Dave Forgey wrote:
>>>>> I sense fear in your reply and fear and greed are what keeps my
suggestions from happening.
===
Rick's comment: I am sure most of us appreciate that life can be very
difficult when it comes to human interaction and agreements. Particularly
with agriculture since there are so many variables with weather and health
issues and time value issues. For the typical business person to make
informed decisions to further their self interest is not what I consider
greed. By definition, the concept of greed is only when things are taken to
an extreme, not when carrying out most normal business transactions. The
main consideration you have to ask yourself is: "Am I making a rational
business decision based upon sound judgement, realizing that there is always
risk?" and "Do I have enough resources to take that risk?"
When you reach retirement age, taking on risk is unwise for most of us
because we do not have time left to replace lost wealth. If you have more
than you think you would need, the risk may be acceptable to a given
individual. But most of us are not quite that well off. Most of us need
something close to $1,000,000 in combined assets and value of retirement
accounts, social security, etc. to be financially secure. Even that amount
is not enough to cover all contingencies, but is doable by the average
person here in the U.S.
>>>>> I have said many times that a 50% net profit should be
the goal of a pasture based dairy farm. With that level of profit on a
farm of adequate size two families can live well, pay down debt and even
buy land. I believe that if I worked with a young family for a year or
few that I would know their goals and ambitions.
=====
Rick's comment:
It depends upon the size of the farm. Fifty percent of a low gross income
... returns ... a low net income. As business oriented farmers have been
finding out, they must find the right size for them in order to have
economies of scale and then sufficient return to support the numbers of
employees or co-owners (typically family partnerships). The return on a
pasture based dairy farm may or may not be as good as other farms in our
region as there are so many variables. For those starting out from scratch,
with other income, it can work better in some cases. But we have seen many
come and many go of all kinds of farms.
One year is a short time to get to know someone but sometimes you can get
lucky. Sometimes not. Whether a farm or other business, partnerships are
very risky. If you wish to help another farmer by using your equity and are
willing to risk it, that is certainly your business to do so. But few would
do this. And few would be able to give up the management control.
Most of the new entrants will really be those from families with existing
farms. Realistically, we have more than enough potential new entrants from
that group now. In fact, most farm families often tend to discourage their
offspring from farming because it is such a competitive business and they
are not willing to take the risks to become more profitable.
Bringing in many new people does increase the competitiveness. I personally
do not have a problem with that since there are those who really want to go
into farming even though they did not grow up on a farm or have ties to
farming. They may even have better success with grass based farming because
they do not have to change current family beliefs and preferances and they
won't have locked themselves in to high cost structures and equipment. But
having said that, there are few who do succeed.
Sincerely,
Rick Williams
Misty Ridge Farm
contract dairy heifer grazing and direct marketed farm meat and produce
Viroqua, WI
www.mistyridgefarm.com
