Posted September 8th, 2009 — Filed in Bud's Musings
I was reading that the average age of farmers and ranchers is getting older. This is not or at least should not, be surprising since people are just living longer and the work is easier. It was also mainly that only the old can afford to farm or ranch. Everything from technology, equipment, to land is so expensive that it encourages farm or ranch consolidation which drives up prices even more. Few young people can raise the capital to start a competitive farm or ranch.
The author’s solution was to have bankers and government to conspire to provide beginning loans and universities and extension services should devise training programs for those turning or returning to the land at 40 or 50 years of age. They figured that their survival rate may be better than those who try to start in their twenties.
This will really squeeze the young people out.
Why do we so often think that the solution to a problem is more of what is the problem? Why is it considered that someone has to borrow money for everything we do? It is easy to see, or should be, that people in debt are the ones who are complaining about how difficult it is.
The banks would loan money to purchase Ostriches when they were selling for $35,000, but not three years earlier when you could buy them for $500.
Why do we think advice from people who tell us there is no profit in ranching and that it takes 400 cows to make a living and must have outside income to even do that, will be good advice?
The banks are not bad but will expect things that are bad. The government seems to hurt more than help and the Universities will give advice that would keep a person doing what, even they say is not profitable.
These things are not bad, in fact they actually make it easier for a young person or anybody to get started properly. If young people cannot raise the capital to start a competitive ranch, that may actually be a good thing. If we can’t borrow that eliminates one problem before we start. Why not just start a profitable ranch operation and not have much competition from anyone.
Profit on one animal is better than being in debt and losing money on many. Profit in ranching is having and using the right knowledge, not in how much money can be borrowed. If we look around some of our largest businesses have gone broke because of being able to borrow too much money and were not able to pay it back. If you don’t borrow this will not happen. Borrow small and wisely or not at all. Let the other person borrow and provide good markets for you because they are forced to sell underpriced animals to pay a loan, then buy overpriced animals from you because the bank prefers to loan money on overpriced animals.
This is not a tirade against banks, universities, or government, it is to try and get people away from their kind of thinking. When farming and ranching first started most of the people had very little money and most of the places were small. The people worked hard and built a great country then, after many years they learned that by borrowing money it was possible to grow bigger faster and easier. This was easier, not better and then there were some minor problems and this was now the “only” way there was to operate. They felt that the answer was to borrow more and get bigger, this made some of the minor problems major ones, now. At this time most of the advice is “borrow more, get bigger or get out.”
With proper marketing and good stockmanship it is possible to be small, borrow no money and be profitable. Grow with profit, that’s the best way to grow and by far the safest. Young people have all kinds of opportunities now to get into raising livestock. There is as much opportunity now as 70 years ago and probably easier to get started. The only difference is that 70 years ago people were willing to start small, learn all they could, grow the business slowly with hard work and be happy. Today, most young people want to start big, work little, borrow money and get advice from the wrong places. That makes starting very difficult and keeps them unhappy. Little is better than big when big isn’t possible.
The two best things to make sure of success are proper knowledge and proper work. It is proper work now because the work is not hard but still has to be done right and at the right time not just when someone feels like doing the work , then we can
Smile and Mean it.