How do farmers make any money?

[ultrarunner]

Some really are in the land business and farming/ranching covers the holding costs.

 

[Hay Dude]

Some really are in the land business and farming/ranching covers the holding costs.

Also keeps the taxes down and generates income while they sit on it

 

[Dryland Farmer]

You mention meat. Think about dairy. Just take what you pay per gallon of milk. The dairy farmers just get cents of that milk you bought. I think class III milk is around $20 per hundred weight currently. When I quit in the early 2000’s it was around $8. But probably cost $13 to make that 100 weight. Imagine the uproar if your food doubled just so the farmer could get a little more. We can’t have that though.

Correct me if I'm wrong but doesn't paying so little for milk still end up costing the consumers when dairy farmers that can't make it have to be subsidized.

 

[Hay Dude]

Pretty sure this will draw some fire, but so be it. I'm a crop farmer, corn and soybeans. Used to raise hogs from feeder to market.
There is good money made farming, and has been for at least the last 10 years. Before that it was still profitable, just not as much as now. That's why land is in demand and the price stays high. Crop insurance will take a lot of the gamble out of it. Sure, if you have new equipment and more than you need, you're going to have trouble staying afloat. If someone is actually having trouble, there is a reason for that, but it won't be made public here.

Agree. I also see farms where the adults who own it get dragged down by kids who keep crying for the biggest & baddest equipment.

Don't use YouTube for a barometer of the farm economy. Those guys need views to keep their money coming in their account, and nothing draws views like a doom and gloom story.

That’s right. The You Tube guys have to keep it interesting, or who’s gonna watch? Heck some of the women got some big taters to show off, just to keep you watching, too. Some of the others make up drama to make it seem like a reality show.

Like I said, if it was as bad as you're hearing, land would be cheap, but right now every land sale is a bidding war, and it's farmers bidding against each other with stupid-high bids.
It's no different than any other business, and you have to run it like a business, and be smart about it. Period.
But livestock guys earn every penny they make. But, again, if there wasn't money in it, they wouldn't be doing it.

Won’t draw any from me. I think you’re right on it.

 

[Dryland Farmer]

But livestock guys earn every penny they make. But, again, if there wasn't money in it, they wouldn't be doing it.

Another saying that fits ''if it was easy everyone would be doing it"

 

[Hay Dude]

Another saying that fits ''if it was easy everyone would be doing it"

Or
“From the road, farming looks easy. It isn’t”

 

[Hay Dude]

The concept of Farming comes pretty easy to me, but it is still hard to execute. I believe it is what God made me to do. It feels natural and I can do it 24/7 and still enjoy it.

 

[Dryland Farmer]

The concept of Farming comes pretty easy to me, but it is still hard to execute. I believe it is what God made me to do. It feels natural and I can do it 24/7 and still enjoy it.

I feel there is no other livelihood where you can feel the Lord's Hand on you successes and failures so profoundly as in farming. When you watch approaching storm clouds and know they can bring a much needed or crop damaging hail or wind, it brings into context how small your own contribution to you successes or failures, even knowing you gave it all you had. I can tell by how you always keep your farming and the Lord together you feel the same.

 

[RayIN]

He is living the old saying " keep on farming till it is all gone"
The guy is very wealthy and farms for fun.

Farming and fun don't fit in the same sentence.

 

[quicksandfarmer]

Two hundred years ago, roughly 90% of the workforce was in agriculture. Today it's about 3%. And they produce about ten times as much food. This change was brought about by an ongoing series of technological improvements.

But each technological improvement that increases productivity also decreases the amount of labor needed, and decreases the number of people employed in farming, and ultimately, the number of farmers. Farming has been like a game of musical chairs for at least the past 100 years, with each new advance in productivity a bunch of players have to leave the game.

At the same time, the technology requires capital. If you don't have the capital, you can either leave the game, or you can borrow money. But borrowing money increases the chances that one bad year could force you to be the next player to leave the game.

 

[rvds]

Why does it matter who owns the farm?

I saw a documentary once that explained how some of the subsidies worked. Some clever farms were incorporated and had many shareholders EACH of which was eligible for a cheque even if their stock was only worth a thousand dollars and the cheque was more than that.

 

[rvds]

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.

I thought you said earlier that you did not pay rent for the land? I was offered 425$ per acre to rent two of my farms this year and as I do not net that much I am seriously considering it. It sounds like somebody is giving you some dimes?

 

[Elviscaretaker]

Good topic. Watching Clarkson's Farm is also great entertainment value here on our farm/ranch. I've been at it for only 4 years now after shuttering my companies during covid. Sold off my holdings, moved to another state and over paid for a run down neglected farm. But, I own it all free and clear including the new and old equipment I bought. We started off haying it after cleaning up the fields etc. Weeding was a very suck job since my wife doesn't want chemicals used and doesn't do the weeding herself One cost not needed). Keep in mind, I was a hood rat and had no clue about farming. After trial and error we still hay but now it's to support our cattle (second cost savings (?), not relying on others for it). Each head brings a Hefty price because of the breed. For now I sell limited but in 3 states. Direct sales is the only way this will pay for itself and I figured it would take 7-8 years to build our herd the way I want it, to produce some of the best beef in the US. Plus, I need the head count to be able to supply consistently) I do this all myself except for things only a vet should do (my vet also has a sense of humor and has taught me to preg check, pull calves but only kids so far, give shots and so on). I'm still bleeding $ but each year it has gotten less. Being able to fix a baler, tractor (new and older) swather, stack wagon ( thanking the Lord I learned about those!) etc will make this easier to sustain down the road. Will it make me rich? No, it'll cost me money that'll I'll only ever get back by selling this prime land/location I'm sitting on. But that's not the point for me. It's not a hobby, I don't (won't) take subsidies and my goal is simple.... I just want it to pay for itself (not cost me $) while producing a healthy meat that I can sell, not to just the wealthy (half my sales go to the tech industry) but the average person who normally thinks this breed is out of their financial reach. The rest of my animals are for personal use. By the way, horse are the equivalent of boats, just start throwing $$ at them. Do you need to be a little nutty to do this? Yes, but you can't be stupid. I use all of the things Ive learned over my long life to do this. Yet, I'd not change a damn thing either as I love the work and dealing with the animals vs the animals in the corporate world. Also, green doesn't always mean JD, think Duetz Farr. Great tractors but crappy tier4 so I electronically eliminated it, no, it won't cause any issues down the road doing it on one of these. Did I get off topic again? LOL Yes, you can make money at this, if you can survive the start up costs and/or were born into it. Again, I've been fortunate in my abilities in my life so I can eat the start up costs until this is self sustaining. But, I'm doing stuff that no city folk would ever dream of including myself 4 years ago. ALL of my animals are trained to be handled by me, I even picked up an "untrainable draft mix colt" that I've been able to train, not having a clue on what to do... I just started treating them all like I would my dogs as I trained them for what ever job I had them for and it worked out rather well. I also run a daily spreadsheet so I know exactly what, where and why on everything here and where it goes including daily health checks with notes.
Back to work, final check on the animals and to look for any predators. I do this every night. Thermal makes it easier

 

[rvds]

I’m not speaking for LHF2019, but it’s easy to have big (gross) profits and no money if your expenses were really high.
If I make 200K gross profits, but equipment payments, inputs, expenses (repairs, fuel, insurance, etc) were abnormally high, like $150,000, you could have little “money” left.

I do not understand this logic. Gros profit is normally gros sales minus input costs? After that net profit (taxable income) is what is left after all the other expenses are deducted. In my case I have never had to use any depreciation to reduce my net income to avoid income tax and indeed tractors purchased new in the 70s are worth more now than we paid for them.

 

[JasperFrank]

There are two classes of farmers. One just does a strategic crop like Soy, that have target prices all set up and a minimum buy level. If you can always be under that minimum buy level, you are good. On scale, these do very well. Everyone else has to always maintain or find a new market. Some just go to direct distribution as a subscription delivery service or get very specialized doing "exotic" things and contracting directly with many restaurants and vendors.

 

[LHF2019]

Correct me if I'm wrong but doesn't paying so little for milk still end up costing the consumers when dairy farmers that can't make it have to be subsidized.

So which would you prefer? Pay more in the store knowing it goes to the farmer or not see the costs every week but know it your taxes are attempting to help the farmer with programs? In a nut shell this is the simple explanation. But it is not that simple is it? There are greedy middle men just waiting to take. If it wasn't so difficult there would be more onsite sales farm to consumer options where you would know exactly who is getting your money. But again there are so many government hoops to jump through. I'm milking now for my personal use. I do it every year. It would be great if I could sell the access. Milk, cream, and butter. 100% raw.

 

[Dryland Farmer]

From a personal perspective I would rather just pay more for milk, simple because I don't consume much. From a farmers perspective I would almost think I would prefer to be able to make a living without assistance. I suppose if it didn't work you wouldn't be doing it.

 

[Hay Dude]

There are two classes of farmers. One just does a strategic crop like Soy, that have target prices all set up and a minimum buy level. If you can always be under that minimum buy level, you are good. On scale, these do very well. Everyone else has to always maintain or find a new market. Some just go to direct distribution as a subscription delivery service or get very specialized doing "exotic" things and contracting directly with many restaurants and vendors.

Just two, huh?
Got it.

 

[lman]

Another way farmers southwest of here are making money is growing solar panels. 20,000 acres in the last couple of years. You can't blame them at $1,000/acre it's hard to turn down that money. Who needs corn, soybeans or potatoes anyway. That's what was grown there previously.

 

[Snezzy]

Another way farmers southwest of here are making money is growing solar panels. 20,000 acres in the last couple of years. You can't blame them at $1,000/acre it's hard to turn down that money. Who needs corn, soybeans or potatoes anyway. That's what was grown there previously.

If grass or weeds grow under the panels you've got to mow. Or instead you could keep sheep to do the mowing. Science-fiction writer Philip K. Dick wrote "Do Androids Dream of Electric Sheep." Voila!