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  < Back to Table Of Contents  < Back to Topic: Modern vs. Vintage Farming

article number 140
article date 06-28-2012
copyright 2012 by Author else SaltOfAmerica
Evils of Farm Finance, 1924 Style … also, Benefits of Good Marketing
by Clarence Roberts

From the 1924 book, The Business of Farming – A Manual of Farm Methods for Oklahoma.

FINANCING THE FARM. Save Money by Growing your Feed.

The way the farmer handles his money matters has much to do with the net income from the farm. Every farmer is forced to be a financier. He must market his crops, livestock and other products. He must buy the supplies for the farm and family. The more care and judgment he uses in making his sales and purchases, the further he will make his money go, and the more of it there will be left at the end of the year.

It is just as important to save money on the farm as to make money. Any article bought for which there is no real need is money largely wasted. Any cheap article that lasts but a short time is money poorly spent. Anything bought that otherwise might have been raised on the farm is money badly invested.

The easiest and surest way to save money on every farm is to grow feed for the livestock and food for the family for every day in the year. The family that has plenty of meat, milk, eggs, vegetables and fruit to set the table three times a day will never need to go in debt for money to buy groceries. At the same time if that family has plenty of feed for the livestock, especially the livestock that helps to feed the family, it should not have to go in debt for anything.

Grow your own feed for your livestock.

It is an easy matter on many farms (where most of the food is now bought at the store) to save from $200 to $300 every year by growing, instead of buying, the food. The United States Department of Agriculture found that the food grown on the average farm in 1921 had a value of $265. The man who raises all the food possible saves this amount. The family that raises little or none must take this amount of money and buy food at the store. But remember this sum of money must first be earned from the sale of other crops or products before it can be spent for groceries. It is always safer to grow the food than to depend on other crops for money with which to buy food.

The same is true of the feed for the livestock. The farmer who buys his feed must pay one or more dealer’s profits and a freight bill or two, in addition to the price which the farmer who raised that feed received. These extra costs and charges on feed bought at the store add nothing to the value of that feed. The farmer who raises all his feed does not have to pay them; he saves the money that the other farmer must spend when he buys feed for his stock.

The real farmer loves good livestock and always gives his stock the best of care. As a result his stock thrive, with the further result that farming is more profitable than for the man who neglects his stock.

FARMING A YEAR BEHIND. The farmer who grows but one crop, whether wheat or cotton, and expects to use the money from that one crop to buy everything needed by the farm and family, is nearly always in trouble. He is usually a year behind. Each spring he must borrow money to buy food and feed on which to live while making another crop. He hopes to make enough out of the crop to pay his debts so that he can borrow again the next year. He usually lives hard. His family must eat the cheapest food. The livestock is poorly fed, because feed to buy is high priced. This farmer often worries about his debts. Under his plan of farming the family is neither happy nor prosperous.

If the one crop he depended on fails, or partly so, the one-crop farmer does not have enough money to pay his debts. He may pay part of his debts or he may pay none at all. He is then two years behind. The family must now live harder than ever, because the next crop must be used to pay debts of two years. If the crop is a real good one, all the debts may be paid. But as it actually works out, some indebtedness is carried over from year to year. Thus, the one-crop farmer is rarely free of debt. He barely manages to hold on and rarely makes a good living for his family.

FARMING A YEAR AHEAD. The farmer who plans first of all, to raise every possible bit of food for the family and all the feed needed by the livestock very seldom has to borrow money to buy these things. In an extremely dry year the food and feed supply may be short. But there is always something to eat and something to feed. Even though the supply is short it is just that much more than the farmer who makes no particular effort to look after the food and feed.

Farmers all over Oklahoma have proved, year after year, that the food and feed can be grown on the farm. These farmers always have a smoke-house full of meat.

The cellar is full of canned fruit, vegetables and meats. The hens are fed and housed to lay and the cows are kept on the job of giving milk. There is always on hand a surplus of canned goods to help out during a dry year.

Good financial practices allow good feed for your cows to give milk.

What these farmers have done all farmers can, do. The man who is deeply in debt cannot suddenly pull himself out and start on a cash basis. He has to pay his debts first. But he can begin any year to raise a better garden, put up more meat and give the chickens and the cows better care in order to have at all times plenty of eggs, milk and butter to eat.

If he does this, he will not have to borrow so heavily. He can gradually pay off his debts and in just a few years be on a cash basis. He will then live on what was made the year before rather than on what he expects to make the year ahead.

A concrete bog wallow helps the hogs to keep clean and healthy. A small amount of crude oil poured on the water will help to rid them of lice.

FARMING ON A CASH BASIS. Any farm family can stay on a cash basis year in and year out by keeping a flock of hens (bred, fed and housed to lay) and a few good milk cows (bred, fed and housed to give milk). The sale of eggs and cream every week in the year will meet the expenses of the farm and family as they arise. The calves and an extra hog or two will help to add to the farm income. A small flock of sheep will help out. A few acres of some extra crop like sweet potatoes, Irish potatoes, watermelons, peanuts, etc., will also swell the cash income. Then the money from the main cash crops (cotton, broomcorn and wheat) can be used to pay off the mortgage, buy a farm home or buy improvements for the farm and the home.

This plan of farming is no theory. It is one followed by most of the successful farmers in Oklahoma, the same farmers who own the best land and have the best improvements. The plan will help any farmer to live better and get ahead a little every year.

WHEN TO BORROW MONEY. Except in case of absolute necessity, the farmer should never borrow for consumptive purposes. By that we mean to borrow money to buy something to eat up or wear out, such as food, feed and clothes. All these things should be bought and paid for with money already earned. But it will often pay to borrow money for productive purposes, by which we mean to borrow money to buy better stock, better tools and better seed. All these things help the farmer to earn money. Each article (if bought right) will pay for itself by helping the farmer to grow better crops, farm more acres and get more money out of the feed crops. Such debts are not a burden on a farmer. The farmer who makes such a debt has something to show for it. That same something will help the farmer to pay the debt incurred to buy it.

Before any farmer borrows money he should ask himself: “Will this thing I am going to buy help me to be a better farmer? Will it pay for itself in a reasonable time? Will it be better for me to buy it on credit now or wait and later on pay cash for it? When the farmer has answered these questions to his satisfaction he may go ahead and borrow the money.

A grove of catalpa trees grown for posts. They are now ready to thin out and will help the owner to build good fences without having to buy posts. While growing they served as shelter for the stock and a windbreak for the buildings.

Many of the most successful farmers in Oklahoma have borrowed large sums of money in times past. But they never borrowed money to pay the household expenses, or food for the family or feed for the livestock. All the money they borrowed was used to buy land, or better stock, or better buildings or better seed or laborsaving tools. Then by good management and hard work they made these things pay for themselves.

1. Why must the farmer be a good financial manager?
2. How may he save money by growing hi own food and feed?
3. Show the disadvantages of farming a year behind.
4. Row may every farmer farm a year ahead and live on what he has made instead of what he expects to make?
5. What are the advantages of farming on a cash basis?
6. When is it good business to borrow money? When is it poor business?

MARKETING. The Worst Marketing System.

After the farmer grows his main crops and feeds out his livestock, he still must market them. This problem of marketing is just as important as producing the products in the first place. Every dollar added to the price he gets, with no additional labor or cost of marketing, is a dollar of clear gain to the farmer. What is more, it is a dollar he cannot get in any other way.

A farmer may take his crops to town as soon as harvested and take what is offered him. But that is not marketing.

The price offered him may or may not be what his product is really worth at that time. The market at the time may be very unsettled. The local buyer may not know what the product offered is really worth. He, therefore, must protect himself by offering a low price for it. But what can the individual farmer do in such cases? He can sell for what he is offered, or take his product home. In actual fact, however, he sells; there is nothing else for him to do.

MAKING A GLUTTED MARKET. Under the past system of selling farm products, most of the crops were sold as soon as harvested. This custom came about because of the need for money with which to pay debts. Money was borrowed in the spring to be repaid in the fall. With debts due at harvest time, farmers had to sell for whatever price was offered.

The farmer who must sell his crops at harvest will not get the best price for his hard work.

The offered price might have been (and often was) too low. Yet, farmers had to sell their crops. This very necessity of selling for whatever price existed, fixed a so-called market price. It was a price fixed by those farmers with debts to pay and who were forced to sell for what they could get to pay them with. For this condition the buyers of farm products were not so much to blame. The real blame rested on the farmers for placing themselves in a position where they had to sell their crops as soon as harvested. Every farmer competed with every other farmer in a mad scramble to sell.

EVIL OF THE CROP MORTGAGE. The wide use by farmers of the crop mortgage has done more than anything else to make possible a glutted market every year. When a crop is mortgaged in the spring to secure money borrowed on a note, the holder can require that the crop be sold to pay the mortgage when due. In fact, the farmer is expected to pay it when due, even though he often does not do so. In his desire to pay it, he rushes his crops to “market.” When a majority of farmers do this very thing the selling price is forced down to the lowest point that a few farmers will take. This fixes the price at which all other farmers have to sell.

When such a condition arises, not only is the local market price low, but the “speculator” who buys aid holds the crop until the manufacturer wants it, takes too large a margin of profit. When a crop is forced on the market rapidly it must be bought by someone who will hold it until there is a demand for it. Manufacturers do not buy to fill their needs for a whole year during the period that crops are dumped on the market. They buy to fill a part of their needs at this time. But most of a product that is dumped on the market at harvest time is bought up by men who hold it for a market advance. This condition creates the dumping price. That price is usually made just as low as the farmer will accept. It is not a price based on the real law of supply and demand. Rather the price is based on the real necessity of a few farmers to sell their crops and pay their debts.

THE FIRST THING TO DO. The fact that crops are rushed to market in the fall for whatever they will bring is one reason why farming has paid so poorly in the past. It will continue to pay poorly until the practice is changed. How can this best be done? It can be done only by farmers getting out of debt and then staying on a cash basis.

The custom of borrowing in the spring for money “to make the crop on” must be given up. As long as debts are made in the spring to come due in the fall, and a mortgage given on the crop to secure those debts, crops will continue to be dumped. Each year will see a glutted market at dumping time, and the offered price will be far lower than it should be.

A good investment is a corn shed where your crops can be stored until market prices are best.

To bring about better market conditions every farmer must live a year ahead instead of a year behind. He must raise his own food and feed. When he does that he will not need much money to live on while making a crop. What little he does need can be supplied from the small sales from the cream, eggs, chickens, truck crops, pigs, calves, lambs, wool, honey, etc. He will then not need to go in debt. If already in debt he can soon pay out, and by the same plan of farming, hard work and careful management can then stay out of debt. The money from the main cash crop will be clear. What is more, that cash crop will not be forced on the market at the dumping price.

THE RIGHT TIME TO SELL. No other business man sells all of his product at one time during the year. No manufacturer would think of dumping his product on the market at one time for whatever it would bring. He never forces it on the market. He holds his product if there is no demand for it. He feeds his product to market as that market wants it at a fair and reasonable price. To make farming a profitable business, every farmer in Oklahoma (as well as the whole United States) must help to create a better marketing system. He can do that, first, by staying on a cash basis so that he will be independent—so that no one can force him to sell his crop to pay his debts.

Lambs that are being fed during the winter on a Kingfisher county farm. Sheep feeding in large numbers is best done by the man with experience. On the average farm, sheep raising in small numbers is a much safer farm practice.

When every farmer raises an abundant home living and feed for all the farm livestock, and in addition pays the running expenses of the farm and family with the sales from the cream, eggs, chickens, fruit, etc., then we will have a solid basis on which to build a permanent marketing system. But it is going to be hard to work out any kind of better marketing system to help those farmers who continue to go in debt every spring for food and feed to live on while making a crop to pay their debts. In addition to their poor methods of farming, they will continue to sell their crops at harvest time for whatever the offered price on the local market might be.

Farming cannot be made a prosperous business simply by growing bigger and bigger crops every year. It is important to increase acre yields as a means of lowering the cost of production. Yet, a large crop does not always mean a profitable crop. A small crop often brings more money to the growers than a large crop. Thus, while every farmer is interested in increasing the output of his farm by means of higher acre yields, he also must work with his fellow farmer to sell their crops for a profitable price.

1. Show how a glutted market is often made by all farmers offering their crops for sale at harvest time.
2. What are the evils of the crop mortgage? Do you know of any advantages?
3. To create better markets, what is the first thing for each farmer to do?
4. Why should farmers live a year ahead instead of a year behind?
5. When is the best time to sell farm products? Why sell at harvest time?

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