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John Phipps blog-starting in farming
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denny-o
Posted 10/31/2014 13:17 (#4153850 - in reply to #4153153)
Subject: RE: John Phipps blog-starting in farming


Michigan - Saginaw County
bp940 - best laugh I've had today.

Can a young man start farming from scratch, with no family ground or machinery or money, and raise a family from just the farm income?
Hell no.
And the one exception listed so far proves the point - he was living at home while starting
All of us stand on the back of others.

What does it take to start a farm?
One million dollars. And I have the land deeds and machinery bills to prove it.
Oh, and you better have a working wife, or have 50 years of savings, before going to farming.

The better question is: Can you start a family farm today?
The answer is: Yeah, barely. But it is tough. Really tough. And the door to doing that is closing.

This country is going to corporation owned farms - and for the same reasons that the family restaurant, family grocery store, family car dealership, etc. have been replaced with chain restaurants, mega dealerships, etc. The high cost of entering the business from scratch. And very thin profit margins requiring high amounts of cash flow.
A McDonalds franchise requires you to have up to a half million in cash to put down and a credit line for another quarter to a half million last time I looked (likely more now) Young guys with no net worth do not own a McDonalds because the corporation will not sell them a franchise..
Last statistic I saw was that 4.5% of farms in this country are large corporation owned and produce 40% of the food.
I have not verified those numbers, but they should open your eyes.

With farm land at 6k to 26K an acre, good tractors at 100K and up, ditto combines, etc. the amount of dollars to start up a farm large enough to generate a net profit of (say) 50K to live on annually is out of the reach of most folks, younger or older. My guess is 1000 acres minimum to do that and still have operating capital, pay debt, and accumulate reserves for the next expansion.
Many family farms think they are doing well, but they are not setting aside money per each hour of operation on each machine so the cash will be there to replace the aging machinery before it becomes unreliable nor are they accumulating capital by setting aside x dollars per acre per year on the present land, to purchase more land. The money that should be going into that fund is diverted for "income".

Accumulated capital in the hands of a corporation is what will finance the future generations of farming. And in 30 to 50 years as corporation farming becomes THE majority the consumer is in for a real shock. Corporations do not flinch from big debt to ensure market control - such as fallowing land if the projected market price of the grain for next year does not meet their minimum. Should be interesting to watch as futures-trading-scum, try to manipulate the market and meet a steel wall of resistance.
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