So what is the measurement of success?

Size of the farms?

More later.Gotta run.

 

Very good article. The last part is true. Me and dad used to argue alot about what to do now we all sit down and come up with a game plan every couple weeks. Most farmers here go up to their ears in debt. We try to limit the debt. Not easy the last couple years but we do our best to limit it. Also guys try to go to high tech fancy smancy equipment which is definitely not necessary. Older equipment works fine. You dont need state of the art if you can do something cheaper that takes a bit of manual labor. Family farms are becoming a thing of the past but I think they will make a comeback somewhat. Never give up just put your head down and work harder and keep the comunication lines open.

 

So what is the measurement of success?

Survival.

Regards, Mike

 

Cy. Thats how I used to think. Now I ask my self what is success? This is how I determine if im successful.

Is family happy safe and healthy?
Am I happy?
Are we reaching our goals?
Are we making a difference in our community?

If you say yes to these I would say you are successful. You cant take it with you when you go. I used to dream big but having my daughter home has changed me a bit. She wont remember what all I accomplished but she will remember I was there for her. Sometimes we just need to slow down and remember what really matters. A yard full of new equipment and thousands of acres mean squat compared to spending time with the ones you love.

 

Like nearly everything that Successful Farming magazine puts out and agriculture.com is geared toward big Big BIG farms as being the most successful. So success is determined by the many acres farmed? The size of government subsidy check a huge farm used to receive a year? The number of employees one employs? One example in that article wasn't even a farm, but an equipment dealer going public? Stressing out about keeping the bills paid while riding a desk with a phone glued to your ear? I don't know. I think success means different things to different people. Earlier this year I was kicking around the idea of buying a 160 acre farm. So that would mean I would be farming 510 acres within 2 years. Which is big for here. I asked my dad what he thought. He said think about your son. He reminded me about how when I was a kid and he farmed 420 acres and was gone all the time. It sort of ruined his health also. He was right in my opinion. I'm not ready at this time to get that big. Maybe in 10 years who knows. The farm wouldn't have cash flowed to buy it and just rent it out so that wasn't an option.

 

Both Iowa State and University of Illinois have done studies on the most profitable farms. I don't remember how they defined profitable, but I think it did reference being able to live off the proceeds without off-farm income. A few interesting take aways:

Diversified operations ranked the best. This is not the mega grain farmer, but the guy who runs a mix of row-crop/forage/livestock.

A couple of traits of the profitable farms: low equipment cost per acre. This applied whether big or small. Hayman hit this one the head, the newest, most expensive equipment does nothing to your bottom line if you can't spread that cost over more acres.

Another was lack of land ownership. The most profitable farms farmed on shares, the second best option was cash rent. Land ownership came in last. Land ownership/equity may help you in the end when you retire and sell out, but it is not the best option to cash flow your farm.

Large acreage only really came into play when spreading cost per acre out. There was actually a tipping point when getting larger was a detriment to profitability. I don't remember the size, but I think it was in the 3,000 acre range.

 

Both Iowa State and University of Illinois have done studies on the most profitable farms. I don't remember how they defined profitable, but I think it did reference being able to live off the proceeds without off-farm income. A few interesting take aways:

Diversified operations ranked the best. This is not the mega grain farmer, but the guy who runs a mix of row-crop/forage/livestock.

A couple of traits of the profitable farms: low equipment cost per acre. This applied whether big or small. Hayman hit this one the head, the newest, most expensive equipment does nothing to your bottom line if you can't spread that cost over more acres.

Another was lack of land ownership. The most profitable farms farmed on shares, the second best option was cash rent. Land ownership came in last. Land ownership/equity may help you in the end when you retire and sell out, but it is not the best option to cash flow your farm.

Large acreage only really came into play when spreading cost per acre out. There was actually a tipping point when getting larger was a detriment to profitability. I don't remember the size, but I think it was in the 3,000 acre range.

In my area I believe tipping point for getting larger is well below 3000 acres. Mostly due to irrigation and costs associated with irrigation and the increased amount of employees needed to manage that. Also depends on debt levels and if the owner of such a farm has to use operating loans. I do agree that renting is better for cash flow then owning until the price per acre comes down.

 

I took a different slant from the interview.....I think the very first question asked Drache sums it all up;

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"SF: You've written much about successful farmers. What are some keys to their success?

HD: The bulk of them are of faith. They are always optimistic about agriculture. They have the ability to anticipate things and are risk-oriented. I have worked with enough entrepreneurs to know that they have an instinct, that they can anticipate if a business will work. They just have an instinct to know when to move."

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There is no mention of owning lots of land, or owning the latest machinery, or the biggest facilities....but of the individual himself/herself....their moral fiber, their outlook and their God given innate abilities(instincts). These are the things that lend individual farmers to be successful. This individual will know their limits as to how it affects their relationship with their Lord, their family, their health and happiness.

Regards, Mike

 

Well what I was trying to say was the size of a farmer isn't a measurement of success.IMO

There are mega size farmers that have been on front pages of magazines just to fail and burn the people that actually helped get them to the size they were.Is thay successful?HELL NO!!

Not saying they are all bad just that size is not a measurement of success.

 

Here is one thing most people do and it was said here. Dont take the machinery costs over acres. Take them over units of products. Be it bushels of grain, tons of hay, pounds of livestock(not head of livestock cause you sell them by pounds and Iam better off selling one animal that gained 400 pounds than 2 that gain 500 pounds together.) I figure my haying cost on a per bale or ton basis not acre.

 

Someone mentioned the most effietient sized farm.There was a study done a few yrs ago and IIRC for a corn/bean farm 1200 acres was the most efietint after that you had to add multiple combines etc.So your effitientcy was lost.I thin k combines have gotten larger since then so maybe you could run more then 1200 acres with 1 combine now.

For 12 yrs I was running 435 acres of hay 3X with 1 cutter,baler & rake.My costs per ton for eq was very low.

 

Out west we ran 3000 acres of canola wheat and barley all 1000 acres and all harvested at different so 1 combine worked fine.

 

Being friendly to friends and nieghbors is something i always consider when expanding. But i like to stay diversified and do whatever improves my bottom line. So if an opertunity presents itself i always try to expand. Within my means... i believe faith amd family comes first the most important things. My goal is not to be a BTO but have a good bottom line.

 

Someone mentioned the most effietient sized farm.There was a study done a few yrs ago and IIRC for a corn/bean farm 1200 acres was the most efietint after that you had to add multiple combines etc.So your effitientcy was lost.I thin k combines have gotten larger since then so maybe you could run more then 1200 acres with 1 combine now.

For 12 yrs I was running 435 acres of hay 3X with 1 cutter,baler & rake.My costs per ton for eq was very low.

3 to 4000 acres here is max for one combine. But these guys have 3 or 4 semis, grain cart, top notch grain storage, run 8 or 12 row and 35 or 40ft. Platforms. Combine never stops.

 

Up here 3-4000 acres per combine is unheard of.Are season can get cut short with ice or snow.

 

Hog, when I was still with Cargill, I used to work with farmers and generally tried to steer them away from basing their revenue needs on a per unit or by price. Too many variables. Here is an example:

Had a customer (this was around 2005) who was looking to plant corn under pivot. Not a great well, so usually running around 180 bu. for irrigated.

I made a chart for him, based on historic prices we had records on and his production costs, and wheat followed by double crop milo or beans would have generated more net revenue per acre than growing a corn/bean rotation every single year we looked at. Sometimes the difference was small, sometimes it was huge. He never even considered it, just planted the crop that yielded more and priced at a small premium to milo. He went with a wheat/milo double crop that year and had the best net revenue per acre he ever had, rotated to wheat/bean double crop (and baled the straw) and returned even better.

Hay may be a little different, as you don't have planting costs every year, but with so many fixed costs (machinery, land, depreciation, interest, etc) it is a bit more flexible to establish a cost per acre and see how a change in yield impacts price need for break even. Your cost per unit is a component of the cost per acre. A person may even find that that when running price/yield scenarios, they are looking at the wrong crop

 

Iam not the best at explaining my ideas fully. Yes you do have to look at what is the best crop for your land. Like you said lots of guys never figure this part out. They just grow what dad and grandad grew. I was assuming on my post that this figuring was already done. That one already figured the best plan for the land. Be it hightest net per acre. Or what you already have machinery to harvest. Or maybe crop x might net more but I never have any luck growing it so I go with crop y. But once this is already figuref out than it comes down to cost per unit of production. Sorry for the confussion. I figured that everyone already figured out the best cropping option. But it seems like not everyone thinks like I do.

I was also trying to get at. Iam better off getting 4 ton per acre on a first cut than 2 ton. There are lots of things to consider. Could almost write a book on.the subject lol. Iam in the process myself of trying to figure out the best crop to grow on the new land I bought.

 

Up here 3-4000 acres per combine is unheard of.Are season can get cut short with ice or snow.

Alot of guys here combine corn now. If it gets to wet or they dont have time.

 

To me being successful has nothing to do will how many acres you farm or animals or equipment you own or if you or a spouse has an off farm job. If you make enough money at the end of the year so you break even or are in the black on the taxes. That is success.

 

There are so many that measure success by the number of acres they farm but then you find out they are in debt so far they will never ever have it pd off.Especially if interest rates rise or commodity prices fall.

In the 80's the SOME you thought were well off with new paint,etc were actually mortaged to the hilt when their mortage forclosure made the paper.

After going threw the 80's it's always been in the back of my mind of it returning so it's always has been my goal to get things pd off for when it hits again.

Are we in the beginning of the next farm crisis???

 

Very possible, I am thinking that downturns in the marketplace will not be as long lived as in the 70's and 80's.....but I definitely would not want to be holding a recent note on 5 figure/acre row crop land.

Regards, Mike

 

The world population is suposed to rise 2 billion in the next 40 years. I think it will be good for everything ag. If there is a down turn dont expect it to last long.

 

Success, for me, is not only making a living at farming, but building a legacy to pass on to the next generation. We have some big wheels around us that cover a bunch of acres and make a good living, but when they die or retire, the farm is done. Their kids have no interest in farming or cannot stand to be around the parents. For me, debt doesn't concern me as long as it cash flows and the debt is used to increase revenue. For me, I can make a good living farming, I have off farm employment for health insurance only, and I still have time for family life. I am the 3rd generation on my farm, and my greatest pride is watching my 15 and 13 yr old sons and 11 yr old daughter develop a passion for agriculture. The oldest is already completely consumed by the fever and all three work on the farm, not because we force them, but because they enjoy it and can already see the fruits of their labor. To me, that is success.

 

Success, for me, is not only making a living at farming, but building a legacy to pass on to the next generation. We have some big wheels around us that cover a bunch of acres and make a good living, but when they die or retire, the farm is done. Their kids have no interest in farming or cannot stand to be around the parents. For me, debt doesn't concern me as long as it cash flows and the debt is used to increase revenue. For me, I can make a good living farming, I have off farm employment for health insurance only, and I still have time for family life. I am the 3rd generation on my farm, and my greatest pride is watching my 15 and 13 yr old sons and 11 yr old daughter develop a passion for agriculture. The oldest is already completely consumed by the fever and all three work on the farm, not because we force them, but because they enjoy it and can already see the fruits of their labor. To me, that is success.

Success is different for all. It is not measured in acres. Nor iron. Nor anything else that can be measured. Success is measured by ourselves and is separate from finances and balance sheets. For some, they pull the aforementioned into their analysis. For others it can be as simple as a certain level of accomplishment.

 

I feel pretty successful around here when the payments are made and foods on the table. Haha But really; when I go to bed at the end of the day I can say I enjoy what I do and look forward to tomorrow, the majority of the world can't say the same.