Real life farming - how does it make money?

[UKFARMER]

I was thinking about how cheap vegetables and other products that use Stuff that farmers grow are and how expensive farming equipment (tractors / harvesters) is and wondered how farmers actually make money?
I watch a channel on YouTube called Harry’s farm, he has a big Case harvester and at least one tractor and I just can’t see how it pays, unless I’m massively underestimating what crops actually sell for.

I’m asking about in the UK specifically but interested in other places also.

[Illinois Farmer]

Take out a loan and pay it off over years, not days like on the video game.

[Thedebe48]

In the United States, it's very common for farmers to have a lot of debt on their balance sheet. Agricultural real estate is often amortized out over 20-30 year terms, and chattel purchases are often amortized out over 5 years or so. Without FSA, credit unions, community banks and the Farm Credit System, it really wouldn't be possible for many family farmers and ranchers to succeed.

Right now there are a lot of farmers in the US that aren't making money at the current commodity price levels. Crop insurance, government subsidies like ARC and PLC, and off-farm income with benefits can help with some of this. Bottom line, farmers have to be very efficient with their resources, know their cost of production, and they have to have an operation that is large enough to be viable, but not too large that their debt and overhead become an issue when their income can easily sway by 10% in the wrong direction.

Many farmers have to be skilled in multiple areas to be successful. Many ranchers are also amateur veterinarians that give their own vaccinations and PG and AI their own cattle in order to save on veterinary costs. Many farmers are skilled at mechanical work. Many farmers market, trade and hedge their own livestock and grain, and many farmers are also talented accountants so as to save money on professional costs where they can.

Overall, this is a large issue in the rural United States right now as many of the smaller farms and ranches that are family owned and operated aren't able to stay afloat, and they're getting bought out by larger farmers. There are less and less family farms and ranches in the US every single year. The small farms that are able to make their numbers work often have a spouse work an off-farm job to subsidize the large costs of health insurance and family living expenses, and they often run older equipment and carry as little debt as possible so as to not tighten their cash flow, and this also mitigates the risks associated with rising interest rates (when applicable).

I'm very interested in hearing what this is like for farmers and ranchers in other parts of the world.

[UKFARMER]

Thanks, TheDebe48.

That was the kind of comprehensive answer I was hoping for.

[Thedebe48]

Thanks, TheDebe48.

That was the kind of comprehensive answer I was hoping for.

Any time, friend!

[dapals51]

Thedebe that was a very good description. Farming is a very difficult thing to get started into in the US, that's why most are family farms. Was always told debt it just a nother tool you use just like a planter, tractor or combine. You can do it with out. But current interest rates make it hard to not use debt. Would also be interested to hear what others do around the world too.

[george.earlslight]

I've found this video to be quite insightful, although I'm not a farmer and can't confirm their narrative.
https://www.youtube.com/watch?v=Xsa46CXwfdY

[SJ_Sathanas]

Also true in the UK. The big supermarkets apparently push down the prices of most commodities and the farmers struggle to make a profit. The price of milk is often in the news as it's sometimes lower than bottled water.

[Massey5713]

In Norway, we have a law («odelsrett») that says the oldest child have the right to take over the farm when the current generation retires. If the oldest declines, the next in line can take over, etc. That makes almost every farm in Norway a family-farm, and not so expensive for young farmers who want to keep the farm in the family. When no-one wants to take over, a decent farm cost from 500 000£ to 2 000 000£ to buy, when you don’t have «odel». Less and less young people wants to keep the family-farm, and not that many wants to start farming. So sadly more and more farms are put out of use, fields sold or rented out.

We are a rich country, but it’s also very expensive to live/farm here. When we buy fertilizer and seeds, fuel, machines and repairs, the cost of it makes little profit-margin. But we get governement subsidies, to make up for production costs, difficult terrain, to build irrigation-system and such. We also have very strict rules when it comes to animal welfare, and low usage of antibiotics.

However, most farms have loans to make investments. The taxation on everything you buy in Norway (except food, wich is lover) is about 24% on the initial price. But if the purchase is for production-investment, you get some of it back. Still have to pay it upfront thou..

[IceUul]

First of all i am not a farmer, but i know few other farmers, so i have some knowledge how real farms work here (North part of Europe Union).

There are two type of farms, small family farms, at least 100 ha of land, old equipment, growing mostly hay and cheaper stuff
and big farms, 1000 ha (2500 acres) and more, usually bigger farms grow bigger, they buy off the farming land from smaller farms, so
some farms here are already 4000 ha. All the farms use government subsidies here. Subsidies were generally paid on the area of land
growing a particular crop, rather than on the total amount of crop produced. Average sum is around 100€ for 1 HA per year. So you have 150 ha land you will get 15000€ support per year. You got 4000 ha land you get 400 000€ per year. There are also extra subsidies for specialized farming and animals.

So otherwise it is like in FS19... you grow crop, sell them on winter/autumn, get paid for spring, ask bank for loan/leasing offers, lease some new or used equipment. There are very big farm fairs in spring here, to introduce the new equipment to potential buyers, farmers usually meet there and lot of deals will be made.

Big difference between FS19 (seasons included) and real life are crop prices, they are much lower and there are good years
and bad years, some year you might get double harvest, some year you loose your crop. So if there are good years, big farms
will buy lot of new equipment and if there are bad, they trying to survive.

About equipment, there are old rusty 20-30 year old equipment used in family farms, real life the family farm income is too low to buy expensive new stuff and stay afloat same time, but one well managed small farm can feed one family quite well.

Bigger farms 1000ha and more will mostly buy new or not more than 10 year old equipment, 2000ha farm for example have 50 tractors, 20 harvesters and 200 pieces of other equipment. Here on bigger farms you can find out all the equipment (EU versions) what can be found on farming simulator 19 game.
Most sold tractor brands (2019):
1. John Deere
2. New Holland
3. Valtra
4. Fendt
5. Claas
6. Kubota
7. Case IH
8. Massey Ferguson

Most sold harvester brands (2019):
1. Claas
2. John Deere
3. New Holland

Usually bigger the farm, bigger the equipment. Very big harvesters are very common here. 90% of the equipment you can see around on countryside are not older than 10 years. So actually big farms are quite profitable here and they have lot of different income types,
so the bad years will not affect them so badly.

I also found out quite a good video about US farming, expenses and income:
https://www.youtube.com/watch?v=Xsa46CXwfdY

If you want to play realistically use government subsidy mod, use real crop price mods and do not do forestry in winter, because in real
life farms don't do it, they only cut the wood for they own use and bigger forestry machinery is too expensive to buy and maintain, so
mostly will be used by big forestry companies. But here in north, farmers mount plows to they tractors and use they machinery
to keep the roads empty from snow in winter time. So i really hope these snow plowing contracts will come to FS19 one day.

[Tylercheesey1986]

Thedebe48 sums it up for how it is down under in Australia. We have to be skilled in everything and the more you do yourself the more you can make. However unlike US and EU our farmers tend to get little support from the government. A 5+ year drought might see a few thousand given per farm as a government subsidy, its disgraceful really.
We have been running our farm at a cost to us from off farm income for the last 2 years, luckily we don't have much debt approx 30,000 so that doesn't hurt too much but we are struggling for sure. Farming is IMO the hardest career you can choose

[SJ_Sathanas]

Tbh I didn't think we had tracked tractors in the UK until I passed a JD on the road back in the Summer.
My girlfriend spotted what I think was a Koamtsu Forwarder not long ago too. Again, I didn't think we had them in the UK.

[norfolk farmer]

Tbh I didn't think we had tracked tractors in the UK until I passed a JD on the road back in the Summer.

Plenty of CAT / Claas challengers,JD and Quadtrac's in my area which is East Anglia.

[this_is_gav]

Plenty of CAT / Claas challengers,JD and Quadtrac's in my area which is East Anglia.

Not seen any Challengers or large JDs but I've seen a few Quadtracs in North Northumberland too.

[norfolk farmer]

Plenty of CAT / Claas challengers,JD and Quadtrac's in my area which is East Anglia.

Not seen any Challengers or large JDs but I've seen a few Quadtracs in North Northumberland too.

There is definitely a misconception of what kit we have in use in the UK, I repair agricultural vehicles for a living and it is a wide and varied selection from the very small to the very big. A couple of places I visit have the new top end Lexion's on order.