"Also, the $80,000 is for gross sales. Given the 80% overhead
typical for
farms and ranches, that translates into $16,000 net income -- not a
large
amount."
This is off the subject of Oregon land use laws, but I was shocked to
hear the average overhead for American farms and ranches. The reverse is
true for me. I pay out about 25% of gross farm sales and retain about
75%. (That 25% includes buying hand tools which are listed on schedule F
as repair costs since the IRS must consider their life only one year. I
buy quality tools and use them for decades.)
I don't know what the figures are for overhead in other small
businesses, but I bet it's lower than 80%. I 'm having a hard time
figuring out how most farms and ranches can operate. This must be the
rationale for the "get big or get out" myth that's been repeated now for
the last few decades. I say (along with Gene Logsdon) "get small or get
out."
If you're losing money or barely getting by, it doesn't make sense to me
to borrow money to do either of these on a larger scale. It reminds me
of the 2 guys who decided to sell watermelons. They bought a truck and a
truckload of melons for a dollar apiece and sold them for a dollar
apiece. After the first day, they counted their money and had the same
amount they started with. While trying to figure out what to do, one of
them said, "We need to buy a larger truck."
Alex McGregor
Walden Farm
High atop Walden Ridge
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