How do you exit farming?

[skhadenuf]

No we do not roll our equipment every year. We don't see a benefit in doing so. Our combines are a number of years old (2, 5 and 6), it costs us about $10,000 a year each to maintain, far less than swapping each year. In my mind, it just doesn't work on our farm, but may for others.

We don't drive $65,000 super duty's, the $35,000 Chev does that same thing. Up until this year, our vehicles had over 300,000 kms on them. Its was time.

We are a large farm in today's standards, but we run very little debt. At times of expansion or major change, we had to. Inputs are purchased at times when we feel the price is right however in 2008, 3/4 of our NH3 was applied in the fall at 80 cents. Looking back not a good decision, but at the time, we didn't want seeding delays in the spring. This fall we have 70% of the acres applied as well at 26c (avg 53c, I can live with that)

As far as the profit numbers quoted, yes that is clear. It is based on our accrued financial statements prepared by our accountants, reviewed with us and with our projections. I feel for you guys that experience more environmental factors than we do. We have had the killing frost on 2002 and 2004, too wet to seed in 2006. We managed to get through it.

I don't have a solution for you Skhadenough, if its not profitable for you can you lease it out, fall back on a trade or work for another producer.

As for the comment about growing some other crops...you must be the pro if you even thought of it

[skhadenuf]

Very interesting, your a very large farm with no debt, would you privilege us to more info how you'd accomplish this ie no crop losses, equipment all given to you land all given to you or what. There isn't a single large or small farmer in our area and I don't just mean local area that isn't carrying a substantial debt load. Can you give some yields maybe things like that as to how you arrived at these income levels. There's no way there isn't more to this story, oil wells?

[skhadenuf]

First of all when dad quit farming he had 4 quarters and you can imagine what equipment he would have had. Now the farm is over 70 with a bit more than 20% rented. There is 3 families.

Yields in 2008 were:
Canola 47
Barley 88
Canary 38
Oats 134
Wheat 58

There are no oil wells, land leases etc and we have never won the lottery. Land sells for anywhere around $90,000 to $135,000 per quarter. Rent is $38-55 per acre.

I'm not sure why it is hard to believe. I have a pier group of local farmers and we share a lot of information with each other, many are familar to our situation.

As far as crop losses - 1988 was one, 2002 and 2004 were tough. Because we have good production and high taxable income's our margins for AgriStability run between $125 and $150 per acre. With the changes in the program recently we have managed to stay consistent We always participate in crop insurance at 70% or better. We are not in livestock and other than a few raising pigs many years ago, that was the extent.

The one thing I will stress as a key to our success is tax manangement. We have never went out of our way to manage our tax below low bracket levels. We did the partnership process many years ago, then transferred to the corp. Since then it was even more easier with the low tax rate. Equipment is only a tool to get the process done. Finding the right tool at the right cost was how we made money. I have friends that are worried about the breakdowns so buy new equipment. We have breakdowns too and sometimes a machine sits for a day. Its frustrating, but you work through it.

Communication is also a key. We don't make any decision without discussing it with the other parties. Sometimes our Ag Advisor with MNP will become involved. They will test drive a major change before we actually do it (buying a few quarters or renting, a new piece of equipment etc). It costs us a few bucks to do this but its a way for us to have a general feel of the transaction and its effect on rate of return. Key word we know what our rate of return on our investment in our farm is...Like I mentioned before, our advisor is an active farmer as well. We get great direction, vision and have great conversations.

We have top notch bookkeeping records. We use a farm bank account and balance to the inflows and outflows. Many use a scribbler and there's now way you know what's going on. We do an annual crop plan where we look at the contribution margin of each crop which assists us in determining the right mix of crops to seed.

My questions to you:
a) Have you ever tried to drive your tax to nil by purchasing items that do not make your farm more efficient
b) Do you use a qualified advisor who really knows Ag or do you use the person who will slap something together for a minimal price.
c) Do you have an accurate financial statement or net worth document of your farm and if you do what has changed in the past number of years
d) Do you have difficulty in getting the job done. What I mean by that is the whole process from getting up in the morning to seeding on time, spraying, swathing, harvesting and marketing.

Management in my mind is making decisions 1% better than others day after day, year after year. The compounding effect of good decisions is success.

[timm]

Sounds like u dont have the iron desease....thats good
and as long as all three families continue to get along
life should be good.