You can to profit from farming/homesteading!

But you are betting on that equipment being worth something in the end. Maybe it will and maybe it won't. Maybe a savings account or stocks will be worth more, maybe they won't. There's still risk involved. I think it's equal risk - equipment or savings. Some would argue that your savings IS your inly real profit. And if all other money is plowed back into the farm, perhaps it is. I have no trust in anything as being more valuable in the future compared to now - no matter what it is.

Maybe if you end up with that $5000 verses someone else's $6000 - at least you could count on the $5000 where the $6000 was an iffy proposition - like baling hay for the first time in the middle of a drought. While it makes my hay more valuable, I could have not produced any at all. I'll be happy if I turn a "profit" even if I don't count the cost of the equipment.

Yeah, but I bet you pay sales tax with every dollar you spend!

Hmm... But you probably pay SS, Medicare, Unemployment, Workers Comp (last two through your employer) and sales tax (most states). When you do something for yourself and save the money you avoid all of these taxes and they add up to a lot. The 36¢ was at the assumption of minimal income tax. Scary how all those other taxes add up...

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SugarMtnFarm.com -- Pastured Pigs, Poultry, Sheep, Dogs and Kids

Interesting, it seemed you were after the 'satisfied' wealth, not the 'hard' wealth.

I consider myself quite wealthy with my profession, tho at times it has cost me to do it, and other times I could rent my assets out, work a job for someone else, and profit quite a bit more than I do.

All making this fuzzy concepts.

Lot of businesses you can plug in a formula and come up with a cost and profit and wealth flow, and have monthly updates as to how that plan is going.

Farming is a long-term deal, income and expenses span a year or 2. Most certainly one can chart out the cash flow, and the profit, and wealth. And losses. But it's way more complicated than you have presented here.

Land values go in cycles, weather goes in cycles, grain values go in cycles. You can have 2-4 good years, as grain farmers have had of late, or you can have 2-4 years of horrible losses if you catch the cycles differently.

Ask farmers from the 1970's and 80's about profit in farming, and you will not get many good replies. Govt felt we were facing grain shortages, and suggested farmers plant wall to wall, increase production, and at the same time limited grain sales, which created a huge depression in farm prices. Land that was selling for $2400 soon was worth $900 an acre, corn that was $3.00 a bu turned into $1.80 a bu. As farmers failed, their used equipment became worth 1/3 of what it was worth......

There was no profit in farming. It took decades to recover from that.

Hog folks had their bad period in the 1990's. Hog prices went from 40-70 cents a lb, to 8 cents a lb. Try to get a profit from that.....

Dairy has had more bad years than good the past 5....

Most farmers around me the wife works a town job, and the farmer runs 300-1000 acres and has a job on the side - trucking, construction, factory job, etc. This gives the family a steady income, health insurance, and a good farm living. Not much profit from the farming, certainly not a living from just the farming!

Farming only has a 6% return historically, and that's gotten worse as the cost of seed, fuel, fertilizer, rent, iron has gone up. To keep up farmers try to grow more with less, get bigger to spread out costs - but all that just makes the return even smaller, forcing another round of get bigger,produce more..... We start playing with big numbers, and lot of risk, and one or 2 bad years can eat up a decade of profits easily.

Profit - that comes and goes, and if you catch several of the cycles wrong in the type of farming you do, you will not see a profit for a long, long time.....

Just how it is. We can speculate on paper allw e want, but doesn't change the realities of farming.

--->Paul

i can understand kinda what you are saying..you are going to have a home and a vehicle anyway..so those aren't necessarily your costs of homesteading any more than renting a home and vehicle lease in the city would be..those would equal out for anyone requiring a home and a vehicle to get to their job..so those should be exempted from the cost of doing business on a farm or homestead..makes sense.

Also often in the first years of any business you do you don't show a profit as you are purchasing the make up of your business, whatever the business is..in homesteading it can be your cost of seed, plants, etc..

I'm using the food forest system here, and in 2002 we lost all of our food forests except a few plants and one tree to a housefire..relocation..so we had to start over..we aren't showing any type of "profit" yet as our baby trees are just now beginning to produce..etc (and I'm not subtracting costs of home or vehicles that have other uses from that either).

But I believe this year or the next we'll be producing enough crops that we will offset our grocery bills enough to show a profit for 2013..that isn't subtracting previous years costs though either..just for that particular year..we have sucked up all the previous years debts and they are all paid off..home is paid, vehicles are paid, cost of trees are paid, some seeds will be purchased but have some left from last year..costs of trees and plants are paid for..etc..

so yeah, I expect a profit in 2013 $ wise..if we have crap weather like last year with the frost kill and drought then that won't happen, but I'm trusting and have faith that we'll have more crops this year than last..and that it will profit us for having done what we have done.

we COULD HAVE just bought the home and vehicles and not planted..then there would be NO profit ever..

also this year I am considering adding a chicken coop, run, and birdies..that might eat into my profit this year but feel that it will profit us the following for having them..if i can use salvaged material for part of that it might help $ wise also.

also in the past there has been large plantings put in of things that the chickens can use for food forage, which will also be a profit if our chickens are put in and they can reap from that..so who know..i expect a profit this year

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Brenda Groth
http://restfultrailsfoodforestgarden.blogspot.com/

You guys can argue economics all you want to (and best luck trying to get anyone without an education to understand economics), but I suspect what most folks on this forum really want to know is not "Can I make a profit?", but rather "Can I get a small homestead to support my family?"

Completely different questions.

My answer is that it is not impossible but it is very difficult. A few people have figured out how to do it. Most people also need some sort of outside income, and, especially, a job that will provide medical insurance.

On Value-added items, not food.

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http://www.mofga.org/

http://www.mofga.org/Programs/FarmAp...2/Default.aspx

I am on pension, I do pay into SS and Medicare, but not Unemployment or Workmen's Comp.

Our Schedule 'C's and 'F' each year are each usually bust.

For many years we filed Schedule 'C's, 'E's and 'F's. We paid close attention that each of them could show $1 'profit' one year of every 5 years. [But that was before the 1 in 5 regulation was removed].

My income has not had an income tax obligation since 1983.

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http://www.mofga.org/

http://www.mofga.org/Programs/FarmAp...2/Default.aspx

Anyone working for someone else is paying SS, Medicare AND Unemployment and Workers Comp. If you are on pension then you paid these for decades. People don't realize they are paying these taxes but they are. The taxes are paid by the employer for the employee as required by law. Employees don't see this so they think they're not paying it but if these taxes weren't required by the government then the employer would have more money to pay the employee. That is how it works. When the government increases the burden on the employer with new employee taxes the employer has a choice of either raising their prices or cutting their costs. Raising prices is very hard, especially in this economy, so it is far easier not to give bonuses and raises and thus the government's taxes come out of the employee's paycheck.

That's a choice, or you need to make changes if you would like to make more but can't see to do so. Careful of being a bust for too long as the IRS looks upon businesses that never make money as being hobbies and they take away the deductions. You need to profit time to time to prove that you are running it as a business, what ever it is. $1 a year in profit won't count in their book - That's the word from the IRS agents.

But you're still paying other taxes. Sales, vehicle, gas, real estate, etc. They take their bite.

Personally I like being successful and profitable. I would rather earn enough that I have to pay taxes. I am also careful not to earn so much that I go into too high a tax bracket. There is a point where one would just end up working half the year for the man and I would rather do other things.

A penny saved is 1.36¢ earned, or more.

And to get back on line with the original topic: It is very possible to make a living and to make a profit homesteading and farming. I do it. My entire family does it. We have no outside jobs or income. What we earn comes from our land, from working here on the farm. I know of lots of other people who do it. I have neighbors who do it. It is very possible. It does take time to develop - just like with any other business.

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SugarMtnFarm.com -- Pastured Pigs, Poultry, Sheep, Dogs and Kids

It all comes down to: Can you eat and buy clothing and pay off any debts you have or not. I grew up on a farm and it was subsidized by my father working at a regular job.

Was it worth it? We all think so. But as far as being able to subsist off the farm, it wasn't reasonably possible. After 40 years of raising cattle, and then selling the farm an all the equipment, my dad figured he made an average of about 14 cents an hour.
When one considers that his 9 kids worked for free (in the figuring of the profit), it has to be for the love of the life that people farm small acreage.

Yes, I understand. I paid all those for 20 years.

Now I only pay into SS and Medicare.



When we were doing all of it, we were also taking the VITA courses taught by IRS auditors, each year, to maintain our certifications.

We were fully aware of what we needed to do.

We were building Net Worth instead of taxable income, and using our investments as tax-shelters until I could get my pension.



Our gas consumption has already gone down a lot. The vehicle that we put most of our miles on gets pretty good mileage, we have seen two tanks that got 62mpg, though most run in the mid to upper 50s.

We are in the process of shifting to off-grid on solar-power, and will then be shifting to a plug-in vehicle, so our utility bill will vanish along with our gas expense.

Property taxes on my land run at $1.05 per acre, so I can deal it



We have been very successful and profitable [just not profitable in a tax-paying way].

I do not like to pay taxes.

There you and I differ. I do not want to pay any tax bracket. I do not want to work 'for the man' ever.

To me, planning on a taxable income so high that you pay income taxes, is a complete failure of your tax-plan. You need to seriously consult an accountant to fix that. Your tax-shelter is failing.



I agree.

Wait, your sole source of income is farming, AND you pay income taxes?

OMG, go see an accountant. Talk to him/her about tax-shelters.

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http://www.mofga.org/

http://www.mofga.org/Programs/FarmAp...2/Default.aspx

That surity you are looking for is why many people mistakenly prefer cash dollars to goods. But there is a price for that surety, it is called inflation. You are guaranteed, GUARANTEED, no question about it, you WILL lose money with cash. The longer you hold it the more you will lose. In that regard you are right, there is no risk or gamble, you will loose. There is no 'savings' the fed has kept interest rates around 1%, a typical savings account is giving .02%. Interest rates and inflation have a symbiotic relationship...keeping rates low to discourage savings and encourage investment causes inflation...inflation makes interest rates rise ( the cost of money tomorrow ). So, if you have money in the bank and are receiving a nice interest rate its because the money has already lost value tomorrow, if you keep your money in and receive .02% then inflation being at 2-3% is going to eat away at your value. You will never get ahead by keeping money in a savings account or under your mattress. It needs to put into things that either keep their value relative to inflation, appreciate, or help you create more wealth ( and whose depreciation is less than the wealth it creates over it's lifetime ).

Wealthy people do not keep their money in a bank account. You will be hard pressed to find a multi-millionaire that has his assets in cash dollars sitting in a savings account.. If they do they probably won't be rich for long. They keep their wealth in assets, PROPERTY, commodities, etc... The MEANS OF PRODUCTION...that is wealth. We are on a smaller scale but the realities are the same.

The equipment WILL be worth its price minus its depreciation value, unless there is an accident, a major malfunction and the total value of the equipment is lost...you can purchase insurance against those events. You'd have to crunch the numbers to see if it is worth it. You say anything is only worth what someone will pay for it...thats right, that is what determines the MARKET value. Its not some arbitrary number, it is what the market is willing to pay.

Personally, I see no choice from a profit/loss perspective...on the one hand you are guaranteed to lose money slowly over time, on the other hand you are likely to profit with the small risk that for some reason your equipment will not be worth it's market value. As a person. like yourself, who has bought and sold some farm equipment recently, I can vouche for the high cost of even old equipment in fair shape.