The Rural Voice, 1993-07, Page 46Putting off -farm
income to work
Farmers are no longer only relying
on income from farming. A great
number of farm families have a
second and maybe third source of
income off the farm.
The latest Ontario statistics show
that the average farm taxfiler claims
more than $30,000 of off -farm
income, against a net income from
farming of only $2,400. Of course,
these numbers include small hobby
farms and marginal farms where
farming losses or very small gross
receipts are claimed. Still, they show
that many farms rely on a second
source of income.
The legitimate farmer can use this
money to make his farm more viable,
or he can lose it by paying day-to-day
expenses on money-losing activities.
How he treats it may determine
whether his farm is an investment or
a liability.
Any business, whether large or
small, must do two things: return a
profit on the capital investment, and
return a profit from day-to-day
operations. Putting outside cash into
production activities may well sustain
an enterprise that habitually loses
money from year to year. The money
that is injected into such a venture is
lost and cannot be recovered.
New money that is used to pay
down the principal amount owing on
the mortgage will yield the greatest
return on investment. This is the
same as investing at the retail
mortgage interest rate. The resulting
reduced mortgage will mean that
interest payments are reduced and
much less interest is paid over the life
of the mortgage. A dollar invested in
this way can return up to three dollars
over the life of the mortgage.
There are four steps one can
follow in using off -farm income to
support the farming operations:
1. Know the cost of production for
each enterprise carried on the farm,
e.g. dairy, pigs, crops, etc.
2. Eliminate any enterprise which
frequently loses money on an accrual
basis. This includes feed production
activities.
3. Separate living expenses from
42 THE RURAL VOICE
Advice
farming operations by using personal
and current bank accounts.
4. Lend personal income to the
farming business at real interest rates
or use it to reduce principal on the
mortgage.°
WJ. Baxter
Ag. Rep., Wellington
Ontario private mortgage
guarantee program
On April 8, 1993 the Ministry of
Agriculture and Food announced the
details of its new Private Mortgage
Guarantee Program. The program
will give rural residents the opportu-
nity to invest in their community and
to help keep farm families on the
land.
The main feature for the lender is
an 80 per cent guarantee against
losses on the original investment.
The borrower will have an improved
ability to borrow up to 90 per cent of
the value of farm real estate at
reasonable interest rates.
The maximum loan amount that
will be guaranteed for any farm
business is $500,000. Loans are
secured by first or second mortgages
on the farm real estate purchased.
The application form has to be
supplemented by the following
documents: a complete set of
financial statements as contained in
OMAF publication 37; three-year
historical income statements and
production statements (for existing
producers); three-year projected
monthly cash flow statements; three-
year debt servicing worksheets; a
personal net worth statement and a
credit report from the borrower's
financial institution. A recent
appraisal of the property will have to
be sent in before the mortgage
guarantee is finalized.
There is an application fee of $25
which is non-refundable. Once the
application is approved, the borrower
must pay a guarantee fee. This fee is
based on the ration of total loans
secured by the mortgaged property
and its appraised value.
The maximum rate of interest that
a lender can charge on loans is the
average rate on the major chartered
banks' GIC plus one per cent.
Application forms and brochures
are available at all Ontario Ministry
of Agriculture and Food field
offices.°
Robert A. Humphries
Ag. Rep. for Huron County
Extra care needed
while handling pigs
With the warmer days of summer
now within sight, packers are likely
to see an increased incidence of PSE
pork.
It has been well-established that
proper handling in the last few hours
prior to slaughter is critical to
minimize the incidence of PSE pork.
Mixing unfamiliar pigs, rough
handling and transit to slaughter can
provide sufficient stress to trigger the
series of events within the muscles
that leads to the development of the
condition. Warmer temperatures
only serve to aggravate the situation
more such that the effect of these
factors tends to be more pronounced
during the summer months.
Extra care needs to be taken when
handling pigs during hot weather.
The Code of Practice for the Care and
Handling of Pigs has recently been
revised and should be available
within a few months. It contains
recommendations for proper handling
of pigs. Many recommendations
relate to handling of market hogs on
the day of slaughter since this is a
time when proper handling is critical.
The Code should be consulted for
more detailed information; however
keep the following points in mind:
• whenever possible, moving boards
should be used to move pigs
• trucks should be designed to allow
good cross -ventilation
• bedding should not be used in
transport vehicles during very hot
weather as it causes increased heat
build-up; sand can prevent slippery
floors
• stocking densities in the transport
vehicle should be reduced by 10 to25
per cent on hot, humid days
• during transit, stops should be
minimized as heat will build up very
quickly inside a loaded vehicle that is
not moving°
Cathy Aker
Swine Specialist