It’s no secret that commodity prices are down significantly, impacted drastically by the global agriculture economy. Ag economists are predicting that this won’t change any time soon and the solution seems clear – tighten your belt, put the horses in the barn and plan to weather the storm.
Sharpen Your Pencil
Over the last few years, the cost of production has been ratcheted very high. Whether it’s seed, herbicides, fertilizer or equipment, there is always a way to control costs and save a few dollars. Reducing expenses is a critical step in riding out the ups and downs of the markets.
Crop Planning, Software & Management
Whether you rely on spreadsheets or have upgraded to farm management software like FarmLogs, Agrivi or Ag Leader, one of the best investments you can make is better planning & marketing for the next crop year. Tracking input costs and even the ‘hidden costs’ of time spent in the field can give you a clearer picture of your operation. Success is never an accident.
Leases, Relationships & Communication
If you are cash renting some or all of your farmland, it’s worth the time to invest in your landlord/tenant relationship. When farm incomes are down and leases or rents need negotiated, this is a relationship you’ll be glad that you watered & fertilized. Communication and addressing issues upfront can mean the difference between acres you farm for decades or acres that quickly pass to the next highest bidder.
What is your neighbor doing?
We learn from our mistakes, but we can also learn from those around us. What are other successful operations doing that you are not? Whether you simply need to sharpen your pencil, choose a different supplier or take the time to carefully analyze your operation, there is always room for improvement. Often times, getting a fresh set of eyes on what you are doing is all it takes to get things moving in the right direction or determine if it’s time to move on.
Selling the Farm
The market demand for farmland continues to be strong. Location, water resources and drainage remain a topic of conversation and play a big role in what the market will pay. With many buyers prepared to purchase for fair and equitable prices, selling some or all of a farm could result in well-deserved gains. As a seller, capital gains taxes should be taken into consideration, proper planning is a must.
The landscape of agriculture and land investment continues to buzz with risk management. Farming is a tough business and those that are successful deserve recognition for making it with their own two hands. If retirement is on your mind or your family is no longer involved in farming, consider the security of the income and inheritance provided by the well-deserved returns of your hard work and investment into farmland. Balancing risk vs. reward takes gumption; inevitably there will come a time for tough decisions that could mean the difference in plowing ahead or resting your hat on a hook.
About the Author
Johnny Klemme is a published author, graduate of Purdue University and Land Broker specializing in farms & land in West Central Indiana. Born and raised on a local farm, his commentary on issues important to the farming community and land values can be found at www.PrairieFarmland.com/blog