Thursday, January 6, 2011

"Rich Farmers"

Lately, the finances of farmers and ranchers have come up as a discussion piece for many of our national news shows. While I will not debate the farm program and subsidy payments, keep in mind they are less than 1% of the total federal budget. All farm payments do not add up to the amount we spend on food stamps and related programs. However, that is not the point of this blog.

For some unknown reason, some of the public has the misguided idea that farmers and ranchers are the owners of a "cash cow". What is true is that we handle a lot of cash, what is not true is that we get to keep any if very much of that cash. In agriculture, we are not rich until we die.

Just this week, we found out that the tractor we sent in for a minor tune-up will cost several thousand dollars. That is several thousand dollars that come right out of what would have been profit. The prices of the equipment necessary for our trade and their replacement parts have risen dramatically. Recently we have watched helplessly as oil prices spiked driving up the prices of fuel and fertilizer. We have also watched as the price of the seed we plant has gone up steadily each year.

If that wasn't enough, farmland prices have reached new highs. While the real estate market has continued to lag, the price of the land we depend on has sky rocketed. Not only do the high values make it difficult to expand our farm and ranches but it drives up the rental rates. You see, we cannot afford to own all the land we need to make a living so most of us rent more land than we own.

One shining light of hope did happen this congress with the temporary stay on the estate tax. Remember what I said about farmers and ranchers dieing poor. Many of us would have to sell some of the family farm or at very least take out a mortgage just to pay the inheritance tax. I always thought it seemed silly to pay again for something Dad, Grandpa and Great-Grandpa all paid for.

After all of that remember that we don't get to set the prices we receive for our crops and livestock. Often prices move at a moments notice and for no good reason. Even the smallest movement in price can result in a loss. To top it off, if the prices we receive move higher, often the prices we pay for inputs also increase at the same rate (and they never go back down).

I don't mean to paint a grim picture of life as a farmer or rancher. We all know what this way of life is like when we pick it. If we wanted to be rich we would chose something else as our life's work. I just wanted to give you an accurate picture of what a farmer's finances look like. I am still proud to be a farmer and as long as the bank will let me I will continue to grow your food.

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