Advertise in Print | Subscriptions
Published October 15, 2012, 10:32 AM

Good times, bad decisions

This past summer, I was sitting in the audience at an area farm event when three retired farmers sat down in the row just ahead of me.

By: Jonathan Knutson, Agweek

This past summer, I was sitting in the audience at an area farm event when three retired farmers sat down in the row just ahead of me. After exchanging a few pleasantries among themselves, they talked a little trash about active farmers. Nothing nasty or mean-spirited; just harmless harrumphing. Farmers today have it so good, they’re spoiled, they don’t know what hard work really is, harrumph, harrumph.

It was the sort of good-natured grumping by grandpas that’s always gone on in agriculture. I sat there and smiled inwardly. If you’d been there, you’d have enjoyed it, too.

But after getting in his digs, one of the oldsters said in a serious voice, “I wonder if some guys are getting in over their heads. They seem to think these good times will last forever.”

The two other retired farmers nodded somberly. They’d said the other stuff mostly in jest; they were deadly serious about prosperity not being permanent.

I found myself agreeing with them. I’ve always believed that farmers’ and agribusinesspeople’s most important financial decisions are the ones they make when times are good. Making the wrong decisions in good times sets them up for failure when times turn tough.

Great stretch financially

They won’t admit it publicly, but most ag producers in the upper Midwest have made a lot of money the past few years. Though farming hasn’t been easy, not with floods and drought, it’s been highly profitable because of terrific crop prices.

I’m just a columnist. I wouldn’t presume to tell farmers and agribusinesspeople what to do with their profits. But from what I can tell, most are being smart. For instance, I know one farmer who built a new repair shop and updated his aging equipment. He’s reinvested wisely in his operation. When times in ag turn tough, as they inevitably will, he’ll be in a good position to survive.

I’ve also heard horror stories about a few farmers making financial decisions that could misfire badly when times turn tough. If you’re an agriculturalist in this part of the world, you’ve heard horror stories, too. Many of the stories involve producers buying land or renting land at prices that make sense only if corn stays above $7 and soybeans above $15.

I’m particularly interested in what happens with farmers and agribusinesspeople whose DNA seemingly compels them to expand. For them, trying to grow the business is as natural and necessary as breathing. Now, with money gushing into agriculture, that goal becomes more achievable.

I’ve always appreciated businesspeople willing to take a calculated risk; they drive our economy forward. I credit their successes and respect their honest efforts that fail.

But I’m not sympathetic when aggressive go-getters — or businesspeople in general — fail after making bad, they-should-have-known-better assumptions.

To make the point again, I think most farmers are acting wisely. But like the retired farmers at the farm event, I wonder if some guys are getting in over their heads.

Tags: