Recently USDA announced that farm income is declining. You already knew that. Did you know there are three easy things you can do to have cash on hand when you need it? Angie Setzer, Vice President of Grain for Citizens LLC told us what you should consider when drafting your marketing plan to help make cash flow easier next year.
1. Know when your bills are due.
Do you have a big payment in January? Put all of your major payments on the calendar and note the amount of time it will take you to move grain and have the cash in hand, advises Setzer. She says it’s important to plan in advance when you need cash so you can move grain when you want to, instead of when you have to.
2. Determine your breakeven price.
What does it cost you to produce a bushel of corn? Are you making money at $3.55, or do you need $3.90 to make a profit? Setzer says you can’t make educated decisions about marketing your grain for a profit if you don't know the answers to these types of questions.
3. Sell when the price is right.
If you can make a profit (even a small one) selling your corn at $3.55, maybe you should sell it. Speculating there might be a higher cash price later in the month is risky because it could put you in a situation where you are forced to take a lower price to have cash on hand. Setzer says you should keep in mind that you can’t go broke if you’re making money.