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Are You an Average Farmer?

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Traditional Farmer
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PostPosted: Tue Aug 13, 2019 12:23 pm    Post subject: Are You an Average Farmer? Reply to specific post Reply with quote

Article on Drudge about farmers and debt,said the average farmer in the USA was $1,300,000 in debt.Glad I'm not average.Can that figure really be true?
 
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jddrawbar
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PostPosted: Tue Aug 13, 2019 12:28 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

NO....
 
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JD Seller
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PostPosted: Tue Aug 13, 2019 12:41 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

That number would be correct as an average. Here in North-East Iowa the number would be a lot higher than that. With land costing $7500-10,000 an acre now. Large tractors and combines costing hundreds of thousands of dollars even used. So a million dollars would not go far.

200-300 acres of tillable ground will cost $2-3 million dollars. Annual rents are $250-350 for this year. So rent for 2500-3000 acres of ground will wipe out a million just for the rent. 500 head of fat cattle will be around $750,000. Heck 500 feeder calves would be in the $450-500K range.

With the average grain farm being 2000-3000 acres makes farming a very capital intense industry.

Local farm family has bought over $10M of ground in the last ten years. They are good farmers and managers but that is a staggering amount of money just in land. They have cattle and equipment debt on top of that.

The numbers are mind numbing. It is hard for me to keep them in perspective. I started out with $10,000 saved in 1978. Got by on family living cost of $10K for years. Now $50K is not living fancy for a family of four.
 
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NY 986
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PostPosted: Tue Aug 13, 2019 12:54 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

Thankfully, no although I have plenty of headaches in lieu of being that far in debt.
 
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Geo-TH,In
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PostPosted: Tue Aug 13, 2019 12:55 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

JD,
A Purdue grad and fourth generation farmer lives a mile down the road. He has many buildings where he stores his new Green Tractors. Not sure how many acres he farms because his farms are spread out all over the place. The road in front of my place is his last name. When we ride bikes past his place I see nothing but big $$$$$$$. Not to me mention his grain storage, grain drying, irrigation system in fields. Everything he has is John Deere. I never seen a ZTR with a cab and AC. He has a green one.
Before his dad passed he changed the name of the farm to an LLC otherwise his farm would be in the historical record as a family farm that has existed for over 100 years.
 
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NY 986
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PostPosted: Tue Aug 13, 2019 1:07 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

I see a correction coming that will drastically affect values. Part of that is already starting to take place with stricter child labor laws that will in time affect groups such as the Amish and the Mennonites. Those two groups lean extremely heavy on several kids bringing in sizable pay so the parents can swing deals on paying 10,000 dollars per acre for tracts of land. The dairy industry will weather more correction as the years go by as more people will consume less milk and be more receptive to non-dairy substitutes. If demand were based on fluid milk consumption things would be downright traumatic today for even the best managers and high equity farmers. From what I see in NY even the grain farms rely on exotic financing to be able to grow in size. Trouble is there are fewer and fewer execs that want to play farmer with their money if there is not a hard nuts and bolts type return on having money in farming. Don't know about other parts of the US but those three factors in 15-20 years could make a lot of ground here worth less than a 1,000 dollars per acre then.
 
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fixerupper
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PostPosted: Tue Aug 13, 2019 1:24 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

I agree with JD Seller. It doesnt take much to accumulate that much debt today considering the size of our farms in the midwest. In northwest Iowa toward the last of September the farmer has part or all of his seed, fertilizer and chemical costs on loan, both semi annual rent payments, he has just gone through the combine to get it ready for harvest and possibly a new grain bin has just been erected. We dont have hardly any cattle in my neighborhood, but if he is feeding cattle he can have much more debt on top of the crop costs. If he is making payments on $9000 land the debt will be much higher.
 
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Bruce from Can.
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PostPosted: Tue Aug 13, 2019 1:27 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

I have never been a average farmer. Didn?t take over a ongoing family farm, and I believe most average farmers do. Don?t have that kinda debt either, but..... if I build a new dairy barn, I won?t be far behind. Debt is a peculiar thing. Say now if I blow a million or even 1.5 million, so long as the income continues to cover the interest and repay the capital cost, why not ? If I have enough income to repay a 1 million dollar debt over 20 years, that would come to around 5 grand each month. If I don?t spend that 5 G that comes in each month, it is just more taxable earnings, and I will get to give half or more to the government, and still have to work just the same as I do now to earn the money. If I build the new barn, and ease my work load, maybe even increase my income by buying more quota and shipping more milk. Then being 1million in debt isn?t such a terrible thing. 40 years ago being $100,000.00 in debt was alarming, can?t even go buy a 100hp tractor new for that money now. It?s called inflation.
 
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oldtanker
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PostPosted: Tue Aug 13, 2019 1:34 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

CVPost-Traditional Farmer wrote:
(quoted from post at 13:23:57 08/13/19) Article on Drudge about farmers and debt,said the average farmer in the USA was $1,300,000 in debt.Glad I'm not average.Can that figure really be true?


Yea, I believe that's as an average. That is you total all farm debt and divide it by the number of farms.

Heck that big farm in MI that failed a year or so ago. They were 145 MILLION in debt when they tanked. As of 2007 there were 2.2 million farms in the US. And that was just one farm. Don't think about the size of your operation. Look around. Here? There are some small farms and some BTO's. Most of the BTO's have a pretty heavy debt load. Even the small guys have debt. I know a couple of guys who buy late model used equipment. Stuff that cost 200,000 used. Plus how many of those farms take out operating loans each year?

Rick

Rick
 
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Hoofer B
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PostPosted: Tue Aug 13, 2019 1:40 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

It is probably true. With debt, it all depends on how you manage it. Maybe the average farm assets are 3 million which would mean they have a 1.7 net worth.
 
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Moonlite37
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PostPosted: Tue Aug 13, 2019 1:42 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

Is it easier to pay rent on farmland than to pay interest on a loan? Would a farmer be ahead to borrow money to farm and invest his own money in tax free municipal bonds? I think a calculator is one of the farmer's most useful tool and it may be as important to make common calculations in arithmetic as it is to know seed varieties and chemicals.
 
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centash
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PostPosted: Tue Aug 13, 2019 1:46 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

Likely is....Mine was almost half that years ago with 2 farms, cattle,machinery and milk quota.

Ben
 
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oldtanker
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PostPosted: Tue Aug 13, 2019 1:48 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

Should have added in. They say the average middle class family spends 110% of their annual income each year. Now if you think about that it's scary. But the actual numbers they are looking at include debt like car and home loans. So that 110% figure is a bit misleading.

Numbers are funny that way. They say last year that 40,000 Americans were killed on the roads last year. Most people see that number and say "that's terrible". Now say last year about .0128 % of the US population were killed on the highways. That's well under 1 full %.

So anytime someone is playing with numbers they can be misleading. The average farm debt? How much a family spends? Yea, all numbers that may or may not tell the entire story.

Rick
 
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jm.
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PostPosted: Tue Aug 13, 2019 1:50 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

My take is absolutely opposite of yours, I am thinking land in the next 20 years will be harder to buy and cost more. Just not making anymore and too much demand. Good farmers will only get larger as the weak ones fall out. World has to eat.
 
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SVcummins
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PostPosted: Tue Aug 13, 2019 1:51 pm    Post subject: Re: Are You an Average Farmer? Reply to specific post Reply with quote

A little low I?d say
 
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