How do farmers make any money?

[Hay Dude]

While I never farmed my grandparents did and I lived on their dairy farm growing up, my wife's family still farms.

The thing most people don't realize is to be a farmer also requires you to be a GOOD mechanic, understand finance, project manager, meteorologist, very self sufficient and the list goes on.
Farming is full time job as most on this site well know.

I find it amazing how little non farmers know or understand what farming is all about, I can see a time when only huge farming operations will be able to survive.

Yep.
Soon it’ll be a few hundred corporate farmers with their kids posting pictures of big iron they don’t own.

“You’ll own nothing” is a saying that is becoming more and more of a reality with each passing year- especially in farming.

Of course, some of the older farmers have managed to own everything, but if you are just getting started out, you’d have to either have a rich relative, be willed an entire paid-off farm operation, or farm with 60’s relics to begin farming now. Or as I do, have significant other off-farm income.

I can tell you with 100% certainty farming is a dying profession. It hasn’t or won’t die overnight, but if you look at the numbers, there’s fewer and fewer farms every year.

 

[Gator6x4]

It's sounding like people don't understand that if you spend $100k on a tractor and deduct it, you aren't saving or getting back or saving $100k in taxes. You are only saving the taxes you would have paid on that $100k of income. The less you are making, the lower your tax bracket and the less savings. The higher the tax bracket, to more you save. Realistically the savings is in the $0.15 to $0.30 per dollar. And of course if you aren't making a net profit from the farm, your savings will be zero.


Ah, I forgot the mortgage on the land, so that adds more to the per-acre cost.


That's a break on the realestate taxes, right? That seems pretty common and helps, but it's yet another cost per acre.

How about section 179 of the tax code.

Section 179 Tax Deduction | Equipment

Try our Section 179 tax calculator to find out how much you could be saving. Learn how to use tax deduction for equipment or other business expenses.

www.nationalfunding.com

Don’t owe as much in taxes the year you took the deduction?

Example the tractor cost $70,000.

Taxes owed. $20,000

Tax Credit toward future taxes due $50,000

 

[Gator6x4]

Yep.
Soon it’ll be a few hundred corporate farmers with their kids posting pictures of big iron they don’t own.

“You’ll own nothing” is a saying that is becoming more and more of a reality with each passing year- especially in farming.

Of course, some of the older farmers have managed to own everything, but if you are just getting started out, you’d have to either have a rich relative, be willed an entire paid-off farm operation, or farm with 60’s relics to begin farming now. Or as I do, have significant other off-farm income.

I can tell you with 100% certainty farming is a dying profession. It hasn’t or won’t die overnight, but if you look at the numbers, there’s fewer and fewer farms every year.

Speaking of big equipment, how would you like to buy one of these, jeez.

 

[Dryland Farmer]

That is supposed to be one of the easier machines to maintain, not as much technology.

 

[Gator6x4]

That is supposed to be one of the easier machines to maintain, not as much technology.

I don’t know about maintaining. That monster must cost a fortune. Then the implements prices would probably start nose bleeding by just looking at the price.

 

[quicksandfarmer]

The reason I asked was because of somebody is incorporated they are drawing a paycheck. So while the business shows a loss, they still have money to live on.

The money still has to be there. Corporations don't manufacture money out of thin air. And bankers are less eager to lend to small businesses than they are to individuals.

 

[Dryland Farmer]

I don’t know about maintaining. That monster must cost a fortune. Then the implements prices would probably start nose bleeding by just looking at the price.

Apparently the engine slides out on a skid or something.

 

[Gator6x4]

Apparently the engine slides out on a skid or something.

I hope it has a good set of step to climb up into cab.

 

[Dryland Farmer]

I hope it has a good set of step to climb up into cab.

It actually has an elevator.

 

[Hay Dude]

The money still has to be there. Corporations don't manufacture money out of thin air. And bankers are less eager to lend to small businesses than they are to individuals.

I have a corporation and I can tell you it is extremely easy for the officers to draw a salary while the corporation has a loss.

 

[rvds]

The reason I asked was because of somebody is incorporated they are drawing a paycheck. So while the business shows a loss, they still have money to live on.

Not really how it works on farms. If expenses are higher than revenue there is no salary, LLC or not.

 

[5030]

One of my friends owns a mega farm near Ionia, Michigan and is rotational milking I believe around 1000 cows. They are totally married to the operation 24-7, 365. No holidays, no breaks. Not my idea of fun.

 

[mjonesnh]

Grew up on a Ky. dairy farm. 7 days a week job for my dad. When were were heavy in tobacco harvest or maybe 1000's of bales of hay to bale and get in barn he would be up at 2am to milk cows to be in field at 7am. Late 70's my dad said he had enough, sold all the milk cows and switched over to black angus beef. He told me a few years later the best decision he ever made

 

[Hay Dude]

Not really how it works on farms. If expenses are higher than revenue there is no salary, LLC or not.

LOL
“Expenses” can be manipulated.
I have never needed to do anything like that, but just like with any business, it can be done.
Let’s say a farmer or any corp owner takes a $10,000/month salary for the first 10 months, then suffers a very expensive equipment loss causing him to show a loss.

Pretty simple that the farmer paid himself a salary, then incurred a huge unforeseen loss.

 

[ning]

LOL
“Expenses” can be manipulated.
I have never needed to do anything like that, but just like with any business, it can be done.

My brother in law has an antique store.
He complains about public services but pays almost no income tax.
His safe is full of gold.

 

[big bubba]

haven't seen any mention on this thread re:large foreign purchases & holdings of land/agri investments in US (mainly China) esp in water sensitive areas out west. so...what's ahead on that scenario re:this subject during uncertain times for farmers trying to make a living as the economy & political winds shift?

 

[Eagle1]

LOL
“Expenses” can be manipulated.
I have never needed to do anything like that, but just like with any business, it can be done.

Salary IS an expense and fully deductible in the right business structure. My corp was held in a trust and I was just the hired hand to run the operation.

 

[Jstpssng]

The money still has to be there. Corporations don't manufacture money out of thin air. And bankers are less eager to lend to small businesses than they are to individuals.

You are right. Yet I keep hearing people- not just farmers- italk about losing money year after year. If they are drawing a paycheck every week that partially explains how they keep going.
Also, there are ways to lose money on paper, especially as the company or corporation gets bigger.

 

[Hay Dude]

You are right. Yet I keep hearing people- not just farmers- italk about losing money year after year. If they are drawing a paycheck every week that partially explains how they keep going.
Also, there are ways to lose money on paper, especially as the company or corporation gets bigger.

You can’t lose money forever, but some sure as hell have tried!

 

[MossRoad]

Speaking of big equipment, how would you like to buy one of these, jeez.

View attachment 2834638

You and I can own one, too....

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