Consumer Electronics Show 2021 - John Deere gets a couple of "Worst in Show" awards

[ovrszd]

Obviously your numbers don't work. Farms that gross $100K aren't buying much, if any new equipment without substantial off farm income supplements. I operated a small operation with a partner in the early 1990's and he and I grossed far more than that from low value crops and custom farming for others.

My friend binned 1,600,000 bushels of corn this Fall. Contracted at $5.95 per bushel. $9,520,000. And then there's his soybean harvest.....

 

[Jchonline]

My friend binned 1,600,000 bushels of corn this Fall. Contracted at $5.95 per bushel. $9,520,000. And then there's his soybean harvest.....

Corn for Ethanol? but yes this is what I was looking for. At $9mil you can afford $800k machine! More importantly you need to keep buying the newest stuff so you have enough 179 equipment write off to offset that huge income.

 

[ovrszd]

The meek and unsure typically carry less debt than the bold and confident. The windshield is always larger than the mirror.

Spoken as my farmer friend would.

 

[ovrszd]

Corn for Ethanol? but yes this is what I was looking for. At $9mil you can afford $800k machine!

Nope. He's not in favor of Ethanol at all. It's been real hard on our neighbors up North.

 

[Jchonline]

Nope. He's not in favor of Ethanol at all. It's been real hard on our neighbors up North.

I am of similar mind….good for him.

 

[plowhog]

any person or business might have a reason to take on more debt than they have to when conditions favor it.

Agreed. Some posters here misinterpreted that I disfavored your approach. Not so. My point was that by using debt, whatever happens will be magnified. Good or bad. And debt, of course, is not without its own cost.

 

[JLH4]

I had a friend in OK who farmed 1000+ ac. of cotton and wheat but owned very little land and equipment, he leased the land and contracted the planting, harvesting, spraying etc. His hardest job was scheduling the right crews at the right time and right place with the right equipment. He did go check on the different crews or they would screw him in a heartbeat, but he made good money, I do not know about debt.

 

[California]

It may seem unnatural to the small-scale farmer. But larger businesses usually run on OPM - Other People's Money. Rented money is just another piece of 'equipment' in the stable of operating assets. This allows a far larger operation compared to only the owners' savings invested for operating capital.

But as Plowhog noted, debt can magnify losses as well as income.

 

[JohnInLoudon]

Hoping you could explain a bit in more detail. I understand that a publicly-traded company keeps debt to offset cash on hand to keep others from buying out the shares and then taking the money and killing off the company. How does debt help a private company or small farm?

Most private and public companies take on debt if the increased revenues generated by doing so will service the cost of the debt and generate profits. The cost of debt has been relatively low over the past several years, which encouraged companies to increase debt loads.
For data on US farm debt go here: USDA ERS - Assets, Debt, and Wealth
Bottom line is that US farm real estate debt is trending up and US farm non-real estate debt is trending down.

 

[techguy003]

Deere takes a lot of heat over this issue probably because of their stature in the market. Truth is as you say, a much wider issue that many, if not most manufacturers hold very similar positions on.

Well said.
I couldn't agree more - it's an industry issue.