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DEBRA WHITEFIELD / Money Talk

The Time May Be Ripe for Farming

November 20, 1986|DEBRA WHITEFIELD

QUESTION: Some of my friends have been pretty successful over the years judging when a sour business has seen its worst times. They have made a lot of money getting into those businesses before the general public realizes they are on the rebound. A lot of people in my family have been farmers all their lives, and I have always dreamed of returning to the farm. So, when these businessmen friends of mine mentioned at a party the other night that this might be the time to get into farming, I was of course excited. But it is so hard for me to believe they're right. What do you think?--W. E. N.

ANSWER: As hard as it is to believe, your friends have a lot of company. Some agribusiness experts are beginning to predict that prices for farmland may have finally hit bottom and that this may be the time to start getting back into farming.

But keep in mind that this opinion isn't universally held. Others are predicting that the value of farm acreage will continue to slide by as much as 10% or more before hitting bottom. So, don't go into such an investment thinking that it is risk-free. It clearly isn't.

Agribusiness specialists at major banks say they do see some movement back to the farm by some entrepreneurs, former farmers and even some county extension agents around the country.

Many of these people are lured by the depressed prices, of course--not only for the land itself but for farm supplies such as fertilizer and grain and for farm equipment, which often has been repossessed. They figure they can get into the business for a song and use skills honed in other businesses to keep their costs low.

But the agribusiness experts say some of these new farmers have decided that this business is worth the risk only if they can rent all of their equipment and land. Leasing land, or sharecropping farms owned by someone else, they say, seems to be more popular than buying it outright.

Q: There have been stories galore lately that pay increases are slowing to a snail's pace. But I haven't read much about whether fringe benefits have done the same. Do you know what the trend is?--D. A.

A: Advances in fringe benefits seem to be slowing at about the same pace as wage increases.

For the 12 months ended in September, wages and benefits offered by employers in the private sector registered their lowest gain since the U.S. Labor Department began tracking the trend 10 years ago, according to the department's employment cost index.

The government's index rose just 3.2% during the 12 months, less than half the pace of a decade ago. The increases in fringe benefits and wages contributed in equal amounts to that figure.

Public-sector employees fared slightly better. For the same period, wages and benefits rose 5.2% on average, the government said. Again, the increased benefits and the higher wages contributed roughly equally to the gain.

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