Reply
Veteran Contributor
Posts: 485
Registered: ‎09-20-2018
0

Re: Harvest Report October 22

[ Edited ]

Sorry, didn't mean to sound offensive or jerk-like. Its just that more than a few of the nice folks round here are always trying to cherry pick words out of what I write to give me a hard time rather than consider the suggestions I put forward, and sometimes its hard to tell whether a response is being serious or just trying to make my day more difficult than it ordinarily is.

 

I owe you a beer or something next time I come out there.

Veteran Contributor
Posts: 485
Registered: ‎09-20-2018
0

Re: Harvest Report October 22

[ Edited ]

If you're talking about bankruptcies, they key number is that there are far more than there should be for people who feed the world. Nearly everyone I talk with in corn country knows someone who lost their farm because of the poor economics in the industry. I have read numerous stories about small farmers being in danger of being gobbled up by the well-capitalized behemoths, or taken down by the old estate tax laws. It shouldn't be that way, and it wouldn't have to be if more people in the industry were willing to embrace new ides that have worked in other industries that were challenged by similar economic hardships. Steel is a great example, there are incredible stories about how young people freshly minted with new MBAs and knowing little of the steel industry were able to turn around dying specialty steel firms with the infusion of better business practices that previously were not thought of by generations of the prior owners. It happens all the time in so many different business areas, it certainly could happen in the farming industry. 

 

You may think that % comparisons are meaningless but its the best way to compare apples to oranges without peeling their skins. I'll give you an example, look at crime statistics. There is one group that has 100,000 of its members convicted of felonies, and another group has but 20,000 of its members convicted of the same felonies. If I were to ask you which group would be more likely to commit a felony in the future, all other factors being the same as they have been, by the raw data and since you think percentage comparison is meaningless, you would say the group with 100,000 convictions. Your answer would be based on the first group having five times the number of members with felony convictions. But if I then told you that there are a million total members of the first group and only 100,000 of the second group, then your answer would have to change, since the probability of the first group being convicted of a felony is only 100,000 out of a million (or 10%) whereas the probability of the second group is 20% - 20,000 out of 100,000. Its twice as likely that a member of the second group will commit a felony than will a member of the first group.

 

The only way you get to the correct answer is to equilibrate the total members of the two groups, which is what the percentage calculation does. That's why it is extremely valuable when comparing characteristics of groups with different numbers of members, for it provides a fair picture with consideration for the size of the groups being analyzed. 

Honored Advisor
Posts: 17,371
Registered: ‎05-13-2010
0

Re: Harvest Report October 22

[ Edited ]

I think to be considered a "farmer" you basically have to fill out a schedule F income tax form with $1,000 gross sales.  If there`s a "rash of" small farm bankruptcies ...or any farm bankruptcies for that matter.... haven`t seen it yet.  

 

I would think small farmers would be best to weather the storms because they are more apt to have off-farm income and probably own all the 100 acres or whatever that they farm.   But maybe some 5 head goat milkers in New Mexico have fallen on hard times?

 

IMO those size most at risk is the so-called mid size farm of 1500 acres that is big enough that it needs "big new equipment" and occasional employees, but doesn`t have the volume to afford either.  Also they are too big to have time for off farm income.    But everyone`s mileage varies.

Veteran Contributor
Posts: 485
Registered: ‎09-20-2018
0

Re: Harvest Report October 22

I don't know if you saw this post earlier, but its a story that really provides a good overview of the bankruptcy situation in the small farming community across many States.

 

https://www.fb.org/market-intel/bankruptcies-higher-across-farm-country

 

Some thing like 400 or more farming businesses per year seeking bankruptcy protection, with farms in foreclosure. Whether its a big number or small number is not all that important. Sort of like the adage that the economy is in recession when my neighbor loses his job, but its in depression when I lose mine. Many of these bankruptcies, and many other cases of farming businesses just getting by, could be prevented with some critical changes to the industry and how the government interfaces with the industry. 

 

Maybe someday...

Honored Advisor
Posts: 17,371
Registered: ‎05-13-2010
0

Re: Harvest Report October 22

Well, there`s a steady 1 or 2 farm bankruptcies per 10,000 farms whether corn is $2.50 or $8, it`s just a natural progression....I mean it isn`t something to say "Oh my God, let`s do something now!!!" .   I don`t see any spike in farmers quitting bankruptcies or rich old goats just throwing in the towel.  Of the 2 out of 10,000 bankruptcies, it`s probably "truck farms" grossing $1,000 in New Jersey or California....they come and go with the wind. 

 

 

But as your buddy Hobbyfarmer told you once about Bigshot "Stamp Farms" with his 40,000 acres going broke.  Well corn was 6 bucks when that happened and you can bet he Jew`d  his input suppliers to the bone with his volume.

 

https://www.michfb.com/MI/Farm_News/Content/Crops/Stamp_Farms_saga_will_likely_continue/

Veteran Contributor
Posts: 485
Registered: ‎09-20-2018
0

Re: Harvest Report October 22

Let me try to siimplify this since you're missing my point.

 

As of 2016, there were 30 million businesses in America, farm and non-farm, and there were a total of 25,227 corporate bankruptcies. That works out to 8.41 bankruptcies per 10,000 companies.

 

As you noted in your chart, there are about 2.5 farm businesses per 10,000 that go bankrupt each year.

 

Which means that farm businesses account for about 30% of all business bankruptcies in the US every year. 

 

I don't know of any industry that has a higher rate of bankruptcy.

 

Add in the farms that have sold out to larger farmers (have you ever looked at a chart of the number of farms in the US per year and seen how that number has fallen ?), and it tells the astute businessperson that there are problems associated with farming that other industries have solved. Now maybe some of those problems are unique to the farming industry alone, but there also must be some problems that are due to poor management or industry conditions that could be improved.

 

And that's the point I am making. There are industry conditions that contribute to farming having a higher rate of failure than most any other industry, I have pointed out a few of them with respect to getting the best prices for your products, land costs, and overall production costs that both could be lowered if small farmers banded together and advocated for their causes. 

 

I did not intend to have a statistics discussion about what industries suffer from what rate of failure. The bottom line is, as every farmer knows, the failure rate in farming is higher than it should be. Acknowledgement of the problem is but half the solution. That failure rate can be brought down, and should be...that's the point and that's the basis for what farmers need to do in order to improve their financial condition and increase their profitability.

Veteran Advisor
Posts: 1,504
Registered: ‎06-30-2010
0

Re: Harvest Report October 22

[ Edited ]

Still, questions on the math, bankruptcy percentages.

---

 From your comments, 

 

As of 2016, there were 30 million businesses in America, farm and non-farm, and there were a total of 25,227 corporate bankruptcies. That works out to 8.41 bankruptcies per 10,000 companies.

 

As you noted in your chart, there are about 2.5 farm businesses per 10,000 that go bankrupt each year.

 

Which means that farm businesses account for about 30% of all business bankruptcies in the US every year. 

---

 

First, assuming around 2 million farm businesses (from one of those articles above), then 2.5/10,000*2,000,000 = 500, so around 500 farm bankruptcies.

 

If there are around 30 million businesses (farm and nonfarm), and if there are around 2 million farms, then farms represent around 6.7% of businesses.  If there are around 25,227 business bankruptcies, and let's just say 500 farm bankruptcies, then farm bankruptcies represent around 2% of business (farm and nonfarm) bankruptcies.  

 

Yes, 2.5 is around 30% of 8.41, but if farm bankruptcies were 30% of all business bankruptcies, then 30% of around 25,227 is over 7500, which appears to be 15 times the number of farm bankruptcies.

 

I'm no expert, nor a mathematician, yet it appears to me that something is still screwy in the numbers, and farm bankruptcies do not account for anything close to 30% of all business bankruptcies, more like 2%.

Honored Advisor
Posts: 8,647
Registered: ‎07-18-2011

Re: Harvest Report October 22

interjecting an article from May 2018  is foolish..... and an article disagrees with itself..... Look at the charts, which prove that bankruptcies have not gone up at all in the last 17 years.  

Your continued presentation of nonsense is very annoying.

 

Be at least relevant

Veteran Contributor
Posts: 485
Registered: ‎09-20-2018
0

Re: Harvest Report October 22

What's annoying is that you cannot understand the points I have made even though I have made them into simple bullet points. 

 

I did not make a point about whether bankruptcies are rising or falling. What I wrote is that bankruptcies among farming businesses are perennially the highest of all industries as measured by the percentage of them that declare bankruptcy. I showed you that the total business bankruptcies in America each year is about 8.41 per every 10,000 companies, of which 2.5 of those 8.41 are farm businesses. 

 

That is a staggering number, nearly 30% of all business failures per year coming from the farm industry. That is a big problem that small farmers need to address and solve, the way other businesses in other industries already have done.

 

If you think that's nonsense, so be it. I cannot make the point any clearer, and these statistics come from the same government sources that process the bankruptcy filings. 

 

I can lead the horse to water but I can't make him drink. I can give you the actual data but I can't get you to believe it. It doesn't matter to me, this is your industry, not mine. Either accept the reality and do something to change it, or become a victim of it.

Veteran Contributor
Posts: 485
Registered: ‎09-20-2018
0

Re: Harvest Report October 22

[ Edited ]

This is why I use percentages because otherwise you are comparing apples with oranges. 

 

The 25,227 total bankruptcies is based on 30 million total businesses in the US, farm and non-farm. What you did in you analysis is compare the farm bankruptcies to the total number of business in America, and then extrapolated down to get a number of farm bankruptcies. That's not an accurate picture for what I stated. What I wrote is that the number of bankruptcies in the farm industry was higher than most if not all other industries, and as such, the comparison has to be made relative to the total number of farms, not the total number of all businesses.

 

So, taking your numbers from the farm industry, which is correct, there are 500 bankruptcies per year out of 2 million farm businesses. That leaves 24,727 bankruptcies among the other 28 million businesses in America. Now let's adjust these numbers so that we are looking at the same number of businesses and how many bankruptcies occur for that same number of businesses, so that the rate of bankruptcy can be established, because the rate of bankruptcy tells us what the odds are for a business to fail within their industry, which is statistic I presented.

 

 

Let's calibrate the farm industry to the rest of the economy to start, by saying that 500 bankruptcies per 2 million farm businesses would be the same as 7000 bankruptcies per 28 million farm businesses. Now we have the same number of businesses so we can make an equal evaluation. We said above that there are 24,727 bankruptcies per 28 million non-farm businesses, which combines all industries. But there is not one industry in the American economy, there are many. Let's say there are ten. And let's also say that the non-farm bankruptcies are distributed equally among all ten non-farm industries. That means that there are 24,727 bankruptcies divided into ten industries, which means there are 2,473 per industry. 

 

So, based on an equal number of businesses, there are 7000 farm bankruptcies for every 2,473 bankruptcies in any one other industry. Based on these calculations, within their industry, farms fail at almost three times the rate of businesses in any other industry. 

 

What I did previously with the 30% number was a simple calculation of the rate of failure of farms within their industry relative to non-farm businesses of all industries, accounting for the difference in numbers of businesses. But in reality, the figure above is the most telling, and validates what I wrote previously : the rate of business failures within the farming industry are probably the highest of any industry in the US economy.