wrong, and 90 percent of the decisions based on facts were best.

I often see historically successful farms reducing rarely used equipment to cash. It is a better use of these dollars. It’s hard to always keep in mind that every piece of equipment you own is an asset with cash value. Since it has cash value, it has a related cost. The cost in the interest or value lost by ownership without a return value in use. Don’t misunderstand, sell unused equipment at fair market value, not fire sale prices.

On operational expenses, use your cash on hand to pay for the expenses that would cost you the highest interest rates. It may also be to your advantage to negotiate with each of your venders. There is often wiggle room or ways to save through negotiation.

The next thing you should do is preventive maintenance. Doing repair work pre-use, even though it may appear that it can wait, will often cost in a more severe breakdown and loss of time, in essence proving to be far more costly than simply repairing it.

Finally, be mentally prepared to absorb bad news. From the weather to crop or livestock prices to unforeseen expenses, if you’re expecting it, the effect on you emotionally will be far less than if you place your expectations in hope only to have bad news following problems. It’s also important that you communicate with your family. Help them to understand what you’re experiencing and allow them to help you. Let them know in advance that the extra’s we have gotten used to during the past several years just aren’t going to be there this year. Let them know that things will improve, that all you have to do is work together to get through this year.

So, when you think about how to get through this year, use any or all of these suggestions to survive to farm or ranch another year. If it’s any consolation, when city folks open their eyes, they’re going to discover they’re in much the same situation.

IndianaAg@bluemarble.net