Key to survival is
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EDMONTON ( Staff) — Farmers
will have to plan strategy carefully
if thev are going to survive"
the next two or three years a for-
' mer bank official told an Alberta
Women's Institutes' workshop.
Rollie Davies, now with Union
Carbide in Calgary, predicted
those who get through this period
of worldwide overproduction will
be the farmers who improve their
marketing and financial skills.
People have to look at how they
handle farm decisions in a declining
situation. It's the same in the
agricultural chemical business as
it is on the farm, he said.
The farm woman's role is so
important it has to be emphasized,
he said. As mediators, moderators
and, in the majority of
cases, controller of the purse, the
women influence father- son relationships
and strategic decisions
on the farm. A good farm team
can make the difference between
success and failure.
With two or three years of hard
times ahead, Davies predicted
banks will foreclose on operations
that lose every year and show no
signs of improvement.
" It's a sign of the times, a whole
lot more are going to go under.'
He said farmers shouldn't rely
on the wheat board to do all their
marketing. Some successful farmers
are hedging, they're looking at
other ways to sell their products.
He said it's clear that many
farmers are not trained in financial
management nor how to run a
business: " Those who have natural
tendencies stand out."
Women can either participate
themselves in the financial planning
or try to encourage their
husbands to bring in someone else
— a member of the family, an
accountant, or a consultant.
" If you don't understand it, get
some help."
Government bailouts and subsidies
may create another problem,
Davies said. Some farmers
develop a false sense of complacency,
thinking that they don't
have to worry about financial
management because something
always turns up.
The simplest way to determine
a farm's profitability is by preparing
a balance sheet comparing
assets and liabilities and a profit
and loss statement analysing how
much was spent and where and
whether it was worth it. Look at it
regularly, Davies advised. Assets
should be double the value of liabilities.
A farmer can get in big
trouble if his liquid assets, things
like, grain and feeder cattle, are
not kept in balance with his
operating loan.
" An incredible number of people
don't know how they did in
1985. It's one of the things you
have to do to keep yourselves
alive," Davies said.
Other measures the former
banker recommended to restore
farm profitability included:
• Expense control, buying only
the things that are really needed;
• Reducing or redistributing the
debt load by selling off some of
the assets even if it's at a loss;
• Restructuring the asset ownership,
possibly by entering a partnership
with another family member;
• Renegotiating rental agreements;
• Diversifying farm and nonfarm
income;
• Making new financial arrangements
through leasing, re- amortization,
or fixed rate financing;
locking in profits when available;
• Having insurance against risk.
