Cost cutting tips for farmers were shared this week by AgWeb and Farm Futures. Staying out of the red this season and protecting your margin remains critical to the survival of many family farms this season.
Sara Schafer of AgWeb has created a top 5 list of cost savings farmers can implement for the 2018 season. She has wisely noted that the February 2018 Farm Income Forecast from the USDA projects farm income to drop by 7% while expenses are projected to be flat or up 1% in 2018 compared to 2017. The summary of this macro-level report can be found here at ers.usda.gov.
But breaking down specifics for individual farm operators to control costs is critical and where Schafer is offering real insight. Her piece begins
Be proactive in managing through financial stress. Farmers’ financial positions continue to erode as commodity prices remain weak.
“We remain two to three years out until profits in the crop sector normalize,” says Matt Roberts, founder of The Kernmantle Group, an economics research firm. “That sounds like bad news, but all forces still point forward for agriculture.”
Be optimistic and employ these strategies in the year ahead.
1. Project your cash flow. Regular financial analysis is key.
2. Review every expense to find savings. You might feel like you’ve trimmed all your costs, but keep looking. Know your cost of production at the field level.
3. Analyze every cash-rent agreement.
4. Develop and stick to a grain marketing plan. A written marketing plan will also help you overcome the emotional aspects of marketing.
5. Ask your lender pointed questions.
Read the details under each top 5 cost savings point at agweb.com.
Not to be outdone, Mike Wilson and Ben Potter of Farm Futures, have created their own top 10 cost cutting list for farmers this season. In their article they recognize that both maximizing revenue and minimizing costs are critical for a financially successful 2018 season.
Decisive action is nothing new for farmers trying to surf a wave of five big crop yields in a row. From cutting costs to selling fleeting rallies, not wiping out in 2018 means mastering both sides of the income statement. Consider these moves:
1. Do it yourself.
2. Substitute cheaper nutrient sources.
3. Take back custom[-harvest] acres.
4. Keep negotiating rents.
5. Shop for deals.
6. Market better.
7. Plant cover crops.
You may want to consider this cover crop research from Iowa State University.
8. Focus on timely nitrogen apps.
9. Vertically integrate.
10. Analyze your options.
Want to read their the details about each item on their top 10 list plus see their bonus tip?, read more at farmfutures.com
Image Courtesy AgWeb