That is a hash tag on twitter that some are using when they talk about surviving the agricultural downturn we are in.
I was asked by a banker friend to say a few words on how farmers can survive the next few years. 20 minutes worth to be exact. Short, sweet and to the point. Some agricultural suppliers will not be happy with me. So here are my notes.
4 year downtrend in commodities, 4 consecutive years where commodity prices are lower December 31 compared to January 1. Never has happened before. Even during the great depression it never went down 4 years in a row. So the boom is a bust????
If you can come close to break even you are doing OK.
Close is good enough in these times.
High costs are the problem.
Cash does not cash flow!
Tax implications. Lots of farmers will owe taxes this April, but will not have the money to pay these taxes. Section 179 is biting back.
It is OK when times were good to pay some tax. Farmers hate to pay taxes and many times that gets us in trouble.
Cash Flow restructure, lengthen terms, farmers own lots of stuff borrow against it, or sell it !!!
Big Getting Bigger fact of farming I discuss this. Lots of input suppliers, not all but many need you to survive. They can not live off just a few really big guys. So most will work with you to make it through this.
Too many slices of the pie. Grandpa needs to retire and collect social security. Grandpa has to quit taking a share of the farm profit. Grandson needs to get an off farm job. Grandson needs to not take a slice of the farm income pie. That slice needs to go pay off debt and or re-invest in the farm operation. You will still get all the work done.