Down below I commented to the effect that a number of BTO's are on very firm financial footing. Now to comment on the other side of the coin. There are also quite a number of BTO's that rely on investors and own very little of the equipment they run. I have seen area BTO's unravel when the investors see better alternatives for their money in the economy and pull up stakes. With other sectors of the economy out performing agriculture it becomes very difficult to replace those investors due to the inferior return in farming. Going one step further the equipment aspect does very little for the balance sheet if leasing is heavily relied upon. Some smaller operators with lesser equipment can have more to show on the balance sheet if the equipment has clear value with little or no debt against it. One thing that has yet to be commented upon is several years of flat earnings and their effect on BTO's. As commented on in a recent SF article about declining Kansas wheat acreage shortfalls for small operators are easier covered by a job in town. A BTO would be hard pressed to cover a 100K shortfall from a job in town. As said in the same article world wide increases in the production of commodities such as wheat have made for very flat earnings. Some might be quick to say that crop insurance is the hedge for that but crop insurance for any year are based on expected commodity prices versus giving a high ceiling to work with. If I had to guess that anybody's wheat coverage is based more on 4.50-5.00 dollarsper bushel than the heady times of a few years ago where that price was double. If things play out a certain way where for a few concurrent years the BTO cannot pay his expenses then what does he do. If he goes to the bank do they say you have excellent equity or do they say we see a permanent decline in the business and start to de-value acres, equipment, etc. The things mentioned in the SF article were in substantial part predicted by a marketing professor at Cornell during the 1980's of which I took his class.
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Today's Featured Article - Old Time Threshing - by Anthony West. A lovely harvest evening late September 1947, I was a school boy, like all school boys I loved harvest time. The golden corn ripens well and early, the stoking, stacking,.... the drawing in with the tractors and trailers and a few buck rakes thrown in, and possibly a heavy horse. It would be a great day for the collies and the terrier dogs, rats and mice would be at the bottom of the stacks so the dogs, would have a busy time hunting and killing, all the corn was gathered and ricked in what we c
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