Financial Discretion Equals Happy Farming


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From GENE LOGSDON

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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12 Comments

I have lived among Amish many years and had them build barns for me. The comment I have about their horses is that I have observed they tend to take good care of their draft horses, but have a strictly utilitarian approach to their buggy horses, trotting or pacing them at full speed into town, putting them out wet and after the hard road surface ruins their legs, they sell them at the killer auction. They are in many ways admirable people, but I would shoot one of my Morgans before I would sell it as an Amish road horse.

I live in an area in upstate New York that is been recently populated with Old Order Amish families due to the comparatively low price of land. Many are now my neighbors. All the points made in your article and the comments ring true and they are good neighbors and good land stewards. The one factor not mentioned however is that they do not pay insurance of any kind which makes a big difference in what is left of discretionary income.

I’d say financial discretion can be practiced in any field of endeavor. I stumbled across two books years ago that made a big difference in my life: Amy Dacyzyn’s “The Tightwad Gazette” and “Your Money or Your Life,” by Vicki Robin and Joe Dominguez. I’m collecting copies (used, of course) to give my grandkids as coming-of-age presents.
As far as entertainment, I put a post on my blog one time that I think sums it up: If you and the kids can spend 30 minutes or more debating the finer points of watching lambs vs. piglets at play… you might be a ranch wife.
Great post, as usual, Gene!

Lesson taken for sure and its not just the Amish that can live a more economical lifestyle that is actually more fun and entertaining than having the latest and greatest thing Madison Ave advertising is pushing.There are lots of opportunities these days to live cheap and be entertained at the same time.Auctions are No.1 on my list,I’ve bought many useful items that I could have never afforded paying their retail price at auctions for a fraction of what they sold for originally.Tools,tractors,machinery,cookware and much of what I use came from auctions.Yard sales are another way to buy some useful things real cheap and along with Craigslist.For example bought a set of tires for $20 at an auction turned around and traded them for a perfectly fine Oliver 77 tractor, that’s the way to not spend much but have as much or more as those buying retail.I also save on ‘entertainment’ watching my baby Muscovys or just admiring my garden rather then spend $$$ on something like a movie or
at an amusement park.Really its easier than ever for those ‘possum living’ because so many are will to pay retail and then sell for pennies on the dollar when something new comes along.

The Amish are not a monolithic group. Where we live in northeastern Indiana very few of the Amish are still employed primarily as farmers. The number of Amish with huge houses and “sheds” with enough acreage to care for a few horses is growing because so many of the Amish men work in construction or at large mills owned by other Amish. It seems that a lot of them have forgotten why they are Amish in the first place.

Gene,

The Amish are intelligent enough to CHOOSE which technologies they feel benefit their society. We so-called smart people simply allow technology to bowl us over in the pursuit of fast profits. My hat is tipped to the Amish.

I read somewhere that the Amish were the fastest growing and maybe the only agricultural sector that is growing in population. The average age of English farmers is climbing annually. They must be doing something right. Draft horses have superior applications in agriculture and forestry when the quality of work is considered. I refuse to apologize for animal powered techniques being more labor intensive. Some think that working is what people are for, especially when there is inherent dignity to the work. Since many are “good farmers” they still rotate crops, practice mechanical weed control, conservation tillage and always produce a lot of fertilizer in the form of animal manure. Working draft horses or animals is not for everyone at this moment in time or history. I heard a big talk on NPR about the decarbonization of the modern world as a plan for survival of the human race into the next century. I’m sure everyone doesn’t believe that dire prediction, but I’m equally sure everyone reading this has experienced weather extremes as never before. Yet animal power isn’t recommended or being publicly supported by any official interest or entity. When Cuba was cut off cheap Russian Oil, the government went into the mountains and got every old ox drover they could find and brought them to their schools to teach people how to grow food with animal power. They survived. Animal power is a very necessary cultural practice that should remain an instrument in the human tool box for the future. We shouldn’t completely discard thousands of years of culture and breeding of utilitarian animals – because of 75 years of cheap oil. Especially since we are learning undeniably that the contribution to carbon in our atmosphere is from fossil fuels and human activity. So even if one doesn’t want to work draft animals, it’s a good thing that someone is, in case we ever need them again… soon. I think the Amish are pretty cool and wish I had some close to me. They would have more in common with my lifestyle than most of my conventional neighbors out in the countryside of Appalachia. I traded an Amish man for the first Suffolk Punch I ever had. His descendants have been a part of our farming for almost 40 years now. Many of their virtues economically are practiced and enjoyed by non Amish rural residents throughout the U.S.and world.
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Dear Gene,
As you have pointed out in your work. You don’t need a lot of money to be wealthy. The “New Rich” are retiring in their 30’s, living a simple life and raising a family on part-time income and a do-it-yourself attitude. I guess once again Gene, you’re just ahead of the curve. I love these Wednesday posts. All our best to you and Carol.

Wow! Do I agree with you Gene. I may have to turn Amish Hippie when I retire after that blog.
You are so correct about disposable income. That is the problem our economy has now. We wonder why it is not better. It is because the vast majority of Americans, farmers or otherwise has no disposable income. Part of it is the “need” for gadgets and part of it is that we have lost the desire to be self sufficient.

I garden, can, preserve, grow fruit, do my own oil changes, and fix things around the house. I was brought up to believe if you don’t have it you don’t spend it so take care of what you have and repair it and make due.

Unfortunately us “English” live in a world of texts, tweets, videos with fast lives and nothing to show for it. The Amish are truly smarter and wealthier for sticking to their beliefs.

I work with several Amish who are truly great people. I remember telling an Amish vendor I had been married for 34 years and he could not believe any “English” stayed married that long!
Randy James wrote a couple of books on the Amish. They are well worth reading. He talks about farm income from an Amish perspective and how little the land grant colleges could help them. (Randy was in extension)

I wonder if that income could be adjusted for labor. Most farmers I know are not interested in having a passel of children to provide free labor. I do not know enough Amish to make a general statement about what they do well or poorly.

Having worked with horses a lot in my youth, we have a no equines rule here on our farm. Animal power is not for everyone! I know the pros and cons of horses and for us the cons well outweigh the pros. While tractors can be dangerous too, usually the danger is from operator error, without the added excitement of a creature with a mind of its own.

I agree that consumerism gets overwhelming. Just don’t take away my computer. Or my Kindle. Or my e-books, blogs, and digital camera. LOL

    I don’t think the point of this post was to convince you, or anyone, that they should work with equines as the key to farming success. Unless one has a genuine affection for working with drafts, it’s best they do the equines a favor and stick to tractors for farming chores.

    What I believe Gene was trying to point out is, oftentimes we create our own economic burdens by giving too much importance on buying and owning objects, like the “need” for the latest electronic toys, rather than focusing on the intangibles in life which really are the things with the most worth, even though they are free.

    To get by on less (financially) one simply needs to want less.

    There are undoubted dangers working with horses, but given the two other choices (1- watching the world die at our own hands from continued fossil fuel use, or 2 – starving because we’re scared of farming with horses), I’m inclined to think that using horse power is a great idea. We know a number of Amish families as well, and I couldn’t agree more with Gene’s suggestions!

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