How do farmers make any money?

[Hay Dude]

While I never farmed my grandparents did and I lived on their dairy farm growing up, my wife's family still farms.

The thing most people don't realize is to be a farmer also requires you to be a GOOD mechanic, understand finance, project manager, meteorologist, very self sufficient and the list goes on.
Farming is full time job as most on this site well know.

I find it amazing how little non farmers know or understand what farming is all about, I can see a time when only huge farming operations will be able to survive.

Yep.
Soon it’ll be a few hundred corporate farmers with their kids posting pictures of big iron they don’t own.

“You’ll own nothing” is a saying that is becoming more and more of a reality with each passing year- especially in farming.

Of course, some of the older farmers have managed to own everything, but if you are just getting started out, you’d have to either have a rich relative, be willed an entire paid-off farm operation, or farm with 60’s relics to begin farming now. Or as I do, have significant other off-farm income.

I can tell you with 100% certainty farming is a dying profession. It hasn’t or won’t die overnight, but if you look at the numbers, there’s fewer and fewer farms every year.

 

[Gator6x4]

It's sounding like people don't understand that if you spend $100k on a tractor and deduct it, you aren't saving or getting back or saving $100k in taxes. You are only saving the taxes you would have paid on that $100k of income. The less you are making, the lower your tax bracket and the less savings. The higher the tax bracket, to more you save. Realistically the savings is in the $0.15 to $0.30 per dollar. And of course if you aren't making a net profit from the farm, your savings will be zero.


Ah, I forgot the mortgage on the land, so that adds more to the per-acre cost.


That's a break on the realestate taxes, right? That seems pretty common and helps, but it's yet another cost per acre.

How about section 179 of the tax code.

Section 179 Tax Deduction | Equipment

Try our Section 179 tax calculator to find out how much you could be saving. Learn how to use tax deduction for equipment or other business expenses.

www.nationalfunding.com

Don’t owe as much in taxes the year you took the deduction?

Example the tractor cost $70,000.

Taxes owed. $20,000

Tax Credit toward future taxes due $50,000

 

[Gator6x4]

Yep.
Soon it’ll be a few hundred corporate farmers with their kids posting pictures of big iron they don’t own.

“You’ll own nothing” is a saying that is becoming more and more of a reality with each passing year- especially in farming.

Of course, some of the older farmers have managed to own everything, but if you are just getting started out, you’d have to either have a rich relative, be willed an entire paid-off farm operation, or farm with 60’s relics to begin farming now. Or as I do, have significant other off-farm income.

I can tell you with 100% certainty farming is a dying profession. It hasn’t or won’t die overnight, but if you look at the numbers, there’s fewer and fewer farms every year.

Speaking of big equipment, how would you like to buy one of these, jeez.

 

[Dryland Farmer]

That is supposed to be one of the easier machines to maintain, not as much technology.

 

[Gator6x4]

That is supposed to be one of the easier machines to maintain, not as much technology.

I don’t know about maintaining. That monster must cost a fortune. Then the implements prices would probably start nose bleeding by just looking at the price.

 

[quicksandfarmer]

The reason I asked was because of somebody is incorporated they are drawing a paycheck. So while the business shows a loss, they still have money to live on.

The money still has to be there. Corporations don't manufacture money out of thin air. And bankers are less eager to lend to small businesses than they are to individuals.

 

[Dryland Farmer]

I don’t know about maintaining. That monster must cost a fortune. Then the implements prices would probably start nose bleeding by just looking at the price.

Apparently the engine slides out on a skid or something.

 

[Gator6x4]

Apparently the engine slides out on a skid or something.

I hope it has a good set of step to climb up into cab.

 

[Dryland Farmer]

I hope it has a good set of step to climb up into cab.

It actually has an elevator.

 

[Hay Dude]

The money still has to be there. Corporations don't manufacture money out of thin air. And bankers are less eager to lend to small businesses than they are to individuals.

I have a corporation and I can tell you it is extremely easy for the officers to draw a salary while the corporation has a loss.