The Rural Voice, 1980-03, Page 29Advice on Farming
What is
your net worth?
BY STAN PAQUETTE,
Associate Agricultural Representative
What is your equity? What is your net
worth? A few questions to answer when
talking to your bank manager.
Equity - is the percentage of your
business you own. It is a measure of your
financial strength and an indicator of the
risk level in your farm business.
A satisfactory equity varies with the
situation, age of farmer, length of time
farming and type of enterprise. A thumb
rile is 50% or more equity for a well
established farmer and 25% or more for a
beginning farmer.
Liquid Position - A business requires
adequate funds to pay current bills. A
strong total equity position may often be
out of balance. Too much may be tied up in
fixed assets and too little in current assets.
Net Worth - simply means the balance
remaining after deducting liabilities from
assets. What about the farmer with a net
worth of $1 million, but only $100 in the
bank. Many farm operations today may be
in that position. What does it mean? Does
it mean that the business is hamstrung and
can't pay current expenses? Or does it
mean that funds that could be quickly
converted to cash are at work earning
interest? This is an important question.
Whenever a business cannot pay its bills
when due, it's bankrupt. A business in
such a position is not liquid. A business
with a favourable net worth and operating
at a profit could go bankrupt. Cold hard
facts, but true.
If risk is low, liquidity needs are low.
This means little need for large amounts of
cash to pay bills. This is usually the
situation with established farmers who
have a good cash flow and a good asset -to.
liability ratio.
The young beginning farmer, who has a
low asset -to liability ratio and a low equity
in his business, must rely heavily on more
borrowed money to retain a liquid position.
He must be able to borrow readily to pay
creditors. This necessitates a very good
working relationship with the banker.
How do you keep a good liquid position?
Farmers should be more concerned about
liquidity as input costs continue to
escalate.
Short and long term debts should be in
balance. Cash flow projections should be
made, building in a safety factor to allow
for unexpected current expenses. Proper
cash flow projections can allow you to put
money to work earning interest on a short
term basis.
If balance sheets are prepared, review
them. Compare current assets to current
liabilities. A well accepted ratio is 2:1 of
current assets to current liabilities. Higher
ratios of 5:1 may be a better liquidity
position. However, if the current assets
are in cash or a non-interest earning
account, it means lost opportunity in
interest earned. The money should be
working for you, earning interest, when not
needed in your operation.
Many farmers purchase capital items
with short term money. Capital items such
as machinery should be financed with
1-10 year intermediate term loans. Land
and buildings should be financed with
10-30 year long term loans. If this is done,
current money is available for operating
purposes plus principal payments on
intermediate and long term debt due
within the year.
The bank loans officer or manager makes
his decision whether to recommend your
loan requests by examining the very things
discussed; equity, net worth and liquid
position.
Lasers
influence farming
BY YURI KOCHETOV,
Dept. of Agriculture & Chemicalisation,
Lenin Academy, USSR
Today, lasers are being used in agricul-
ture more and more actively.
These uses include the influence of
lasers on seeds of various crops before
sowing in order to increase their product-
ivity; the study of laser radiation of seeds
for plant disease resistance; the utilization
of laser radiation as a mutagenic factor,
OQC (optical quantum generator) employ-
ment for the remote sounding of the
physiological state of plants.
There are two methods for laser pre -
sowing radiation of seeds.
Seeds of vegetable crops are subjected to
a single radiation from a laser beam with
an exposure from one to 10 minutes. The
effect of laser stimulation reaches its
maximum result after a 10 to 15 day rest
period for the radiated seeds.
The experiments conducted in the USSR
show that laser radiation of pea seeds
results in a 20-23 per cent increase in yield.
When radiating cucumber seeds there is a
20 per cent increase in yield.
Plants grown from laser -radiated seeds
differ not only in productivity, intensive
growth of the biomass (standing crop) and
yield, but also have a larger content of
chlorophyll, organic acids and dry sub-
stance.
In addition, it has been established that
laser radiation evokes many different
changes in the biochemical composition
and the physiological properties of grain
crops. One of these is mutations (heredi-
tary) and the other is modifications or
morphoses.
As a result of experiments conducted
with barley, buckwheat and flax grown
from parental radiated seeds, scientists
have developed varieties which combine
high productivity, early ripening and a
higher albumen content and resistance to
disease.
In a second methodology, seeds of grain
and vegetable crops are radiated by
succession by monochromatic red light and
a laser beam. In order to achieve a positive
effect the seeds are treated three times.
After the first Tight treatment the grains
are left to rest for three days. After the last
radiation the seeds rest with optimal
intervals from five to 15 days, after which
they are sown in the field.
Grain crops ripen five to six days earlier,
their yield shows an increase of up to 20
per cent. Beet seeds treated with red light
show a greater sugar content, while other
vegetables have more vitamin C.
Soviet scientists say they are confident
that the time is not far off when the laser
beam will be a routine working instrument
of plant breeders and farmers.
Results consistently
inconsistent
(STRATFORD OMAF OFFICE)
This past fall, a farmer told me he tested
5 corn hybrids on 3 moisture testers. All
tests were done the same day. He used
moisture testers that belonged to the corn
company that weighed his plots, a local
feed dealer's and his own. The results are
given below. They are consistently incon-
sistent.
Corn Co. Feed Dealer Farmer's
Co-op 265 34 29 31
Funk's 4065 24 22 23
Warwick 777 20 20 25
Pioneer3992 26 22 28
Stewart's 2501 26 26 26
These moisture meters are only as
accurate as the people handling them. As
well, these meters calculate moisture
based on a corn's ability to conduct
electricity. It would appear that hybrids
differ in their ability to conduct electricity.
This little demonstration shows that it is
quite easy to have an honest difference of a
few % points in moisture between meters.
It also indicates, maybe, you should check
to see which elevator gives you the best
reading on your corn hybrid.
THE RURAL VOICE/MARCH 1900 PG. 27