Today’s downturn in farming is different than the crisis of the 1980s, but, farmers who survived the downturn from more than 30 years ago learned best practices that are applicable to today’s challenges. Everything from understanding leverage to specialization to input management will help farmers profit this year and beyond.
Q. What did you learn farming in the 1980s that is helping your business survive today?
Ted Hamer | Waterloo, Iowa
Ted began farming in 1983, and he now farms with his son, Caleb, and Caleb’s business partner, Scott Beenken. They raise soybeans for seed, corn and seed corn. They also have a custom farming business.
A: “I can remember doing a cash flow and trying to show my banker that if everything goes right, I might be able to make $5,000. We learned to prepare for the downtimes during the following good times. We tried to keep our machinery as up-to-date as possible, without adding new debt. Then if we hit rough times, we had a decent line of machinery to withstand six or seven years of rough times. Our other goal in good times is to build the nutrients bank in our soil. Then as times get tough, we can decide if we can apply nutrients or draw back out of that bank. So maybe we aren’t going to put any P and K on now because we did that in the good times. To be quite honest, I am a little bit nervous for the young guys. Those guys really haven’t seen what rough times are, and they really think this feels pretty rough right now.”
Ron Brooks | Waupaca, Wis.
Ron joined his family dairy and crop operation as a junior partner in the 1980s and farmed alongside his father, Dodge. Today, Ron farms in partnership with his daughter, Zoey. They also have an agricultural aviation business.
A: “Running lean is one thing we learned in ’80s. However, the ’80s were a little different. We had much higher interest rates, but we had no debt. So, this is a new paradigm for us, as we just went through an expansion and have a lot of debt. Like everybody else, we’re burning equity and maybe thinking the dairy industry is starting to turn the corner, but I’m not going to fool anybody—it’s tough. I’m focusing less on grain, and more on dairy. We’re not recapitalizing or buying new equipment that isn’t absolutely necessary. We’re trying to get another one to two years out of it, when it should have been rolled over and traded in already.”
Jim Kline | Hartford City, Ind.
Jim rented his first 100 acres as a high school freshman and bought his first farm four years later. With his brother, Jim purchased equipment in the 1980s and they took over the family farm in 1990. The operation includes corn, soybeans and seed wheat production.
A: “The best lesson I learned from the farm crisis of the ’80s was not to overextend yourself. You need to know, with a high degree of probability, what your return will be on at least part of your business plan. Also, you need to have a market that is fixed ahead of time at a profitable level. Then you can show a lender that going into a new year at least part of your business plan has a very high probability of a positive return.”