> Maybe part of the problem in how much profit a farm makes is definition.
> I know a lot of small farmers, particularly those who have little or no debt,
> tend to overlook many cost items such as opportunity cost of farm
> capital, and their own family labour.
There are many definitions for "profit". I define it as what I put in the bank at
the end of the year. I don't include "ghost" categories in my accounting. If I've
lost a theoretical advantage in a market, I've only lost theoretical money. I
don't think anyone counts their theoretical money or buys anything with it.
Different accounting systems can come up with all kinds of numbers. The only ones
that count for me are the ones in my bank account and my return on investment.
How do I count my farm labor cost? Farm Labor Cost = Net Profit- I pay myself
what the farm makes. That's the only real formula. The farm family works on the
farm and recieves the benefits- profits from the farm, housing, food, exercise,
high quality of life... Should we add these in as a farm expense? Point is, farms
are very different in all ways from other businesses. That's what baffles
economists- they just can't understand something outside their training.
> I suspect that labour is a greater component of total farm costs on small
> farms -- perhaps particularly on organic farms -- so including return to
> operator labour in with operation profit could distort these proportions a
My farm labor cost is 60 to 75% of my gross farm income. If my labor is a farm
expense, how come I can't report "zero" farm income on my Schedule F? Because
economics (for farmers) is a double-edged sword. The government gets us coming
> For what it is worth....
Your ideas and opinions are worth a lot! Keep 'em coming.
Ruminating on Walden Ridge
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