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Honored Advisor

Was your farm in the black in 2017?

Apparently only 50% of farms had profit on the farm income side of their ledger.  

 

http://hppr.org/post/2018-forecast-us-farm-income-sink-12-year-low  

 

 

 

After peaking at upward of $120 billion in 2013, farm income for the past three years seems to be hovering at about $60 billion.

“Quite frankly, when you really dig into the numbers and you look at median farm household income — not all farm income but income from farming — it's been negative since 2013,” says John Newton, director of market intelligence at the American Farm Bureau Federation. “That means more than 50 percent of farmers are losing money.”

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21 Replies
Senior Advisor

Re: Was your farm in the black in 2017?

Wondering  '' what ''' the message in 14,15,16,17  towards marketing  ? ?     

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Honored Advisor

Re: Was your farm in the black in 2017?

I got an elevator newsletter saying about local accountants reporting much red ink this tax season for farmers and bankers report loan payments in the rears in many cases.  I think basically farmers lost money until 2009-2013, then the party ended, the punchbowl taken away and lights shut out.  I think after 2017 we have a lot of partiers staggering around trying to find the door.

 

It seems you need a job and second job for your wife and get a job yourself for family living expenses and if everything goes right, then the farm pulls it`s own weight.  If you have a car dealership or construction business, then you can buy farms and use the farming as a tax dodge.  

 

I guess I live it and still am a little surprised, my farm makes money every year, just not enough for all living expense.  I had a guy seriously tell me that the only year he had to pay income tax was 2014 and he said if his land expense was free he would`ve still lost money and the rent he paid totaled the loss on his schedule F.   He still would like to "sure rent another quarter to get back on my feet" ...go figure???  It`s sounds like a sickness.

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Veteran Advisor

Re: Was your farm in the black in 2017?

It's all black dirt in Iowa.  Smiley Happy

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Honored Advisor

Re: Was your farm in the black in 2017?

Yep tax on
vehicles,
Real estate
Most things bought at store
And YES again in '17 on
Income
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Senior Contributor

Re: Was your farm in the black in 2017?

Yes Jim, true enough.

 

But in CSR do we trust...ehhh?

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Advisor

Re: Was your farm in the black in 2017?

yes.  Though less than 2016, which was the best.  

 

On the report, this challenge most farmers find themselves in a bind with deals that looked good five years ago, but ate up equity that was needed to cover years like this.  I may feel sorry for them from a personal, “been there” perspective, but this is business.  You live and die from decisions made.  It speaks to the need for due diligence, asking questions like “what if?”  

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Honored Advisor

Re: Was your farm in the black in 2017?

BA there is nothing more misleading than farmers and their incomes..... the majority donate labor and claim their business made some money.  and the foolishness goes deeper....... the same ones think they personally made money by saving payroll taxes from the pay they did not get.   Smiley Happy   

 

 

The ones I account for made good NET money in 2002-7......  But net income was not great after 2008  Expenses went up equal to the price of commodities.

 

That newsletter makes the mistake most often made...... Trying to define profitability by gross income.  USDA makes the same mistake.   It is wasted time and especially this last few years... totally misses the mark.

The big untold story is what has happened on the expense side of the equation.  two segments of expenses have held their own in interest and chemistry, but over whelming is machinery, including motorized equipment, and seed.  Both went up faster than grain prices and don't come down.... Farm machinery(including non motorized and irrigation) for the last ten years has gone through the highest inflation period ever.  Seed continues to climb when taken in an overall perspective.  Corn might make us feel like it has flattened out, but when it peaked the controling companies drove up prices on alternative crop seed.... 

When you view the net profit graph from the expense side over time.  The last three years have been brutal.

Free labor doesn't even help.

 

 

 

Senior Advisor

Re: Was your farm in the black in 2017?

The  boasting  of  how  we  all  had  it ''' figured out ''' earlier this decade,  are now excusing from the experts & all,  eating (marketing - spending) humble pie ---

 

Previous decades of farmers went through economic cycles, withstanding ups  &  downs , although handled most of it with sporadic times of un-paid labor--- These were the folks that were snickered due to they didn't keep up with the times--- The ( number -1 )   thing being  Chapter __ Filing wasn't part of the their business plan--- How many Headlines have we observed only to see just a few months down the road we read again ''piles'' of excuses of how it just didn't turn out right --- Then another outfit comes along and miraculously buy this operation for cents on the $$$$ -  Smart business - in the eye of a  ''' very ''' few ---

 

We  LOST  the hard working generations  of '' dumb farmers '' who produced  aha ''' commodities ''' to the roulette wheel antics, located on the west side of Lake Michigan ---

$9 hogs back then - raising cheaper now - believe it , not hardly ---                   

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Honored Advisor

Re: Was your farm in the black in 2017?

two thoughts to add

 

1 the farm equipment/ motorized / freight costs / farm expenses..... lets not forget what it cost nation wide to meet the tier 4 demands of regulation.  Deere claims 20K to 40k per unit produced,,,,, The increasing demand for equipment caused by trying to get the last of the non def motors in trucking and farm equipment and higher grain prices really drove costs up.  just one expense drivers and not going away...

 

 

2  Ever notice how many want to advise farmers to survive on marketing advice...... but have you ever heard a marketing adviser say ....... cut your costs and pay off debt quickly.... or see how many hours/years  you can put on that equipment............. when it means far more to profitability that that last 5 cents of price.

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