Last week I received my latest issue of "The Stockman Grassfarmer". I've been a subscriber for a few months now and I enjoy receiving the issues. If you have never had a chance to check out this periodical I encourage you to do so (you can even receive a free sample issue). Many of the articles are based on large scale grazing operations and I have heard others say that once you have read it for a few years it all seems the same, but it seems like I always find stuff that applies to what we are doing and are interested in doing. Because last week was so busy and the fact that I was away this weekend I haven't had a chance to dig too deeply into the articles. But, as I skimmed through the pages looking at the titles one jumped out that I just had to read right away.This month the introduced a new column titled, "A Grass Farmer's Guide to Finance", by Richard Parry. According to the introduction, "the purpose of this column is to help grass farmers to become better stewards of their financial resources and to open their eyes to investment opportunities outside of agriculture." Any time I see any article about finances and farming I am hooked, so I took some time to read this article right away.
Did you know that in 2005 household debt was 113 percent of the annual income, but before 1980 it was only 58 percent of the annual income? Or how about this tidbit, the national rate of savings in the United States is actually in the negative. On average we spend more and borrow more in a year than we make! Mr. Parry threw out a few more facts that are pretty depressing, but the main idea is that as a nation we are doing a bad job at saving our money.
With the current state of financial affairs (growing debt, rising consumer spending, etc.) Mr. Parry believes that now is the time to be contrarian, and not just in an agricultural sense. He writes, "Now is the time to build your cash reserves and pay off debt. In the coming years there will be once in a lifetime opportunities to purchase assets at fire sale prices."
Mr. Parry does admit that the prudent use of borrowed money is a good thing. He also adds that you don't have to save just cash, but building your equity is a good idea too so that you can borrow when those golden opportunities arise. Financial independence and intelligent savings are two huge keys to successful small scale farming ... or farming in general.
Towards the end of the article he briefly mentions the importance of investing ... this is something he says will be covered in future columns. I am really looking forward to those! Make smart decisions and contrary decisions with our money has long been a goal of my family. I think one of the keys to building a small scale farm that is sustainable and long-lasting is to build it without great debt. By only taking on moderate and truly needed debt you may have to build the farm slowly, but I think you will cut down on the possibility of disaster, fear, and stress. And all three of those things can ruin your farm and your family!
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There is a low capital intensive farming system called SPIN-Farming. It requires minimal land and infrastructure. There is now a growing corps of farmers across Canada and the U.S who are taking up commercial farming in their backyards and front lawns and neighborhood plots in cities and towns. By re-casting farming as a small business, SPIN is helping to make farming an integral part of urban and suburban economies, rather than something a part from them. It is helping not only to re-envision food production, but provides a tool for re-building it. You can see some of these backyard and front lawn farmers in action in the gallery area of the SPIN-Farming web site (www.spinfarming.com).
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