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Advisor

Re: Getting ahead of 2012 input costs

Truthfully, I've met don kraft. He is a decent guy that just loves to promote dialogue. He and i agree on many things and disagree on some, but i suspect he would be a good neighbor.  I know many retired guys with alot less intellect (but think they're geniuses) than don.

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Kay/NC
Honored Advisor

Re: Getting ahead of 2012 input costs

You are forgiven...goading for some has been raised to the level of a fine art. 

 

We have had a lot of ideas and issues to deal with as the year winds down, and a new one approaches. I know you crop guys are all about fertilizer, seed, and fuel.  We are about cutting costs on a contract hog farm. 

 

Mike is finishing up the fall seeding/overseeding this afternoon.  This seed (cereal rye that will be cut in a vegetative stage for haylage next spring) cost exactly what our supplier charged last year. 

 

I've gone ahead and paid all the property taxes....just decided to whittle away at them over the course of a couple of months, after receiving the bills in early September.  They are due by January 5th, and it has always irked me to sit and write that one huge check every December...I would wait until the 31st, I hated it so much.   

 

This way, it is done before November 1st, in three or four separate payments.  I don't know why, but it always seems something bad/expensive comes up right along with them every year, to make me feel really beaten down...I know that is just a mental perception, but it feels good to have them done way in advance. 

 

Doing the pile of tax bills in pieces didn't cause me quite the pain, either, although I did save the worst parcel's bill for last.  Eight hog houses and 101 acres on that one is a bear! I know this isn't exactly what you meant, Jeff, but I think I will start making early payment of property taxes a regular thing from now on. 

 

In contract livestock production, our costs are less variable, but I have started looking for some savings again.  Some things are low-hanging fruit. 

 

I deleted some items from farmowners coverage...stuff we can easily repair or inexpensively replace that had been on the policy, where we didn't feel needed coverage anymore.  I will be watching  policies for future opportunities to do this. 

 

I am concerned that our premiums will rise, due to all the storm damage in our region from last April's tornados and Irene in August.  We have to help pay for everyone else's losses. 

 

Just got our health insurance quote for next year, and it was only a few pennies more a month than for this year...$370 and change, for  both 2011 and 2012.  That was a pleasant surprise.  Thank you Blue Cross Blue Shield!  With no huge labor cost spikes, comp premiums should stay level, too. 

 

Mike is doing proactive things, maintenance and repair wise.  He sees that staying ahead is cheaper than falling behind. 

 

We are also pitching the cost share proposal for a mortality management facility, and waiting to see how much the NRCS's share will be.  Honestly, I think we will probably buy it, either way.  The money it will cost, even without costshare, doesn't earn in savings anywhere near enough to offset what we pay for the rendering truck each month now, and it will fit into the 179 deduction.  So far, I have gotten their input for sizing, and know what the rotary drum to match that will cost, without their engineered facility of storage bins and such to go with it. 

 

I have paid next year's land rent to our one small adjoining landowner...do that every year by September 1st for the coming year.  That way, she has it in hand when her tax bill comes.  I think timing like that is very important to some people. 

 

Vehicles and equipment are all okay, so nothing expensive anticipated there.  I do not forsee any land purchases this coming year.  The second small one I bought into last fall is about through the partition sale process, and I ended up with it.  Smallish legal bill expected there, but that will be money well spent. 

 

Some repair projects to the farmhouse and the country store building I am fixing up, but that is the fun stuff.  Mike is in charge of some, son in charge of others, farmhand is scheduled to work to help them during a pig depop, so no extra labor costs should be involved.  The main thing with repairs in the house is the time and inconvenience involved. 

 

Hope all of you have a good harvest, and not too many cost increases to look forward to next crop year!

 

 

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kraft-t
Senior Advisor

Re: Getting ahead of 2012 input costs

Niether do I.

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kraft-t
Senior Advisor

Re: Getting ahead of 2012 input costs

Debt is debt and it doesn't matter whose debt it is. It's a bit hypocritical to hyperventilate about government debt and then continue with business as usual with your own fiscal house out of order.

 

BTW government didn't create the debt. It was the reaganites trying to starve the beast. Cutting taxes while not being fiscally responsible.

 

The fact is that your city friends are picking up the tab while you write off $100k in machinery in one year. You have it mighty good and you shouldn't be complaining about taxes if you avoid most of them.

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Nebrfarmr
Veteran Advisor

Re: Getting ahead of 2012 input costs

I remember (sort of) fondly my days of farrowing sows, and feeding out the pigs.  However, my newest facility was built in 1981, and I was still using buildings from 1973, in 2008, and it just got to the point I had to rebuild, or get out.  When the only place less than 100 miles that would still bid on, and  take a farm-trailer load of hogs closed up, I decided it just wasn't practical to make the investment. 
Do you raise your own feed, or buy?  I raised all my own.  There even used to be a soy extruder at a Co-Op 10 miles away, that would process your own beans into meal, and sell the oil for you, and take it off your bill.  That is no more, either.

It is getting to the point I'd either have to be big enough to justify the investment, or turn to other things.  Fortunately, I have experience in construction, welding, and concrete, so odd jobs during slow times are easy enough to find for extra income, although with a 5 yr old and a 2 yr old, I'm glad crop prices are strong now, as I don't have to take on many, and can spend more time with the kids.  I can already tell the 2 yr old is more attatched to me because of the extra time I get to spend than our 5 yr old was at that age.  Thinking about it makes me feel guilty, bad for her, but I had to do what I had to do at the time.  At least now, we are bonding more, because I can spend more time now, but I wonder what I/we missed out on.

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Nebrfarmr
Veteran Advisor

Re: Getting ahead of 2012 input costs

I didn't mean to make it sound like I thought he was evil or anything, and I like a good debate as well as the next guy,  but this is the BUSINESS section, and from what I read of the rules of this forum, the heated discussions belong in the Ag forum, not here. 

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wt510151
Senior Contributor

Re: Getting ahead of 2012 input costs

As your post clearly states, location is key to deciding operations. I can still small lots of hogs in this area. Still using older buildings though. Usable and efficient enough to offset the capital cost of new ones. My implements are old, but working and debt-free. My conservative nature and diversified income streams have allowed me to profit when one enterprise has not. Isn't that all that matters in business?

I can tell you as a farm kid that time with a parent is very precious. Spend it well and include them in the farm's safe activities. Maybe it is only bookwork now, but I learned so much helping when I was young.

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Kay/NC
Honored Advisor

Re: Getting ahead of 2012 input costs

As for feed, our integrator provides that and all veterinary inputs, plus all hauling, etc., and subsidizes propane for heat in wintertime.  We have our labor, electricity, small expense for LP, and our facilities.

 

We also do the waste management, which has gotten proportionally more costly, with fuel and regulatory expansions.  At least the kids make good money for sellign the hay, and we have our sheep and daughter's 30-some horses fed very well. 

 

As for teh bonding thing, you may find that your older child is more attached to her mom, but you can build and strengthen the bridge with individual attention.  Since she is the big sister, a big girl now, and old enough to hang with Daddy on parts runs and such, you might want to invite her along, alone, when you can.  When the younger one is around, the attention you can share is split and the smaller, more needy one often gets the lion's share.  You might be amazed at how fast that perceived distance could be closed. 

 

Glad you realize the need to spend time with your kids...money truly isn't everything. 

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bruce MN
Advisor

You validate don's point prescisely

One of the inherent problems with a democratic system of government  is that while an electorate can change the administration of it it because of the mistakes they see as having been made in the past, as he clearly points out, the public tends to take all of the actions and policies of the past and lump them into a generic "the government". With no distinction.

 

Danged straight they did what you say. AND what don said.

 

All in all, the biggest accomplishment of all of it has been to morph allot of middle class people into "little people". Not so that anybody would have taken much notice as it progressed. Of course, not all of them have faced up to it or picked up on it.  Or if they have, haven't quite got it all ciphered out as to how it did.

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hardnox604008
Advisor

Re: Getting ahead of 2012 input costs

Trend national debt vs national incomeFor what it is worth, government debt is a relatively small portion of the total. Does not include projected entitlement costs.

 

In an imperfect but interesting way you could say that our record wealth inequality is told from this rise in debt. Most "wealth" is actually the "promise" of someone else to pay be that a government, a corporation, subprime borrower, credit card holder, whatever.

 

Of course what happens at some point of debt saturation is that a larger and larger portion of that "wealth" is no longer wealth because it isn't going to be repaid- the realization of that fact comes slowly then rapidly. And the messiness of that compounds itself as bank collateral values go bad etc.

 

This isn't futurism it is nowism.

 

BTW, note the explosion higher beginning in 1981. That isn't just government spending, that is the Reagan/Thatcher financial liberalization where they figured out that if you let all sorts of financial shenanigans go on you can tax the booty and keep government running even with lower marginal rates.

 

That game ran hotter andf hotter until 2007-8 when it finally hit a wall. We "dealt" with each of the financial crises that led up to it- S and L, Mexican Crisis, Russia/LTCM, Naz bubble and each time we bailed one out we just made the players bolder.

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