The Rural Voice, 1982-07, Page 30NOW
is the season to
REPAIR
and
RE -SIDE
YOUR BARN.
CALL US .. .
J.E H.
L 1 M 1 T t 0
FARM & INDUSTRIAL BUILDER!
364-1880
R.R. #1 HANOVER
PG 30 THE RURAL VOICE/JULY 1982
GUEST COLUMN
Keep good records
by Don Pullen
Financial difficulties are indeed a serious problem in some
farming operations. High interest rates and accompanying large
principal payments are having a ravaging effect -especially where
there is a significant amount of short term debt and limited cash
flow.
Equity erosion is a concern of great magnitude in a number of
situations. Certainly. recent increases in beef and hog prices will
be of assistance to many. However, where debt load is of major
proportion, there's difficulty in controlling or minimizing this
persistent erosion, even if these higher prices do continue.
Unfortunately, in the adjustment process, some farmers may be
obligated to sell major assets. A few, if they have several farms,
may be able to sell a parcel of land -although farm prices and
demand has weakened in recent times. Others, who are perhaps
somewhat over mechanized, might consider selling selected
major equipment and then hire custom work for certain
operations.
Some farmers told us they have clamped down on major
purchases in an effort to control costs. Where cash or credit is
available, the best bet is to concentrate on fertilizer, agricultural
chemicals and smaller essential purchases. Generally though,
intentions to acquire costly machinery or expand livestock
buildings have been curtailed. Over the past year, plans to feed
cattle or hogs have been abandoned by a significant number of
farmers.
We believe good advice is to borrow as little as possible during
1982. It's for sure that agribusiness firms have extended credit
with greater scrutiny this year than ever before. Overdue accounts
at some farm supply firms may cost 2 to 3% per month. Many
don't realize that this works out to 24 to 36% per year. If there's
some chance it won't be possible to pay out in a reasonable length
of time, of course there will be interest added to overdue interest
and principal owing --think about that!
The chartered banks, credit unions, relatives and related
lenders are still the lowest cost sources of credit. The good old
days of the cheap money mused about by our elders --similar to
cheap energy --are likely gone forever.
While working with farmers and bankers in the Ontario Farm
Adjustment Assistance Program. evidence indicates that those
who are coping most adequately with today's economy are the
farmers with first rate production and financial management.
Accurate, up to date production and financial records are a
must --however, for too many record-keeping is at the bottom of
their list of priorities.
Our staff find it quite a challenge to be of assistance where there
is limited producer knowledge about costs and levels of
production, cash flow projections. net worth statements as well as
current, accurate financial records.
With this year almost half over, a significant fact is that some
are still trying to determine their 1981 financial position to see if
they qualify for the 1982 Ontario Farm Adjustment Assistance
Program. There's no mysticism involved --the message is
clear --poor, incomplete records kept only for income tax purposes
are the weak Zink in far too many farming operations.
We would encourage anyone with an interest in strengthening
the records aspect of their operation in the future to give us a
call --let's talk about it!
Don Pullen is the Agricultural Representative for Huron
County, Agricultural Representatives Branch, Ontario Ministry of
Agriculture and Food, Box 159, Clinton, Ontario NOM ILO.
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