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HomeMy WebLinkAboutThe Huron Expositor, 1984-12-05, Page 13FARM THE HURON EXPOSITOR, DECEMBER 5, 1984 -- A13 Rural financial disappointments plenty ' EY ART LAWSON GREAT EXPECTATIONS [Amine Not -So -Great] A friend asked me, "How much debt can an acre of land support?" He was working on his budget and wondered if his plans and expectations were realistic. I replied, "It depends." (You'd think I worked for the government or something.) But I wasn't trying to be evasive. It seemed like a simple question, but there was no simple answer. Thumbrules can lead you astray ifyou don't add a little common sense. I'll try to share a few of my thoughts with you. DISAPPOINTMENTS We see a lot of financial disappointments in both agriculture and other businesses these days. What went wrong? Most of these ventures looked like they'd work at some point. There are lots of reasons. Poor markets, rising costs, high interest rates and produc- tion problems are often the immediate causes. The underlying cause is often related to expectations - plans and projections that were riskier than they seemed. As one expert has said, "Everything can be shown to work on paper. The real world just isn't that simple.' WRY EQUITY IS IMPORTANT Equity is often viewed as a measure of security or 'how well off' you are. It's more than that. It may represent your chances of financial survival. Recent studies have shown that farms with less than 30 per cent equity have about a 1 in 5 chance off long term survival. Farms with 60 per cent equity have more like 4 out off 5 chances for long term survival. The cost of debt servicing and the inability of the low equity business to withstand adversil result in a heavy toll. However, low equity need not mean there's no hope. BIG DIFFERENCES I've seen farms with nearly 100 per cent equity that were losing'money.' I've also seen farms with very little equity that were making profits and heading in the right direction. The big differences come down to basically three things (1) the management abilities and practices (2) the capabilities of the resources being managed, and (3) luck. (Some people might say luck is the result of (1) and (2)). The term "management" covers a lot of things. To me a "good manager" is a person with a sound technical understanding of both production and finances. The skills have to be combined with a positive attitude and decisive actions to apply the 'know how'. The manager uses his labor, money and land base to produce commodities such as crops, livestock or livestock products. There are big differences in land as to what crops can be produced and what yields can be attained. In a crop such as corn, for example, you may need 80bushels(or more) per acre just to pay for inputs and machinery costs (including overhead costs). The difference -between a 90 bushel crop and 100 bushel crop is really 100 per cent in terms of profitability. The same kind of relationship exists in livestock performance. For example, the first 12 or 13 pigs per sow per year may be needed just to cover costs. The additional pigs per sow are the profit. You can't discount the value of luck - good or bad. A good growing season and everything done just right can be wiped out with an early frost or a hail storm. On the other hand, it seems like the good farm - managed well - will see more good luck than bad. WATCH OUT FOR T it UMBRUI,)ES The next time someone tells you his rule of thumb is "each acre can service $1,000. in debt" or "each sow will service $2500. in debt", you can confidently answer "Well, now that depends." Business as usual at Vincents International Harvester, the famed farm machinery manufacturing ' company has been sold to Tenneco. The International line of tractors and equipment will enable Tenneco to become a major full -line source of farm machinery when merged with Case logos and names combined to form a renewed identity, says Marlen Vincent of Vincent Farm Equipment Ltd., Seaforth. Mr. Vincent attended a meeting in Dallas, Texas on Friday with approxi- mately 2,600 other International dealers from North America. He was told that about 15 per cent of all the 1H dealerships will be amalgamated. "We don't know if we will be amalgamated, but we feel confident that we will continue to give sales and service that our customers have had over the past 60 years," says Mr. Vincent. "We expect no change in color of our farm machinery," he says. "The chief engineer of iH will be the head engineer of Tenneco, Our axial flow combine and 800 Early Riser planter are the Cadillac of the farm machinery industry." Though there will be a change, Mr. Vincent says it will be gradual. At the same lime, he says the farming and business community will see other changes in the farm machinery industry. "They'll have to join ranks. Ours is the first amalgamation 'in a long time. "We're in our third generation now. And we're enthusiastic to continue to serve the farming community with the same loyalty and service for many years to come, " says Mr. Vincent. In addition to their Seaforth location, Vincent Farm Equipment Ltd. has dealer- ships in Ayr. Cambridge, and Woodstock. • Now! Cook outdoors aH year \\\\\-t\\\\h 'round , III�p.pr9"11��j1p,� 1111 I I'll�'llllhpj� 4t� I,hlltlllll„ 1 Li Wait B,o,Imaster IS built tough to w,Ih'land the elements se you Car barbecue broil rnaSl Smoke bake try and stew all year round _� - •_ Check these features • •Super heavy duly. rust flee ^„ ••� earl aium,num body •tlainloss steel yells • Super patented 40,000 BTV bow fl0 burner • Super deep Cooking depth even cooks a turkey G.E. DUAL WAVE ofl MICROWAVE 539 each Large 1.4 cu. ft. capacity oven with micro -touch controls puts this oven on top of Santa's gift list. Loaded with time -saving convenient features. 10 power levels 501-106 Thermometers For Every Occasion ifter7 I I? kinfr g4 1 Wittade ao70'050ao $23x5 0 70 eoch C 80 ro o0 ro �- loo 4 ; 110 X1 30 40 50 azt ypa0 to -40 r70 l0 7�. 2020 o fro1� 0 6C)' o 00 p0/ c/ 100 •v,• eoc•I w nil 1,-v AC 5213 430 (TANK EXTRA) b, 4n 45515 tkcr Deluxe Wet/Dry CO.OP "Shopmaster" Vacuum A gill so practical you II use it for years to come 4 gallon Capacity vacuum easily handles wel or dry spills Side hose conneCI 0l1 eliminates hoping when pulled Comes c3rnplele w,Ib brushes hose, wands an0 easy. rolling 4 oosilwn Caster 597.849 7988 988 N„ 4•14,d 1 30 a0 50 4„ 4551: Phe+yam '"' ea. DROP IN AND SEE OUR GOOD SELECTION OF TOYS MAKE YOUR CHOICE EARLY' Clearance on Kerosene Heaters I.H. "_ actor. 12 INCH Oscillating FAN 36" 15" THICKNESS PLANER Reg, 51395. SA3 NE S 1 095119 Max Cutting Width 15' Max Cutting Height 6" Motor Size - 2 H P /220 V/Single Phase Rate of Feed per Min 1 1'y No of Cuts Per Minute 13.500 No of Cuts per Inch 97 Shipping Weight 420 lbs WOOD LATHE WITH MOTOR Reg. 534991 ON SALE DRILL PRESS Bench Type 12 Speed 5/8" Chuck 522995 Sale Prices in effect, while quantities last, to Dec. 22, 1984 MAIN FEATURES ON/OFF SWITCH BELT AND PULLEY COVER FACEPLATE DRIVE CENTRE BED RAILS TOOLREST TOOLREST HOLDER 8, TOOLREST LOCKNUT 9 TAILSTOCK SPINDLE, (WITH BALL BEARING CENTREi 10. TAILSTOCK SPINDLE LOCKNUT 11. TAILSTOCK 12. TAILSTOCK LOCKNUT Your farmer owned business Mensa District 11 C Hansell Se®fort h 1-800-265-7097 Zurich Brucefie Id 262-3002 236-4393 482-9823 527-0770