You can to profit from farming/homesteading!

CesumPec · #21 12/16/12, 07:34 PM

Quote:

Originally Posted by Darntootin

Yes of course my example was only an example of how profit, wealth, and depreciation should be considered. I can't possibly touch on every facet of every farming endeavor in existence as I am limited to making a reasonably concise post, not a treatise on the entire enterprise of farming! lol. You'll note that before discussing the depreciation/value of the baler I emphasized that it was an example. Other machinery have different depreciation rates but you will note that most farm machinery, when kept in good shape seems to hold its value well.

As to my estimates on the depreciation of the baler ( my example ) it was based on a well researched study ( I'll post it if I can find it again ). My own checking, through different online sources for machinery has been consistent with the findings in the study.

The problem is that it appears you are counting all the hay income and allocating it to the baler instead of splitting it between tractor, baler, hay wagon if applicable, hay cutter, tedder, barn storage if applicable, etc.

Old Vet · #22 12/16/12, 08:21 PM

Quote:

Originally Posted by mnn2501

And what did you live on for those 10 years?

Mostly off of what my wife made with some of the things that I made on other jobs. It is not easy to farm 10,000 acres and have time for another job but I did it for the last 2 years and during the winter.Oh my combine that cost $300,000 two years before sold for 100,000 One of the other combines brought $8,000 and $5.000 but they were 10 years old. My tractors brought about half of what they were worth if soled by a dealer. I had one small tractor that brought more than I payed for it. I sold that one to a homesteader. On my farm I raised Soy Beans, Rice, Wheat, and Pecans. I made more money from pecans than any other crop on a per acre basis.

farmerDale · #23 12/16/12, 08:29 PM

Quote:

Originally Posted by arnie

profits from the homestead for me can only be figgered in as money not spent.i can sell enough eggs to afford to cover the cost of mt chicken scratch but by eating my home produced free range eggs I did not get samanolla poisoning .I suppose the milk cow's grain cost me more than if I boughtthat homignized garbage in the store but I just buchard the calf she had from a angus bull returning over 300 pounds of organic extra gormiet quality beef not the 1.99 a pound garbage fr0m wallmart but the 28 a pound real meat from the custom butcher shop not to forget no ecoli posining or hospital bills to run up I'll just say ditto for the hog never who never even had to be wormed after it came here as a shoat being faised on good pasture ,garden scraps and corn . then how can we compare the produce from the garden no pesticides and canned here at home with my own pure spring water[should I charge 2 $ a pint for the sparkling clear spring water with no chemicals that I get to drink and shower in or just not having to pass kidney stones is pay enough] ;not picked with dirty hands in Californiaor china filled with preservitaves and shipped around to walmart.then theres the rabbits I raise to eat sell and give away .As I go through the chores every day the peacefull tme milking the quiet tme as the rabbis rare up on the cage anticipateing a treat or how the honey bees don't raise much of a fuss when I work with them feeling the comrodery of silent communication ;instead of charging myself the wage of a farm hand maybe i'll gain the cost of not having to pay a sicietrist to tell me the pressure of the rat race has made me a stressed out nut who may need a fourtune in meds to cope or a high priced ticket to some form of over hyped entertainment to be able to smile . or more meds to fall asleap at night i'm still broke sometimes but then I can't remember even having a cold or stomach flu in 6 years .i'm hoping the IRS doesn't get wind of this as they will decide to tax me on my debit colom and that may send me to the poor farm which is where i'm at I suppose anyway.

just sayin

i wish I would have figgered this out 35 years ago

This post is great. A lot of good points made, and saving money can make money for sure, with no tangible economic way to measure the money "earned". My wife says that because she is a stay at home mom, her financial contribution, though limited by her lack of steady income, involves smart shopping, (at which she is awesome, always finds the deals!), gardening/canning, saving on vet bills, ( she worked for a vet before I met her), making/mending clothes, making many crafts and things to make our life more comfy, and the list goes on and on. I am pretty good with a wrench, a saw, a fencer, etc.. which is also similar in its non-monetary benefits through avoiding hiring.

These immeasurable benefits to our bottom line, are not able to be put in the bank, made to pay bills, or made to raise our taxable income. But they are real, and aid in living a better lifestyle cheaper, than otherwise possible...

rambler · #24 12/16/12, 08:44 PM

Long thread, I didn't follow all the math.

In general farming is all about hoping to.become asset rich, but almost always cash poor, and the first 10 years are especially bad as you need to have those expensive tools all at the same time, takes years to pay them off. Also a farm crop takes a year to raise, plus perhaps another full year to sell all of it, so will take 2 years to get the first full sales, but you needed to spend all the money up front for land, tractors, planter, tillage, seed, critters, etc.

It's tough to get into.

If you manage to make a windfall along the way and cash in big a decade down the road, the govt is there with its hand out, put you in a higher tax bracket, take 15% for social security, state is there too, you don't get much left on your 'good' year....

So you gain assets as you age if you can hang on those first years, and when you are old and worn out you own a lot, but you never had any cash or enjoyed a cash rich life.

How it is.

Paul

geo in mi · #25 12/16/12, 09:40 PM

Profit, to me, is solely in dollars generated on a yearly basis above and beyond my costs to generate them.

Feeling wealthy is having a baler in the barn, paid for from my day job. It feeds my cows, gives me tasty milk to drink and/or beef to eat. If all I do is farm, I would have to choose a way to make its cost pay off on a more timely basis, by using it more, by custom baling, or by feeding more animals(which I can't afford because I don't have any more spare cash.) Yes, it carries a residual "value" of $7,000 or $4,000 only because it is paid in full and you do not need those dollars to generate other dollars .......if I had to borrow $8,000 to buy it, then it would be unprofitable unless I baled enough bales to pay for it, plus make a profit.

If you can afford to lock up money in equipment or land and let it sit idle, you are indeed wealthy. But you will soon have to call the auctioneer if it isn't producing income so as to pull its weight in the total farm operation. Me, I am only profitable enough to contribute my $ .02 worth.

geo

CesumPec · #26 12/16/12, 09:44 PM

Quote:

Originally Posted by farmerDale

This post is great. A lot of good points made, and saving money can make money for sure, with no tangible economic way to measure the money "earned". My wife says that because she is a stay at home mom, her financial contribution, though limited by her lack of steady income, involves smart shopping, (at which she is awesome, always finds the deals!), gardening/canning, saving on vet bills, ( she worked for a vet before I met her), making/mending clothes, making many crafts and things to make our life more comfy, and the list goes on and on. I am pretty good with a wrench, a saw, a fencer, etc.. which is also similar in its non-monetary benefits through avoiding hiring.

These immeasurable benefits to our bottom line, are not able to be put in the bank, made to pay bills, or made to raise our taxable income. But they are real, and aid in living a better lifestyle cheaper, than otherwise possible...

Agreed and nothing beats the pleasures of that home grown food, the satisfaction of beating Walmart with avoided purchases thru crafting and repairs, or just fresh air on a cool morning, when the owl dives past you to remind you you are encroaching on her territory, the daily commute from the back porch to the barn, a newly strung fence. And in Forerunner's case, a steaming pile of compost doing it's thing.

Callieslamb · #27 12/16/12, 10:06 PM

Quote:

Originally Posted by Darntootin

You're missing 7000 from the account but you have machinery worth 8000. You are making the error of only defining wealth in dollar terms. Assuming you made a wise purchase and paid close to the market value for your equipment then you are up 1,000 minus depreciation.

You know how much equipment costs because you just bought some, nobody is giving away good haying equipment and neither will you when/if you decide to redeem your equipment for dollars.

Assuming the equipment is redeemable for $$ when I'm ready to be rid of it, yes. In bad times, my 1960 tractor is worth a lot of money. However, in good times, people will buy a much newer-featured tractor than deal with mine. Buying it made good sense to us - it was locally available at a price we could easily afford. It's a great little worker. We needed a tractor to pull a baler more than we needed an investment. Sometimes you get lucky enough to have both. But your original statement rather sounded a bit like you always buy hard items rather than having cash and that way you don't lose your cash. Nope. Doesn't always work out.

No one cares about my worth - except a bank that wants to lend me money and I don't plan on any loans. They are the only ones that tally up my worth in terms of $$. I think of it more as I have so much income and can handle only so much outgo- no matter what sits in my barn. I can't go to the grocery store and say, "but I have a tractor..." they really don't care.

You are kind of like a sales clerk when you leave a store - telling me how much I saved by shopping there today. In a strict business sense, you are right. Buying equipment doesn't mean that money disappeared from my hand - I simply transferred it to a different hand. But I have to think of my farm in terms of cash in and cash out. We invested in a tractor - that's cash out that can't be used for something else.

fantasymaker · #28 12/16/12, 10:08 PM

I see two HUGE flaws in the OP.
The biggest by far is that land values are as changeable as any commodity. Yes they go down in some cases become worthless.
Equipment of ANY kind devalues to the point of the materials worth. Yes I can keep That old 1936 tractor running BUT it will cost more in repairs than it is worth as a running piece of equipment.

FarmboyBill · #29 12/16/12, 10:19 PM

Then you need to part out that old 1936 trctor to one that will run like mine. I imagine I havnt put $500 in my grandads 34 CC Case in the 30yrs ive owned it, OTHER than new tires, which is expendable on any tractor. Ive bought a new battery for my H and na new steering wheel when I bought it. Nothing else in 3yrs and more. I need to go through the carb. It dosent idel well. But it runs like a champ.
The cub, Ive likely put in a couple hundred in the 5yrs ive owned it. I cant make the rear pto run without leaking oil and blowing bearings, so Im going to have to take it to a repair shop, which will likely cost me $200, parts and labor. I bought it as a normal 1950 Cub for $1,500 wioth belly mower. Found out its a demonstrator model and worth up to $4000. BY ITSELF.

Them old 30s/40s/5-s tractors will run and last as long as anything newer. Every bit of the equipment I showed on HQ runs and is ready to go to work. If it was constantly breaking down as you allude to, With that much equipment, I couldnt keep it going. The money in parts would eat me up..

BACK THAT UP. Im going through the knotter mech on my bailer to see why it ties wire around the bill hook shafts. on the twister rods.

Yvonne's hubby · #30 12/16/12, 10:25 PM

Quote:

Originally Posted by plowjockey

Your math is too simplistic, IMO,

In your example, you don't just bale hay with a hay baler.

You need tractors, wind-rower, rakes, wagons, fuel, labor, repair parts, etc. Every last bit of that, comes out of of that $40,000 worth of hay. What about the drought years, or when the hay gets wet? How much land at $5-8,000 per acre, is needed, for exclusive use on a hay field?

There is little argument, IMO, that those that farm medium to large farms, could make a living and most of of us are aware what "profit" really means?

I'm raising sheep and laying hens on 3.5 acres, using $9 hay and $12 corn. Sure wish somebody could tell me how to make it break even, let alone a profit or living off of it.

I'm all ears.

Ok, heres some simpler math for you. I bought my tractors for 4K.. 3k for the 35 ferguson and 1k for the 30 ferguson. I paid a grand each for a new holland hay mower conditioner, and an IH hay roller. I had to spend about a grand on those two to put them up in shape. My rake cost me 80 bucks about 25 years ago. I also have a new holland square baler I paid 400 bucks for about 20 years ago, but havent used it in several years. (since I bought the roller) I have taken up about 400 bales (or 40 rolls) a year with this equipment for at least 20 years now. Added all up I have a total of almost 7,500 in the equipment that would sell for somewhere in the 10k range at todays prices. I figure the hay itself would have a total value of another 8 to 10 grand over the years which more than covers the cost of fuel, minor repairs on equipment, seed, fertilizer, twine and other expenses. Of course I use the tractors for other things besides haying.. plowing the garden, cultivating, spraying weeds, bushhogging, moving whatever needs moving around the farm... rolls of fence wire, and then there was building the cabin... that little 35 ferguson was indispensable when it came to moving those logs and setting them up. It also enables me to handle those rolls of hay... from getting them in the barn to feeding them all winter. While cutting and raking and baling hay is a major chore on my farm, it is only about 20 percent of the use I get from my tractors. Those two little fergusons have far more than paid for themselves just hauling the manure for the garden and keeping the road graded up around here. As to the comments of the op.... yep, theres money in farming... if one goes at it right they can make themselves a dollar... maybe two... every day!

sammyd · #31 12/17/12, 08:24 AM

Quote:

Originally Posted by mnn2501

And what did you live on for those 10 years?

that wouldn't be profit anyway..

Edkansas · #32 12/17/12, 08:37 AM

Quote:

Originally Posted by sammyd

that wouldn't be profit anyway..

I think that is a grey area, so I would say yes and no.

Real Estate depreciates and counts against net profit for tax purposes. You could technically be losing money on paper and still be able to roll surplus dollars back into your business or put it in your pocket.

unregistered168043 · #33 12/17/12, 09:12 AM

Quote:

Originally Posted by farmerDale

This post is great. A lot of good points made, and saving money can make money for sure, with no tangible economic way to measure the money "earned".

Again, too much emphasis on 'paper money', IMO. "Saving money" by satisfying a need is using wealth, whether that wealth is in the form of dollar bills or actual goods raised or created.

And, yes there is a VERY tangible economic way to measure the 'money' earned..thats what I've been trying to get across. Using your logic, if I cut a cord of wood, then sell it for $250, you'd say I made a measurable profit of 250 ( minus expenses, etc ). Now if I use that 250 to buy another cord of wood to heat my house that would all calculate easily and neatly. I made $250 and I spent $250.

What I'm saying is that if I use that cord of wood to satisfy my NEED, directly ( what 'money' i.e wealth is for ) then I have profited $250 in dollar terms ( the market cost of that good ).

unregistered168043 · #34 12/17/12, 09:32 AM

Quote:

Originally Posted by Callieslamb

But your original statement rather sounded a bit like you always buy hard items rather than having cash and that way you don't lose your cash. Nope. Doesn't always work out. .

Nothing "always" works out I can attest to that. But keeping our money in cash, long term "always" doesn't work out. You will lose the value of that cash GUARANTEED.

.

Quote:

No one cares about my worth - except a bank that wants to lend me money and I don't plan on any loans. They are the only ones that tally up my worth in terms of $$..

Not true at all. Property, capital, and assets of many types are considered collateral.

Quote:

I think of it more as I have so much income and can handle only so much outgo- no matter what sits in my barn. I can't go to the grocery store and say, "but I have a tractor..." they really don't care..

Again you are measuring wealth by what you can buy with dollar bills only. This is a mistake.

Quote:

But I have to think of my farm in terms of cash in and cash out. We invested in a tractor - that's cash out that can't be used for something else.

You should not be measuring you're farms success in terms of cash, you should be measuring how much productive wealth you create for your use, and the value of your land and equipment long term.

The money you invested in the tractor is like buying a stock, you can't use it for something else IMMEDIATELY. The benefit of cash is it is immediately redeemable for goods, but there is a price to pay for that it is called inflation. You should keep only the minimum amount of cash needed to fund your necessary purchases and for emergencies. The rest should go into assets that protect your wealth by appreciating or helping you create more wealth (goods) that either you use or sell/trade.

IMO you have made an excellent investment.

Edkansas · #35 12/17/12, 09:52 AM

Darntootin, the only small issue I see with your scenario is:

If you buy the chord and save your tree you break even. You lost $250 but maintained $250 in wealth (tree).

If you cut your tree and burn it without setting aside the cost of the tree (wealth) that wealth is gone. Sure, you didn't have to spend $250 but in not spending where did that $250 go? If it went into buying saplings great. If it went into the dollar slots at the casino; probably not so great.

I see where you are getting at but there appear to be a few holes, but then this is all gorilla math

unregistered168043 · #36 12/17/12, 09:56 AM

Quote:

Originally Posted by fantasymaker

I see two HUGE flaws in the OP.
The biggest by far is that land values are as changeable as any commodity. Yes they go down in some cases become worthless.

I can't speak to land values in your area...over here land has done nothing but rise for the past 100 years, easily. In 1960 a good acre of land here went for somewhere's around 100-200 per acre...now you are paying 2,000-5,000 easily.

If you put that $100 dollars in a jar back in 1960, and pulled it out today how much of it's buying power has it lost? That land has gone up and multiplied 20x.

Let me qualify my statements by saying that of course, NOT ALL LAND AND EQUIPMENT IS WORTH BUYING from a value perspective. Likewise not all farming activities may be profitable I consider that common sense. You have to crunch the numbers on the equipment, the depreciation, inflation, the property, etc.. and compare them to the expected payout.

I prefer simple homesteading/farming activities that are almost guaranteed to make me a profit with the lowest cost. I consider cutting timber for firewood/or timber mill use to be almost all profit. What I use is almost all profit, and what I sell is too. The cost vs. goods created is very favorable. I consider cutting hay to be a likewise, profitable endeavor and the investment in machinery is more than worth it.

ET1 SS · #37 12/17/12, 09:58 AM

It is a mistake to look at farm life as a spreadsheet.

Bean-counters look at life in terms of the cash value of your time. But that strips your from having any other values. Life is not all about cash.

Pay your bills, feed your family, and have the time to shoot squirrels or go fishing.

unregistered168043 · #38 12/17/12, 10:02 AM

Quote:

Originally Posted by Edkansas

Darntootin, the only small issue I see with your scenario is:

If you buy the chord and save your tree you break even. You lost $250 but maintained $250 in wealth (tree).

If you cut your tree and burn it without setting aside the cost of the tree (wealth) that wealth is gone. Sure, you didn't have to spend $250 but in not spending where did that $250 go? If it went into buying saplings great. If it went into the dollar slots at the casino; probably not so great.

I see where you are getting at but there appear to be a few holes, but then this is all gorilla math

Not so fast! I see what you are saying but you are missing the 'forest through the trees' ( sorry I couldn't resist ). The timber is renewable on its own, with minimal input from me ( in fact ZERO input) all I need do is practice good sustainable timbering. Which I do. In fact my culling of the forest is actually HELPING to encourage healthier growth!

As far as 'where the money went'. Well if I judge the money well spent at the casino then it is. If I value the enjoyment of the casino more than the other alternative uses for that money then it is my prerogative. Remember wealth is for fulfilling our wants and needs, my wants and needs might include the blackjack table.

unregistered168043 · #39 12/17/12, 10:05 AM

Quote:

Originally Posted by ET1 SS

It is a mistake to look at farm life as a spreadsheet.

Bean-counters look at life in terms of the cash value of your time. But that strips your from having any other values. Life is not all about cash.

Pay your bills, feed your family, and have the time to shoot squirrels or go fishing.

IMO if I have a choice between sustaining my life by cutting wood and hunting/farming or sitting in an office and living in an apartment...guess which one I'll choose!

It all comes down to what you personally value.

KimTN · #40 12/17/12, 10:06 AM

I only have a small homestead farm. I have been reading the posts and think that most people have the same problem that my husband had while reading the expenditure v.s. income sheet. I am totally OCD when it comes to record keeping. What wasn't in the report I submitted, was what we personally got out of the farm. To remedy that, I spent a year keeping a detailed log of all the goods that personally benefited us and assigned a fair market price (apples to apples) to each item. When I submitted that report, he was able to see that actually, we had made a profit. I think most people overlook this bit of info. How would farmers really survive if all they were doing was racking up loss. Of course the benefits of exercise, good food, fresh air, and no illness can't really be calculated accurately, but you have to figure that counts as a lot also. Just my opinion, but the health benefits are worth more to me than cash in the bank.