How do farmers survive throught the whole year on just their own crops/livestock
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For most farmers money management is a very important skill. Many farmers only get revenue at one point in the year, but they have expenses all year long. They just are really good at budgeting and not over spending just because there’s cash in the bank does not mean they can afford something.
Here’s an example. It’s common for cattle ranchers to sell their entire herd in the fall. They buy all their cattle in the spring, they feed them and fatten them up over the summer and they sell the whole bunch in the fall. While not all ranches work this way, many of the smaller ones do.
So they might spend $1,500 a head for a skinny young cow in the spring. At the end of the season they receive $2,250 a head for those same cows.
So this farmer has 200 head that he raises each year. In the spring he spends (1,500*200) $300,000 to buy his cows. Through the summer he has some expenses such as gas for the trucks, hay to feed the cows when the grass in the field is not enough, vet fees if an animal gets sick and a whole bunch of other expenses. In the end he spends another $75,000 just raising the cows.
In the fall he sells the cows for (2250*200)=$450,000. This is enough to cover his expenses of purchasing the cattle along with the costs to raise them. He’s made $75,000 in profit. Now he needs to spread that money all through the whole year for his family to pay expenses like their own food or other costs of living. The farmer gets all of his entire year’s worth of pay in a single day in October.
Not all farms work this way, but many do. Many that grow crops don’t have the same up front costs but they have a lot more costs in things like equipment and fertilizer.
But the last thing to consider is risk. If you don’t quite make your cows fat enough, or if the worldwide price of beef were to go down the farmer might not get the same price for the cows that he was counting on. That can mean that he can’t repay the loan he took to purchase the cattle in the first place or the loan he took to pay for his land. A small chance in the price of beef or in the weight of the cattle at the end of the year can make or break a farm for the entire year and in that case they are just fucked unless there’s some government program to help out.
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