We are all very aware that 2017 will require some planning to make it through. The current price environment is making everyone take a hard second and third look at their current operation. In talking with farmers the question that I have been getting the most (or hearing the most as many have been asking multiple people) is ” How are we going to make it this year?” Well, there is no clear cut answer to that question since everyone’s farm is different. However; I will take you through a few items to consider and hopefully some of them will be useful to you on your farm.
- The first thing to consider is the somewhat obvious – Inputs. I know you can only cut some variable costs so much before it begins to take a toll on the quality or yield of your crop. There are some variable costs that you can take a closer look at and rethink your level of use, such as equipment costs. A recent poll shows that equipment costs ranked highest for expected cuts to farm budgets for 2017. The items that were behind the number one answer were: Everything, Nothing, Fertilizer, Seed, and Chemicals. Yes, you can only cut so much before you affect the quality of your crop but you can explore other options. I know I’m not telling you anything you don’t already know on this one, but I just want to throw out there to do some additional research and ask around what has been cost effective for your neighbors.
- Next would be the fixed costs. These are a bit more flexible as they are specific to your operation. You can try things such as renegotiate rent rates, figure out how to maximize your labor dollars, trade custom work, and talk to your farm neighbors on how you can help each other. Always check with your local farmer neighbors and ask what they are doing. If you are hurting and worrying about this year, I am pretty certain they are as well. You might as well figure out how to help each other.
- Then take a hard look at your current debt load and equity position. If you feel your current debt load is going to be too much to handle take a look at some possible restructuring options. Think about if you might could save by combining several debts together or if you have some equity in your real estate you may benefit from locking in a long term fixed rate. You may could even benefit from cashing in some equity for some working capital. These are times where you should properly leverage your assets and let your assets work for you a bit.
- In low price environments like we are currently in, the art of marketing commodities becomes even more important. I can’t give you a perfect plan for marketing in 2017, nobody can! BUT I can tell you the worst marketing plan is a nonexistent one. Doing nothing and “waiting” hardly ever works the way you wish. If you are not one who is keen on watching the markets then get someone on your team who can help. Yes expense management is a he deal and that is up to you but you can pass the buck to someone to allow them to hep you protect your revenue. Revenue protection is just as important as expense management. You don’t have to hand over your marketing solely to someone else, but at least have someone you can call and get the information you ned to make informed decisions.
- I sound like a broken record I know but…. you need to plan, plan, plan, and then plan some more. Look at every possibility and then look again. Revisit your plan throughout the year and make changes as things change. The first draft of a plan is hardly ever the final one! Watch your budget like a hawk and be prepared to make adjustments.
- Finally, listen to and learn from others. Talk to the seasoned farmers in your area and see how they have made it through tough times in the past. Ask your neighbors what their plans are, read articles online or in your local paper, and keep up with the markets as well as global factors that impact the market. Stay informed and gather up as much knowledge as you can!