How do farmers make any money?

[rvds]

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Couple examples from many many years ago.

why claim depreciation that causes a loss?

 

[rvds]

Farm subsidies need to be directed at a reasonable size family farms, not major corporations or mega farms. There needs to be a cap to how much one entity can receive in subsidies. Grew up on the family farm in the Midwest watching several families buying up other local family farms to combine into mega farms. We knew one of them personally from church. Their answer to how they did it? He told us that they'd take the government subsidies and every two to three years and use use them to buy another farm outright and expand the operations. Government would then pay them more subsidies since they were now larger, rinse and repeat.

This has been the unintended results of most government programs in agriculture. They were a nobly intentioned effort to help family farms that instead led to neighbours being subsidised to swallow neighbours. I believe the nation was better served when rural areas were vibrant economies but times have changed.

 

[LHF2019]

From a personal perspective I would rather just pay more for milk, simple because I don't consume much. From a farmers perspective I would almost think I would prefer to be able to make a living without assistance. I suppose if it didn't work you wouldn't be doing it.

And that's great but in the dairy world you don't get a choice in what your paid for all your hard work. Your milk leaves every or every other day and you do not know what your going to get paid per hundred weight until next month in 2 checks. But you just spent all your money making sure the cows are fed, equipment maintained, employees paid.

why claim depreciation that causes a loss?

Back then anything on the depreciation schedule got depreciated out in 7 years. If you made a purchases high priced items went on depreciation so you could spread out the expenses for the seven years. Now they have a section ??? where you can take the full amount at once or spread out. And there might be other options within those rules. Why I have an accountant. So much to keep track of and you hope your accountant will do the best for you. So this year I will show profit. Next year if given a choice of profit or loss I'm going to take the loss. Some years you get a choice of how much profit you want to show. Some of it is by moving purchases around. Say I bought a $1000 air compressor. I will have a choice on making it a supply expense for this year or I can depreciate out over several years. That would be a discussion that would happen in Nov. for tax planning. But once in the depreciation schedule you can't change it.

 

[rvds]

And that's great but in the dairy world you don't get a choice in what your paid for all your hard work. Your milk leaves every or every other day and you do not know what your going to get paid per hundred weight until next month in 2 checks. But you just spent all your money making sure the cows are fed, equipment maintained, employees paid.


Back then anything on the depreciation schedule got depreciated out in 7 years. If you made a purchases high priced items went on depreciation so you could spread out the expenses for the seven years. Now they have a section ??? where you can take the full amount at once or spread out. And there might be other options within those rules. Why I have an accountant. So much to keep track of and you hope your accountant will do the best for you. So this year I will show profit. Next year if given a choice of profit or loss I'm going to take the loss. Some years you get a choice of how much profit you want to show. Some of it is by moving purchases around. Say I bought a $1000 air compressor. I will have a choice on making it a supply expense for this year or I can depreciate out over several years. That would be a discussion that would happen in Nov. for tax planning. But once in the depreciation schedule you can't change it.

Wow! In Canada it is nothing like that. Depreciation is voluntary and all assets are pooled in groups with similar depreciation rates. Most tractors and machinery are in the 20% class. If you buy a tractor for 100k it gets added to the 347k of undepreciated assets in that class and you may claim a MAXIMUM of 20% every year. If you lease a tractor you claim the entire lease payment as an expense even if means declaring a loss.

 

[Dryland Farmer]

And that's great but in the dairy world you don't get a choice in what your paid for all your hard work. Your milk leaves every or every other day and you do not know what your going to get paid per hundred weight until next month in 2 checks. But you just spent all your money making sure the cows are fed, equipment maintained, employees paid.

How many cows did you milk when you were still in the business?

 

[LHF2019]

How many cows did you milk when you were still in the business?

Barn held 60. Most I milked was 80 one summer. I leased out the extra 20 when had to put young stock back in the barn. After they were gone I realized I would have been better not milking the extra 20. I made more milk per cow with 60 than 80 because the facility to hold them was not designed for cows but heifers. The barn itself was good for 86 lbs/cow. That's it. It was like hitting a wall. The genetics were all there but what was missing was cow comfort. It was a tiestall barn. When I quite milking and leased out the cows they were kept separate on DHIA and within a month the herd had surpassed 100 lbs/cow. It was interesting to see what they were capable of. Not all of the cows survived the transition. Our oldest did not make. 12 years old as a tiestall cow did not transition. Felt bad for her. She was one that went down after calving and had to lift her once a day to milk her for close to a month but she made it and once in the barn she was a 100 lb producer. And yes I do miss it. The challenge. Watching the next generation come in and see if I can make them better than the previous generation. I've helped 2 farms put in robots and that made me miss it even more. The data those things can pull in. That's why I still milk in the winter. Enough to keep me from doing something stupid and go back at it and when the weather turns nice I can call it quits.

 

[Dryland Farmer]

Barn held 60. Most I milked was 80 one summer. I leased out the extra 20 when had to put young stock back in the barn. After they were gone I realized I would have been better not milking the extra 20. I made more milk per cow with 60 than 80 because the facility to hold them was not designed for cows but heifers. The barn itself was good for 86 lbs/cow. That's it. It was like hitting a wall. The genetics were all there but what was missing was cow comfort. It was a tiestall barn. When I quite milking and leased out the cows they were kept separate on DHIA and within a month the herd had surpassed 100 lbs/cow. It was interesting to see what they were capable of. Not all of the cows survived the transition. Our oldest did not make. 12 years old as a tiestall cow did not transition. Felt bad for her. She was one that went down after calving and had to lift her once a day to milk her for close to a month but she made it and once in the barn she was a 100 lb producer. And yes I do miss it. The challenge. Watching the next generation come in and see if I can make them better than the previous generation. I've helped 2 farms put in robots and that made me miss it even more. The data those things can pull in. That's why I still milk in the winter. Enough to keep me from doing something stupid and go back at it and when the weather turns nice I can call it quits.

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You didn't milk 80 cows with that thing did you? Did your cows go from tiestall to freestall? That's a tough transition.
A saying for dairy farmers: Beef guys might wear the nice hat but dairy farmers are the real cowboys.

 

[Jstpssng]

For those of you who take a loss: are you incorporated or an LLC, so that you are collecting a paycheck before the overhead?

 

[MossRoad]

If grass or weeds grow under the panels you've got to mow. Or instead you could keep sheep to do the mowing. Science-fiction writer Philip K. Dick wrote "Do Androids Dream of Electric Sheep." Voila!

That's exactly what they're doing on a 1000 acre solar farm here. Sheep farmer is pretty happy. Land owners are pretty happy.

https://www.southbendtribune.com/story/news/local/2024/12/03/sheep-flock-graze-in-honeysuckle-solar-farm-to-help-farmer-gunthorp/76424837007/

 

[Fixastuff]

s-corp is the best for me according to accountant.

 

[LHF2019]

You didn't milk 80 cows with that thing did you? Did your cows go from tiestall to freestall? That's a tough transition.
A saying for dairy farmers: Beef guys might wear the nice hat but dairy farmers are the real cowboys.

Correct. Tiestall to freestall. lol no we had a pipe line. 4 milkers, dad up it to 6 then after he passed I got 2 more at an auction. But guess what, the milker pump was not upgraded. The ramification was really noticed when toward the end I did all the milking by myself so 5 milkers max. The last month I got premium. Always floated the premium line and no major issues SCC or bacteria counts on inspection but the smaller vaccum just couldn't quite handle 8 milkers. 3 main reasons I left milking. Health, Money, and labor. A 60 cow dairy is on that fine line of needing no labor to needing just a couple people to make it manageable. Health. The last year I milked I had decided that winter I was going to milk the high producers 3x daily for additional income. Later that summer I got off the tractor and when I went to get back on had to pull myself up. Could not put pressure on my knees. I was already down to using one leg to climb ladders, no longer could run and as you can imagine milking was starting to get a little rough. This at 23 years old. To this day if I push myself I can feel my knees start to go. Especially if stairs are involved.

For those of you who take a loss: are you incorporated or an LLC, so that you are collecting a paycheck before the overhead?

Sole proprietor. Looked in to different headings with the accountant and lawyer but none would be advantageous for us.

 

[Dryland Farmer]

Correct. Tiestall to freestall. lol no we had a pipe line. 4 milkers, dad up it to 6 then after he passed I got 2 more at an auction. But guess what, the milker pump was not upgraded. The ramification was really noticed when toward the end I did all the milking by myself so 5 milkers max. The last month I got premium. Always floated the premium line and no major issues SCC or bacteria counts on inspection but the smaller vaccum just couldn't quite handle 8 milkers. 3 main reasons I left milking. Health, Money, and labor. A 60 cow dairy is on that fine line of needing no labor to needing just a couple people to make it manageable. Health. The last year I milked I had decided that winter I was going to milk the high producers 3x daily for additional income. Later that summer I got off the tractor and when I went to get back on had to pull myself up. Could not put pressure on my knees. I was already down to using one leg to climb ladders, no longer could run and as you can imagine milking was starting to get a little rough. This at 23 years old. To this day if I push myself I can feel my knees start to go. Especially if stairs are involved.

Where did scc and bacteria count have to be to get the premium and how many years ago di you quit? I have experience as a herd manager but never a owner and I am still interested in dairy.

 

[ultrarunner]

Grandparents had 40 milk cows tiestall plus calves, hens and pigs.

All winter in the barn and spring and summer living the good life in pasture coming in only for milking.

The first time out was always exciting… happy cows.

Just a single hot wire strand did the job…

Brings back memories.

 

[Jstpssng]

Sole proprietor. Looked in to different headings with the accountant and lawyer but none would be advantageous for us

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.

 

[LHF2019]

Where did scc and bacteria count have to be to get the premium and how many years ago di you quit? I have experience as a herd manager but never a owner and I am still interested in dairy.

Want to say 150,000 on the SCC and I would run 200-220 can't remember on the others. 22 years ago this fall on being done milking. Did relief milking for a few years with the custom work. It was neat to see other barns and while I thought our was very labor intensive it was a walk in the park compared to most I milked for. Worked in one that had tunnel ventilation. I really liked that. And I did have the conversation with the vet about that system while I milking. The big down fall of it the fans would have been blowing right towards Grandma's house. That would have been unacceptable. I still get dairy magazines to try and keep up with some of it.

How big of a herd did you manage? The farm that put robots in runs about 360. I did the night shift the first couple weeks after install. The regular day person did not treat those cows good and did talk to the owner about. It really pissed me off. I could walk in the pen with them and they would jump up, run, act nervous. Every night it was that way. It was bad enough they were learning a new routine then treat them like that. By the morning they were relaxed and I could walk among them without them being nervous and get the ones needed to run through the robots. The next night repeat the process. I did talk to the owner about a potential job just because of the way the cows were treated.

 

[Dryland Farmer]

The herd I managed was just under 200 cows. Here in Canada animal welfare is a big deal, partly brought on by animal rights groups sneaking around on farms and looking for bad situations they can put exploit. It was a naturally ventilated barn with no fans. It worked good down to 10 degrees F, anything colder it just stank.
I'm glad you chose not to exhaust your barn into grandma's house.

 

[5030]

It appears as though people milking cows and Farriers have a lot in common far as the old frame giving out. When we had cattle (steers) no milking involved, just to market weight and off they went to get turned into consumable meat.

 

[garry1p]

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.

 

[chim]

....................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.

Until marrying into a poultry farming family, I thought I knew everything - put feed in one end of a chicken and they poop eggs out of the other. It's a bit more involved

 

[Hay Dude]

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.

Yep