What can we do about it?????????

[carebear300]

As I look through my mail tonight I have spent over an hour paging through what seems like an endless number of auction sales. The really sad thing is that this is the third or fourth year of this performance. You tend to wonder who is left to farm all the land. You look at the listings and see the lifetimes of work, hopes and dreams that will be all over the day of the sale. Yes some of them will have retired with a tidy little nest egg but that will be the minority. The vast majority just had to throw in the towel, they just couldn't go on borrowing more and more money just to exist. I actually heard in town today, to my chagrin, that an old friend is being foreclosed on by the bank. He is 58 years old and has farmed all his life and his wife has worked off the farm all those years to keep the farm going. He did all the things right, he liked cattle so seeded his farm all down to grass and raised beef cows. He didn't drink or smoke and worked seven days a week year in and year out. He paid all his bills to the local people up until now. What the heck is wrong with this business we are in? How much will that hurt all the local businesses that he patronized all these years? Where will it all end? There is something wrong somewhere when a man with 2oo cows can't make an honest living. Do you have to run a thousand cows to make a living? If so then its about time that the number crunchers and economists that seem to run this country started doing the work and taking the risk, because the rest of us are getting older and tireder by the minute!!!!!!!!

[SASKFARMER3]

Here is your answer in a NUT shell.
Have every farmer out their take their tax returns and go back till 2000 and check on them what their total dollar was from other sources IE FED or Prov.
Then ask them selves are they a feed lot or cow calf operator. Then on the grain side if their from northern Sask East Sask or Manitoba and add up their total after 5 years of unbelievable weather scares.
Then trace it back to the APF that Lyle Vanclief and his Liberal NDP cronies etc designed.
Money went to Packers and Accountants but amount to Cow calf and Grain farmers Virtually non existent.
Now go to the fed gov access of information and take total spent on Ag in that period and wham big amount of money.
So if their is none in produces pockets But their is huge amounts spent who got the Money?
You cant neglect one part for so many years and not get to the point were in Oh yea the liberals did that with Newfoundland fisherman, it was OK to let foreigners fish and take all our stock but to help your own no way.
Simply were at this point today for one reason and one reason at all its political stupidity clinging to power by corrupt politicians SASK AND OTTAWA>
On auctions we have three this spring in our area and two guys who shouldn't be retiring are renting out their land.
All three auctions are all forced sales!

[skhadenuf]

Carebear, obviously you are as concerned and troubled about this issue as most of us on the farm are and you are exactly right on the mark. I think we as rural people have been programmed by all the politicians to believe that we really don't have a say in the election outcomes. In actuality that is not true. If you look at the last election it was the rural areas that gave the conservatives their base. Just look at what the reward for that vote has been since they have been in power. They were going to scrap the CAIS, not done. They were going to develop a disaster program, no not done. They were going to develop this wonderful all encompasing agricultural program, not a word still. And insult to injury the recent billion which is copy out of the Liberal play book where our votes are being ransomed for a measly 400 million across Canada now and the rest in savings some time in the future in some kind of unkown program. I can't recall which MP it was from Sask that stated we just proved how committed we are to agriculture, (you sure did, not committed at all) and Mr. Harper can't spend much time here in the west because we know now we have your vote. Well EXCUSE ME MORON!!!!!! that Liberal tactic was garbage in the last election and if your creative thinking limits you to copying the guys who got the boot last time then maybe you ought to stay sitting on your seat till the end of the next election because that 400 million which much will go to Quebec is not gonna save your but from feeling the point of our boots. How we can change things is by shocking the country next election and voting in independant candidates in every rural riding Man. Sask. and Alberta, and with the election going to be as close as it is we would hold the power!!!!!

[farmers_son]

Carebear: I thought about your post for quite a while. I recently had an opportunity to speak with the head credit writer for Alberta Treasury Branches. I made some comment to the effect that farmers did not have much money and he replied that some have a large amount of money. Some people are really struggling and some are doing very well. For me the auction sales presented a real opportunity as I picked up quite a bit of machinery last year at very reasonable prices. One sale was, for me, quite a sad sale as it resulted from a breakup of a family, a dispute between father and son. Perhaps if there had been more money in agriculture they might have been able to solve their problems.

We are all subject to the same pressures and challenges. Sometimes it is just circumstances. Perhaps if BSE had hit your friend 10 years sooner he might have been able to pull through.

What can be done about it? Well there is a post or two in the Agri-ville farm management section regarding some business training available for farmers. No one replied. No interest. I think the successful farmers, if they are not already, will become number crunchers. The farm management forum should be the busiest, not the deadest.

Every year about 200-240 farms go bankrupt in Canada. Really that is a small percentage, and most would have a farm sale before it got to that point.

See:
http://www.agr.gov.sk.ca/docs/statistics/bankrupt06.pdf

Farm debt is a huge problem in Canada, a problem that has been largely ignored. Professor George Brinkman has done a huge amount of work on Canada farm debt versus U.S. farm debt.

See:
http://www.cfa-fca.ca/upload/nat_sym_g_brinkman.pdf

Professor Brinkman outlines a number of factors of concern. Changes in exchange rates from $0.63 to $0.83, vulnerability to rising interest rates, overcapitalized relative to income.

I agree with Brinkman’s statement that interest rates can only go up. There is something we can do about it and that is to lock in a fixed interest rate when the getting is good. There is long term money available in Alberta at 6% , no one in Alberta should be caught holding variable rate loans. FCC is lending at 7.25% which will not look bad a couple of years from now.

The other thing we can do is to know our costs, contribution, fixed overhead.

Your friend would have been a good manager or he would not still have been in business all these years.

[Horse]

You think some are doing quite well, who the oil man playing farmer or any one that plays farmer , not to single one out but lets take cowman that we all know him and his son run a very respectable size operation , but when the crunch hits they have a very lucrative oil buiz to fall back on, and that is hapening all over not just him so are some doing well I think not if you just use people making thier total income from farming,or ranching.Then there is those that have large resource revenue Myself included [not large but 9500] that is actualty a lot of clear profit I still generate 6 figures a yr gross and it dont much more than match the lease revenue and I have to work dam hard to do that.
Anyway my point is what is a farmer and who should qualify for gov assistance the packers again because they own the cattle or the cowcalf man that produced the calf or the feedlot [ again the packer most often] that fed the calf or the grain comp or the actual producer.
I guess we cant limit who spends thier money on farming but I feel its thoes that dont realy farm in the trenches that are a lot of the problem.

[hayburner]

I often wondered why cowman was so supportive to the oil and gas companies they not only brought surface lease cheques but off farm income thru a lucrative oil business.

[farmers_son]

I agree that those that do not farm in the trenches are part of the problem. Especially closer to the cities.

But what do we do about it? I saw an article recently about leaving money on the table.
We have all heard that we need to produce cheaper but it could be that we are not realizing all the income we could.

Most of us do not hedge our crops or cattle but we could. If we calculated how much money we have let slip through our hands through falling prices that we could have hedged it would be truly staggering. I left hundreds of thousands of dollars on the table by not hedging oil and Canadian dollar even though I knew my operation was sensitive to changes in both.

There are people who do not crop or hail insure. No one, I mean no one at all, can afford to self insure. We simply do not make enough to loose an entire crop.

I have already mentioned interest rates. People still talk today about how the rising interest rates of the 1980s nearly did them in. Those high rates did not last much more than one year but the impact was critical. Why use variable rates when interest is at an all time low. Interest has no where to go but up. We can do something about that.

[ivbinconned]

Horse I am shocked!! You accept oil revenue off lease land??

[Horse]

IVBC sorry to spoil your fun but that is lease money from deaded land that took 30yr to pay for.
Farmers-son I dont know how much one we can cut costs, take for instance the consultants are now running around telling us to feed out in the fields on high land dont pay for corall cleaning swath graze bale graze now I have been doing most of those things for 20yr now so how do I save anymore I think they are behind the times . A cow can only produce 1 calf per yr and I dont think we can push them for much more weight, we can wate and catch a neibour in bad shape and get his machinery or cattle or his land below cost but I realy hate being a vulcher.I have only bought 1 new tractor and all the rest have been used but someone has to take the depreation.
I sure would like to see someone cowe up with a workable solution as 1 of my daughters would like to try farming but I just cant come up with an enterprise that will make expences plus a living without off farm income and why in hell should she work to suply food for someone else and then go to work besides.

[Horse]

F-S I have to disagree with the hedging that is what put at the mercy of the packers. If hedging guarinteed a profit those accipting the hedge would sure lower the price in a hurry, all it does is let some try to capture the market or squeze the smaller players out.
As for hail or general crop insurance ther is no sense in taking it unless your risk is very high then the ones with low risk pay for you.

[farmers_son]

I found that comment very interesting. I guess the reason people have to work to supply food for someone else and then go to work besides is because if she is not willing to do that then someone else is. I do remember when the farm lenders would not lend money to anyone if they were working off farm. If you could not show repayment ability from the farm then there was no loan. When FCC and the other lenders changed that policy the handwriting was on the wall and farm land began to be owned by non farmers.

I am sure that raised the price of farm land. Those looking to sell reaped that benefit while those looking to expand while farming full time felt the pressure of the policy change. I guess government wanted to stop deciding who owned farm land. It would seem to me that farmland would eventually end up being owned by people who do not even try to farm it. The actual farming would be done by renters like in England and Scotland. That is was what my ancestors came to Canada to get away from.

Regarding insurance. I recall reading in the Western Producer of a very large farm that went bankrupt. The farm had land spread over a very large area and thought they could not be hailed out everywhere at once. They were wrong and with no insurance they were toast. Even though the risk of hail may be very low in your area, even though no one alive remembers ever being hailed, it could still happen. And it could happen the year after that too. It has hailed here every year since 2000 and most years before that. That is actually an advantage for me because I realize the risk. The people who feel they are in a sure crop country may still have to learn that there is no sure crop country.

It is a fallacy to think you could put the premiums into a bank account and self insure. Without insurance you have unlimited risk, you could loose it all. For me that is an unacceptable risk. I looked at it like spinning the wheel at a game of chance. You put down all the cash you have and you might win that cash back even some more but you might loose part or all of your cash. If you loose all your cash you are out of the game. If you loose part of your cash two or three spins in a row you are out of the game. However if someone would guarantee you that you would have enough cash to spin the wheel over and over again would give them some of your cash for that guarantee? I think I have to be able to spin the wheel next year or the farm is gone. True, some people farm in areas where there are fewer spots on the wheel where you would loose everything, the risk is less. However the risk is still there just the same.

[smcgrath76]

This is a pretty interesting thread. I do know some farms that are doing pretty well, however a lot are not. Many of us are overcapitalized, pay too much for inputs, don't hedge our market risk and are generally poor marketers. The upside of this is that there is great room to do better.
We have found in our operation that always asking why we do things the way we do is a good start as long as it is approached with a mind that is open to change based on the facts.
I agree with FS wholeheartedly that there is generally not a lot of interest in accruing business skills among many producers. Most of us were raised in a situation where hard physical labour was regarded as very important and was praised. In the past this labour was what made farms go.
I think that today, farms are a knowledge based business, much like any other. The individuals who have the best information and learn how to use it are most likely to succeed.
As much as we all need cash, I don't believe the government can help producers who just want a cash payout. I think the track of investing in education for producers who want it is an important step, even though cash is still nice. I know I have/am investing large sums in education on a regular basis, including business education, and it makes a great deal of difference to our farm business.
As I have said in previous posts to FS, I don't believe you have to farm full time to be a serious farmer, I do believe you have to be profit motivated. I know persons with in excess of 1000 cows that are not profit motivated and I know persons with 30 cows that are. They run very different businesses.
One other interesting point that may be the only one I retained from E-Myth was in regards to cost cutting as it relates to Horse' comments. It said to look at your greatest cost and ask the question, what would happen if I just didn't do that anymore? This concept has dramatically changed our farm business as well and is driving things like our winter feeding cost to new lows for us.
I think there is great tragedy in agriculture at present, however in the midst of that there is also great hope, but I am also certain that the same thinking that got us into this mess sure as heck isn't going to get us out.

[skhadenuf]

The reality of governments is that they do have the power to influence which industries which business sectors etc. will be able to prosper. I am not suggesting that we just recieve handouts to keep afloat continually. But for example I buy crop insurance, we have had 4 out of 5 crop losses, the crop insurance coverages designed by government department of agriculture is designed so that if you loose crops to disaster in multiple years you end up with no coverage when you need it most. That is a decision made by government leaders to do things that way. I have a degree in agriculture, but don't need it to figure out that in disaster situations when your fixed costs of operation aren't even met by your only method of insurance something is wrong and that is one of the main reasons why all of the auctions are happenning. Government actions do dictate what level of probability there is for people within any industry to survive obviously they are and have failed miserably. That argument of poor management was an old government cruch just to shrug off their own inept handling of the agricultural sector and the uninformed media buy into it all the time because it's the easy way to report the situation. The question is, does our government keep farm families going with cash injections until a relatively solid program can be put in place? The problem is no government or opposition is legitimately working on developing a solid program because if they did they would need multiple times the amount of money to be put into it. Therefore they keep trying to buy farm votes every election with amounts of money that are a pittance compared to money spent in other sectors of our economy, in what is a mind boggling successful attempt at fooling everyone including most of us farmers into thinking they actually want to improve things when they don't because other lobby groups oil sector, unions etc use their clout more than we do. We as farmers just don't want to get together and be the force we can be in order to have the influence we need.

[smcgrath76]

I don't disagree with this assessment.
I don't think the ad hoc cash injections do a lot of good. A solid farm program would be a great development, and I suspect a cheaper option in the long run.

[Horse]

Crop insurance is mabey OK if you are just a grain grower but if you also run cows you are charged the same rate for salvage as if you were to harvest a good crop, if you pay 10% peemiums you have lost every 10th crop anyway, I still say hedging is no safer than cash marketing as a neibour hedged 400 yrlings at 88$ a few yr ago because he felt he would still make a buck, and then watched them go through the ring for 1.08.
In the hedge market 15% make money 85%lose.
Just read in the grain news that 5% as a return on comodies such as grain it would take 1mill worth to make 50thousand and a good operator would make 8%, do you feel you should have to be that large to make that kind of money I will bet other industrys are doing a lot better.