Editor's note: We’ve gathered several experts to offer suggestions on trimming expenses in light of tighter margins in 2014. This is one of 10 money-saving tips.
It’s human nature that during periods of strong profits, management in some areas can "get a little sloppy," says Nate Franzen, president, agribusiness division, First Dakota National Bank, Yankton, S.D.
But as the economy shifts, it’s important that you also shift your management strategy. Stop doing what you’ve always done in the past. In addition, adopt some strategies to help you break even during turbulent times. Things like lowering your production costs, creating value for the customer and even using your time more efficiently can go a long way toward locking in profits.
Record prices have encouraged buying some inputs without hard knowledge of their economic return. "That’s no longer an option," adds Mike Duffy, ag economist at Iowa State University.
Speaking of inputs, if you fail to apply the right inputs at the right time and under the right circumstances, you might as well flush your money down the toilet—at least it’s more environmentally sound, Mike Boehlje, ag economist at Purdue University, explains. Take advantage of variable-rate technology and zone management practices so your inputs go exactly where they are needed.
Management carries over into the shop, too. Make sure equipment is in the best condition possible to give you an edge during planting, crop protection applications and at harvest.
Moreover, taking care of your equipment increases its value, according to used machinery expert Greg Peterson.
"If equipment is under 10 years old but in good condition, it is going up in value. It literally pays to take good care of your equipment," he says.
Keep Your Production Costs in Check for 2014
With grain prices dropping, it’s time to get creative. There is no one-size-fits-all-farmers answer, but there are numerous ways to more closely align costs with returns. Here are the money-saving tips we've gathered.