GENE LOGSDON: Financial Discretion Equals Happy Farming

 
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From GENE LOGSDON
The Contrary Farmer

A most provocative article in the latest Draft Horse Journal  (full disclosure: I write for this magazine regularly) argues that an Amish farm with gross sales of $50,000 has more money to spend after necessary living expenses are paid out than a conventional farm with gross sales of $300,000 (Farming From the Heart, by Chet Kendall, p. 107ff).  Kendall  bases his argument on discretionary income, which is the money you have left to spend as you like after all debt payments and necessary overhead are satisfied. The Amish farm had $23,000 to spend or not spend this way. The conventional farm had none.

The average conventional farm, using official 2010 figures, had gross income of $334,042 and expenses of $275,729 or 83% of the gross income, plus government payments minus taxes, leaving a disposable net income of $48,098. Of that income, $13,545 came from government subsidies. The Amish farm had no direct government payments because that’s against their religion. Kendall argues that the conventional farm’s total disposable income had to be used to pay off debt and for clothing, education, utilities, food, transportation and recreation that the farmer deemed necessary for his lifestyle, leaving zero dollars for savings, investments, or experimentation in new farming ideas. The Amish farm, after paying overhead and living expenses, had an estimated $23,000 left. (There are no official government figures for Amish farms.)

Kendall argues that discretionary income is the key to happiness and true success. “Discretionary income is that income of which real wealth is made… Many farmers never see discretionary income and when they do, it is not on a regular basis. From it comes savings, investment, innovation, capital and entrepreneurship… It is also the source of genuine recreation.”

For many years, we have had close Amish friends, so I think Kendall is on the right track. The Amish do not spend money on consumer goods the way the rest of American society thinks it must. They do not spend money on higher education, but believe me, the ones I know are as well informed as most college graduates. Horse and buggy transportation costs a fraction of car travel. They spend far less on farm machinery. They have their own shops where they reproduce new parts and new models of old machines within the strictures of their own internal economy, not John Deere’s. Their clothing is simple and often homemade. Their utility bills are low— many of them heat with their own wood and do not have electricity in their homes at all. They raise most of their own food. Their biggest fuel cost is diesel oil for motors that generate electricity for their Grade A dairies. If the electricity goes off, as it does now with more and more frequency, they have no immediate worries.

The modern American consumer believes the Amish family’s lower cost of living means a lower quality of life. Depends on how you define quality of life. Carol and I love to visit our Amish friends because it is like going back in time to the way we grew up which for us was a happy life. Their house in winter is always warm, which I, as an old man, no longer find true of many modern homes I visit. Their farm sits next to a sloping road just as ours did where I grew up, and I have gotten particular enjoyment watching their kids coast down the road on toy wagons, scooters, and bicycles just like we did. They have neighborhood ponds where they fish, swim and play hockey like we have always done. Their creeks are their most engrossing toy, just as ours was when our children and grandchildren were growing up. Nature as a whole is a chief source of their recreation as is true of us and I don’t see how anyone could have more recreational fun than we do at a cost of about zero.  I shocked oats and worked around the threshing machine in harvest when I lived in Minnesota just like they do and loved every minute of it. There is nothing drab or mean about their lives even though the work is sweaty and grimy some of the time (so is playing competitive sports). The fact that Amish save a lot of spendable money allows them to splurge occasionally, even taking trips by bus or plane. Their homes are well-built even if they don’t look grandiose or have fancy furniture in them.

Interestingly, the Amish are in many ways not really old timey. They were among the first farmers to experiment with solar-generated electricity. They have all along been pioneers in perfecting grass farming and organic methods and other new production ideas. They are geniuses at getting efficient production out of low energy horse power and small engines on forecarts instead of high energy tractor power. Just recently, I noticed that they are right out in front with new ways to make quality hay using plastic wrap. They can afford to experiment with new ideas because they have discretionary income to keep  the risk low.
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