How do farmers make any money?

[Eaglesfate]

Taking out loans and Subsidized farm checks.

 

[etpm]

The OP made a timely post for me. I have long wondered how farmers make any money considering just how much they must spend on equipment alone. And today I was driving along the Skagit valley in WA state, taking the back roads for fun. During my drive I saw many farms and all the equipment they had. I followed a BIG tractor towing a BIG trailer loaded with something that I couldn't identify for 20 minutes. I couldn't pass safely. It was going 15 MPH on a 50 MPH road. So not only equipment costs but labor costs. I looked at the farms and saw huge operations that are probably not really huge but just looked so to me. I kept thinking about how much money was tied up in the farms I passed.
Eric

 

[Lineman North Florida]

The problem with a lot of the farm subsidies is when you go to that EWG website database you will find that many of those subsidies go to farms with a corporation title, when you click on ownership interest you will find that the corporation is made up of doctors and lawyers, people who have never sat in a tractor seat, meaning people who really don't need it and aren't depending on it to make it until next crop season. If Musk digs around there he will find mass amounts of corruption as well.

 

[hayden]

The problem with a lot of the farm subsidies is when you go to that EWG website database you will find that many of those subsidies go to farms with a corporation title, when you click on ownership interest you will find that the corporation is made up of doctors and lawyers, people who have never sat in a tractor seat, meaning people who really don't need it and aren't depending on it to make it until next crop season. If Musk digs around there he will find mass amounts of corruption as well.

Why does it matter who owns the farm?

 

[Sprinkler Fitter]

According to one neighbor, farmers just sit around cashing checks from the government.

I watch Sonne Farms, Millennial Farmer and Larson Farms oh and also Welker Farms, seems like they all work very hard especially Sonne Farms because they have cattle and crop’s. The other three are just crops and Welkers farms about 10,000 acres.

 

[Jrasband]

New documentary featuring Joel Salatin

 

[bcp]

Farmers lose money per acre but make up for it by having lots of acres.



Bruce

 

[ultrarunner]

You roll the dice and bet on favorable weather and pests kept in check and disasters don’t happen and prices hold.

Family grows/sells 3300 Christmas Trees annually… it takes about 7 years so it’s a long game.

No loans or crop subsidies… or even AG break at the California site…

Soil prep is expensive and one year with record heat most seedlings lost.

That said it has proven viable over 10 years where trees retail from $10 to $20 per foot…

 

[LHF2019]

Good point about retail vs wholesale, but I think there is more to crop pricing than some Poindexter throwing darts at a board.

And don't forget dairy. You don't know what your getting paid until a month after the milk leaves the farm.

According to one neighbor, farmers just sit around cashing checks from the government.

Then your neighbor should farm if it is that easy.


Farmed all my life. Dairy, custom work, now hay and beef sales. It is not easy and for the most part there is no money. Goes in one hand out the other. All about cash flow. Still don't own the farm. Rent it. It is dad's family ground and mom still owns it. Got my start at 20 when dad passed. not the way anybody should experience their own business. I still work outside the farm to make things easier. Thread on here on the hay portion of the business.

 

[Jstpssng]

Then your neighbor should farm if it is that easy

 

[Hay Dude]

When someone asks me “hows the money in farming”?
My answer is “Like soup through a fork”

I took a “bottom line” approach to it. When I started for real about 20 years ago, I was given the opportunity to mow fields. I had 2 tractors and just dragged mowers behind them and did a lot of light land clearing, too.

Then I got the idea that rather than a couple rotary mowings, which seemed like I was cutting viable hay and leaving it, why not bale it instead? Most of my land owners were happy to get rid of the field mowing costs.

I crunched the numbers. I bought mostly relics and junk and started. Then it just grew larger and I was able to afford a step up from junk.

I just took on an additional 170 acres in the last 2 years. It keeps on growing. One thing I will never do is pay rent for hay. I did one time and it’s just a waste of my money

Maybe someday I’ll own a Fendt

 

[ConawayFarms]

From what I've gathered, a lot of these farms are running on pretty tight margins and rely heavily on government subsidies and crop insurance to stay afloat. They also often specialize in a few key crops and use economies of scale to make it work. It's a tough business, and you're right, the equipment and input costs are insane.

 

[Hay Dude]

It’s nothing now to spend $5,000 on just fixing a few things on a decent size Ag tractor. Heck it’s $1,000 just to drain & refill a CVT transmission and replace the filters.

 

[Lineman North Florida]

Why does it matter who owns the farm?

It doesn't matter to me, but doctors and lawyers don't need a government payment to make their farm survive until next year, but a small farmer/farm family might, doctors and lawyers do pretty good at doctoring and lawyering. Point is when yearly government payouts reach the level that doctors and lawyers want in something is wrong and usually a little corruption and if left un-checked will ruin it for the real American farmers ( the ones who are actually sitting in the tractor seats ).

 

[Hay Dude]

It doesn't matter to me, but doctors and lawyers don't need a government payment to make their farm survive until next year, but a small farmer/farm family might, doctors and lawyers do pretty good at doctoring and lawyering. Point is when yearly government payouts reach the level that doctors and lawyers want in something is wrong and usually a little corruption and if left un-checked will ruin it for the real American farmers ( the ones who are actually sitting in the tractor seats ).

I sold a farm tractor to a doctor about 5 years ago. He said he was “vineyard farming” down in Galena, MD.

In other words, he is growing grapes to make his own wine and receiving monstrous tax breaks to do it.

 

[mikester]

Can anyone help me understand how this works?

There's three routes in general:
1. You inherit thousands of acres and a running farm business and equipment and enjoy being a business owner
2. You earn too much income from another source and enjoy the farming and losses to offset your taxes payable
3. You won the lottery, spend all your cash on equipment and land, now you can keep farming until it's all gone.

 

[Hay Dude]

There's three routes in general:
1. You inherit thousands of acres and a running farm business and equipment and enjoy being a business owner
2. You earn too much income from another source and enjoy the farming and losses to offset your taxes payable
3. You won the lottery, spend all your cash on equipment and land, now you can keep farming until it's all gone.

Don’t be so negative. Especially when you don’t farm.

4. You use your own money, take your own risk, and get zero handouts and still do ok farming.

It’s not just your #1,2 & 3.

Some people DO know how to manage a profitable farming business without being given a dime. Ask me how. Been doing it a long time, too. Was given nothing.

 

[chim]

One larger farming operation here thrives by knowing how to play the game and take advantage of any available programs and political connections. When they need to color outside the lines, they have friends in positions who can accommodate them.

 

[masseyrider]

When it comes to crop failure, many farmers buy insurance.

I can only speak for Kanuckistan. Have you seen the cost of the insurance?
And their reluctance to pay if you need it.
You have to prove beyond a shadow of a doubt you did everything possible to salvage even a small part of the crop.
They deduct everything possible from your payment.
My parents never carried crop insurance. Pa figured if you saved the insurance cost every 6-7 years you saved the value of an entire crop.
About 35 year ago we were hit with a massive hail storm. It took the bark off young trees. We still had more than half our peach on the trees. Total write off.
The neighbour after all was said and done didn't even get the cost of the insurance back.

It's like when the government announces payments to farmers. City people think farmers are cashing in on their tax dollars.
Just before I retired from farming 20 years ago we had an issue with Plum Pox. It's a viral desease that affects the quality of stone fruit and slowly kills the tree.
Farmers recieved payment for pulling the existing trees, replacing them and helping them survive for the 4-5 years before they had a crop again.
I received a significant payment, yes.
Government doesn't announce publicly that it's taxable income.
The one time payment put me and all my other farm income into the 35% tax rate. They got back more than 50% of their money back.
If I had depended on farming income totally I would have been on welfare.

 

[lman]

For farming to be successful, the operation needs to continually grow by consuming the less efficient operations. My sister's family started out with a small dairy operation in northern WI that has grown to about 1500 milk cows. My brother in law told me that their financial planner advised them that they should double their operation every 10 years. I believe that was about 20 years ago when they were still trying to grow the operation for all of the family.
The farmer that farms the 150 acre field across the road told me that he's farming 4600 acres of corn and beans. I know another guy that farms about 700 acres and he told me that his semi truck has been draining their bank account, about $20,000 in the last year. He said that hurt but he's got to get his grain to the elevator.