Agricultural business news and notes
In this article I am writing today I want to discuss a couple of topics: one farmers and landowners should know and another for farmers to know. The first one is critical for non-farmers to read too.
(1) In a recent interview with Dr. Vincent Smith from Montana State University, he says the statement that “farmers never made a living farming” is not a myth. His study showed 80 percent of farm income, on average, comes from sources other than “farming” and that farmers don’t make a living from farming and have not from at least 1960. I hear from non-farmers all the time that farmers are all rich. That is untrue. So where does other income come from for farmers? Off-farm employment, government payments (a big part in 2020), other related businesses, (direct sales, etc.). The old adage “Farmers live poor but die rich” might have some validity here.
(2) I am going to talk about another enterprise in farming that farmers do all the time but does not pencil out. Putting up hay (in big bales especially) has never shown a profit. There are reasons to do it if you are feeding it but to sell, it is a loss for most everyone. The budget in the MU system shows a small profit but has yields at 3 ton per acre (2.5 is average) and costs were not updated recently. Furthermore, big bales generally waste anywhere from 20 to 33 percent of the bale. While I am not suggesting you quit putting up hay (although managed grazing and stockpiling help to get there), I am saying to look at your operation to see where you might lower costs without costing yields. ECONOMIC THRESHOLD
Many of you have heard the term “economic threshold” before but I want to quickly address it. It relates to diseases, insects and weeds and at what point the problem causes more economic loss than the cost to control it. It is an important concept for farmers but also for homeowners. Sometimes homeowners are more interested in “getting revenge” than anything but using the economic threshold makes economic sense as well as helping the environment.
Remember if you have a question or need assistance, contact the Livingston County Extension Office at (660) 646-0811 for help.
Joe Koenen is an agricultural business specialist with the University of Missouri Extension.