Farms can be profitable but you earn every penny. A lot of people don't know this but if you buy a home with more than ten acres you cannot get a conventional mortgage and pay 1-2 points higher in interest. So if you own a 250 acre farm worth a million bucks and want to borrow 150k to improve things you have to go to farm credit or somewhere else and pay a higher rate even though you are only borrowing 15% of your equity. Because you are self employed you need to file three years of taxes including all of your business taxes. (but you can go to a chevy dealer and buy you and your wife matching silverados with no money down and no payments for 90 days....)Meanwhile someone who works as a school janitor can get a zero down subsidized loan for 100% of the cost including some of the closing costs. This is by design to encourage you to give up and sell out to a bigger entity.
Farms can be profitable but you earn every penny. A lot of people don't know this but if you buy a home with more than ten acres you cannot get a conventional mortgage and pay 1-2 points higher in interest. So if you own a 250 acre farm worth a million bucks and want to borrow 150k to improve things you have to go to farm credit or somewhere else and pay a higher rate even though you are only borrowing 15% of your equity. Because you are self employed you need to file three years of taxes including all of your business taxes. (but you can go to a chevy dealer and buy you and your wife matching silverados with no money down and no payments for 90 days....)Meanwhile someone who works as a school janitor can get a zero down subsidized loan for 100% of the cost including some of the closing costs. This is by design to encourage you to give up and sell out to a bigger entity.
IDK, but I know the "Farm Bills" they pass are fucked up and cost us a lot of money. Hard to say how of much of it is really helpful.
IDK, but I know the "Farm Bills" they pass are fucked up and cost us a lot of money. Hard to say how of much of it is really helpful.
Are farms and ranches profitable, or not? Is it just a matter of luck over skills?
Are farms and ranches profitable, or not? Is it just a matter of luck over skills?
Remember that IQ regresses to the mean, and interests are rarely heritable. What made your grandfather a good farmer is unlikely to make you a good farmer, ergo family farms are unlikely to stay in the same family.
Remember that IQ regresses to the mean, and interests are rarely heritable. What made your grandfather a good farmer is unlikely to make you a good farmer, ergo family farms are unlikely to stay in the same family.
Good point. Although where are the fresh farmers ready to take over such farms? Surely the owners would want to sell to a smaller farmer.
Good point. Although where are the fresh farmers ready to take over such farms? Surely the owners would want to sell to a smaller farmer.
The young farmer wannabe cannot secure financing to start farming. It's almost as difficult to pass a farm to the next generation. All input costs are way too high. When a used 4wd tractor sells for 250,000 or more, it's impossible to pay for it and everything else with$6/bushel corn. I am part of a family farm that is transitioning to the 4th generation. My generation is sacrificing equity to help make it work.
The young farmer wannabe cannot secure financing to start farming. It's almost as difficult to pass a farm to the next generation. All input costs are way too high.
When a used 4wd tractor sells for 250,000 or more, it's impossible to pay for it and everything else with$6/bushel corn.
I am part of a family farm that is transitioning to the 4th generation. My generation is sacrificing equity to help make it work.
It's similar to other industries. People work on farms, do well, buy a farm, and do their thing.
It's similar to other industries. People work on farms, do well, buy a farm, and do their thing.
A read an article that the cost of massive machinery and related expenses to farm large plots of land actually eats into the profit so much that a farmer using traditional methods (horses to plow for example) was able to out-earn his neighbors with a much smaller plot of land.
The article went on to say lots of farmers have been lured into the idea that more farmland and industrial equipment equals more profit, but that was really a marketing position.
Perhaps someone with better google-fu can find the article for me.
Knowing this, I think the American farmer has been sent on a journey to purchase oversized, automated machinery that they don't fully own, maintenance, seeds and pesticide from Monsanto, and take government loans to grow mountains of food that could go to waste, while traditional farmers own simpler tools, have the ability to service them on their own, and can repurpose what they can't sell by feeding their family and farm animals.
A read an article that the cost of massive machinery and related expenses to farm large plots of land actually eats into the profit so much that a farmer using traditional methods (horses to plow for example) was able to out-earn his neighbors with a much smaller plot of land.
The article went on to say lots of farmers have been lured into the idea that more farmland and industrial equipment equals more profit, but that was really a marketing position.
Perhaps someone with better google-fu can find the article for me.
Knowing this, I think the American farmer has been sent on a journey to purchase oversized, automated machinery that they don't fully own, maintenance, seeds and pesticide from Monsanto, and take government loans to grow mountains of food that could go to waste, while traditional farmers own simpler tools, have the ability to service them on their own, and can repurpose what they can't sell by feeding their family and farm animals.
Interesting
Interesting
its tough work to just not lose money, and easy to go upside down very rapidly
its tough work to just not lose money, and easy to go upside down very rapidly
(post is archived)