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Or they don't want a tax problem. Wont be an issue in my area this year
Ah yes, the "tax problem". Probably the single most common reason why farms go broke is the misguided mentality that "I needed to buy/upgrade to avoid taxes". Translation "My farm is profitable so I have to piss away a pile of money on equipment I don't need to bring me back to a loss position". The surest sign that the farmer has no clue how to manage the financial side of a business. So there you have the asset rich, cash poor (poorly managed) farm. I've seen farms go broke buying equipment to "avoid taxes" never seen one go broke by paying taxes yet.
 

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I am one of them guys asset rich broke as a joke most of the time, or I feel that way, reason is I started with nothing got myself going from the ground up when the old man was in a position he could not help me, never left him though, did everything I possibly could to protect my inheritance (sounds rood but I didnt want to be one of them guys choking his old man to death and not doing his part so he could inherit debt)
In the past years I have been gaining ground and custom work and the whole nine yards, the hard work is paying off but its hard to catch up to keep competitive enough to keep expanding. Got to be careful and play the cards right thats for sure, no risk no reward but measures can be taken to cut risk
 

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I am one of them guys asset rich broke as a joke most of the time, or I feel that way, reason is I started with nothing got myself going from the ground up when the old man was in a position he could not help me, never left him though, did everything I possibly could to protect my inheritance (sounds rood but I didnt want to be one of them guys choking his old man to death and not doing his part so he could inherit debt)
In the past years I have been gaining ground and custom work and the whole nine yards, the hard work is paying off but its hard to catch up to keep competitive enough to keep expanding. Got to be careful and play the cards right thats for sure, no risk no reward but measures can be taken to cut risk
There's the difference. You appear to be managing your money to spend as little as possible and still get things done (rebuilding your sprayer). There are others that trade theirs off with 400-500 hours on them just because there is a new model out there that has 12 fewer grease zerks (or whatever lame excuse) then complain about the high cost of farming. 35 years dealing with farmers all over Alberta, over 1000 different farmers one thing that is fairly consistent (there are always exceptions). The wealthiest farmers are most often the ones sitting in the coffee shop complaining that there is no money in farming while the guys that are truely struggling rarely complain. They are too busy working hard to improve their position.
 

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Is there money in farming. I have worked hourly and owned a mechanic business. Now full time farm. I started from scratch, on my own with all of these. Still paying college loans. I have gained more equity in farming than any job. Made the least to spend on my self than any job. I hope that changes. I have a long ways to go. Farming is by far the most expensive and most risky thing I have done. In a way. Properly managed, it is not bad. Best advice my dad ever gave me in farming is. It is not the bad years that break a farmer, it is the good years. We have to think further out than most. It is a slow moving progression. But has a good chance at great growth for the very patient.
 

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I like that lanwickum, its tuff, I am satisfied giving my wife and kids what the need and hope I can give them all the deserve for now, a guy has to be thinking about the long run and not that shinny new pickup, its really hard to get the confidence from land owners and the respect from fellow farmers that you can compete in their already established world.

Its later is what I strive for, hope my boys can farm with me one day and I can give them what my dad couldnt give me. Love what I do and that is the most important
 

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Ah yes, the "tax problem". Probably the single most common reason why farms go broke is the misguided mentality that "I needed to buy/upgrade to avoid taxes". Translation "My farm is profitable so I have to piss away a pile of money on equipment I don't need to bring me back to a loss position". The surest sign that the farmer has no clue how to manage the financial side of a business. So there you have the asset rich, cash poor (poorly managed) farm. I've seen farms go broke buying equipment to "avoid taxes" never seen one go broke by paying taxes yet.
Oh my God!!!:6:


Thank you for posting that!!!! I have never understood that mentality! There is a guy 'round here that graduated HS with my brother in law. Huge dairy operation. You see 1 year old equipment parked off to the side, and BIL asks him about it. "Oh, that POS never did work. Looked like a bad idea from the get go." Well, why did you buy it? "Oh! You have to!!! You gotta buy something or Uncle Sam will take it!"


I get it, TO A POINT.


But, unless you're a total government hater and don't want to give them bastards one red cent, what's the difference if you give the money to them or to the dealer? Let's say you have $500,000. Pay tax on it, 30% of it's gone. Buy a Lexion, it's all gone, but you get to say you "lost" $50,000 a year for 10 years.


Round numbers. Simplistic. Yes, I know, I'm not trying to write an accounting book.


BTW, the price of milk tanked, and that genius that graduated with my BIL had to refi most of the operation. If it weren't 3rd generation, he would have lost it all.
 

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To make matters worse, my Dad surely never "got it" most of his farming career. It's like he kept a running total of his yearly income, and made sure to buy just enough to make it a loss every year. See something expiring on the depreciation schedule, buy something else. Often, we needed it or at least could use the improvement, but not always. Then we got audited! And I mean to tell you we came this -->| |<-- close to losing the audit. If it had not been for my at -the-time 3 years of improvement to the bottom line and showing a direct tie between the most recent investments and the improvement, we would have lost, and the other "stockholders" would have been wiped out by the tax bill because they were "cash poor".
 

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Ag comodity prices and cattle prices make all the difference. Low prices below direct expenses affect everyone. Farmers are market takers and not market makers. Even Cargil posted net losses the last quarter for the first time in 14 years. This is probably not due to buying a new tractor but directly linked to low comodity prices. Most equipment manufacturers have layed off employees due to declining ag sales, directly linked to low comodity prices.
The oil industry is laying off employees all over and rigs have shut down, this is directly linked to the low price of oil. Just like any business when what you have to sell cost you more to make then what it's worth something has got to change. They are adjusting their business to the price of the comodity by scaling back and laying off employees.
In this game you win some you loose some. Just hope to win more times than you loose. I don't care what tax situation you are in if you get hit with low prices and discounts on your crop, say $1.50/by wheat two years in a row, it'll hurt, it'll knock you down a bit.
 

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I am one of them guys asset rich broke as a joke most of the time, or I feel that way, reason is I started with nothing got myself going from the ground up when the old man was in a position he could not help me, never left him though, did everything I possibly could to protect my inheritance (sounds rood but I didnt want to be one of them guys choking his old man to death and not doing his part so he could inherit debt)
In the past years I have been gaining ground and custom work and the whole nine yards, the hard work is paying off but its hard to catch up to keep competitive enough to keep expanding. Got to be careful and play the cards right thats for sure, no risk no reward but measures can be taken to cut risk
Erm, how do you star from nothing by inheriting a farm?

I went to college with a Kiwi that came to my college on a scholarship. When he went home he had about $500 Kiwi in his pocket, 10 years later he has 1,000 cows. That's starting from nothing.
 

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Inherit what farm? My old man still farms

Read it again willy, I am still working hard to help my old man prosper along with myself

For the record the only thing I have ever inherited was a watch, a casio watch, proud to have it from the man that was my friend
 

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Inherit what farm? My old man still farms

Read it again willy, I am still working hard to help my old man prosper along with myself
Don't take this the wrong way, but are you going to have to out manouver and out bid all your neighbors when your dad does pack it in?

The advantage of an established land base, even if you have to pay full price for it, is often overlooked, you know? At least you maybe have some land base of your dad's that you do not have to fight hard to get in the end??

I have many neighbors who are "buying out" their parents. But at least the land in question is in the family, and secure that way, you know?

I wish my dad had bought up more land when it was cheap! grrr
 

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When it comes to paying taxes, all taxes aren't the same. Income tax, not a big deal. One bad year, well thats why they have loss carryforwards.

Property taxes? Now thats a different story. Them parasites will suck you dry, and then sell you out when you can't pay them their extra nickel they demanded this year. I pay far more in property tax than I do in income tax, and get less in return.

Since property taxes are mostly local, make sure your local boards don't get Taj Mahal tastes next time they want a new building.
 

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Don't take this the wrong way, but are you going to have to out manouver and out bid all your neighbors when your dad does pack it in?

The advantage of an established land base, even if you have to pay full price for it, is often overlooked, you know? At least you maybe have some land base of your dad's that you do not have to fight hard to get in the end??

I have many neighbors who are "buying out" their parents. But at least the land in question is in the family, and secure that way, you know?

I wish my dad had bought up more land when it was cheap! grrr
I hear ya 100%, the old man is a honery stubborn butt hole sometimes for sure but he does know how hard my brother and I have worked to get his train back on the tracks, the other thing is that chances are as long as my bro and I are doing the work he will keep at it till the day he dies, we have him to the point of no debt, he was close to disaster not long ago and he is only making payments on land he recently purchased, his wallet is thicker now than its ever been and his reputation is back to good again. Just hope he dont forget.

My father inlaw will forget everything my wife and I done for him and will live a happy retirement, its just the way the cards play
 

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This is a bit of a goofy question. It's like asking do restaurants make money. I'm sure a string of Boston Pizzas make money but the cafe in the small town barely breaks even. We are like any other small business. We need luck, hard work, good management and to top it all off we do it outside in the bloody weather which changes every ten miles. Nobody in my area made money for ten years and then everybody did the last three . These high rainfall areas , this one anyway needs Crop Insurance and we needed Grip and the earlier Agristability and Western Grain Stabilization or not one farm would be left standing. So I guess in a way you could say we don't historically make money. I know guys in the Southern Red River Valley who have never made a claim or maybe only on Sunflowers for others. The weather and soil couldn't be more different between there and here. Historically then , they have always made money with the exception of some really low price years. They appear to have the Boston Pizzas I guess, but they also have real expensive real estate.
 

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Do farmers make money? Bushels of it!!:)
Kidding aside farming has been good to me, so yes a farmer can make money, but it is not a guarantee.
 
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