Don’t let today’s market uncertainties and economic woes throw off your business goals. Instead, turn challenges into opportunities. That was a clear focus of the 2016 Top Producer Seminar held Jan. 27-29 in Chicago and hosted by Top Producer, a sister publication of Farm Journal. With a theme of “Cultivate Every Opportunity,” the seminar featured nearly 35 speakers and attracted more than 1,000 attendees, including 600 of the nation’s largest acreage farmers. Here are some insights, tips and strategies you can employ on your farm today.
1. Maintain Enough Quality Working Capital
Market volatility can make farmers vulnerable, says Curt Covington, senior vice president of agricultural finance at Farmer Mac. “The most important thing you can do during volatile times is build liquidity in your business,” Covington advises. “Build enough cash reserves so you have a buffer against volatility.”
Adequate working capital alone is not enough. “Bankers worry about your working capital quantity and quality,” he says. “The closer it is to cash, the more comfortable they feel.”
2. Be Ready to Trade a Summer Weather Market
As El Niño becomes La Niña, the transition will cause drought and warmer-than-normal Corn Belt temperatures, predicts Bill Kirk, a weather statistician and owner of Weather Trends 360.
These conditions, combined with dry weather after planting, lead Kirk to forecast corn prices could hit the $6.50 to $7 range this summer.
3. Become a Better People Person
Farmers should invest less time doing field work and more time with the men and women on their business team, says Carolyn Rodenberg, owner of Alternatives to Conflict and a member of the Farm Journal Legacy Project Advisory Team.
“Are you spending less than 70% of your time on the people part of your business?” Rodenberg asks. “You’re not doing your job if you’re doing less.”
4. Prepare for Economic Growth
Look past low commodity prices and rising interest rates, advises Jason Henderson, Purdue University Extension. That’s because a new chapter in domestic economic growth is on the horizon.
A strong U.S. dollar shows what could be coming.
“For me, the increase in the value of the dollar is a signal it’s the U.S. that’s going to lead again,” Henderson says. “To really get out of global recession, it is going to take the U.S. consumer to lead, to buy, to invest and to grow.”
Eventually, the value of the dollar will go down and U.S. farmers will increase export volume. “I wish I knew what year that was going to happen, but I don’t,” he says. “Long-term, that will happen, and we have to be ready for it to take advantage.”
5. Invest in Grain Storage
Young farmers can prepare themselves for retirement by building grain storage, says Jerry Gulke, an Illinois farmer and president of the Gulke Group.
“I wanted to become a cash generator,” Gulke says, remembering the early days of his farming career. “As you become debt-free in that sector, use that grain bin money to invest in something else.”
He recommends farmers work with cash and pay down debt deliberately. That way, lower commodity prices hurt your business less and less.
“The market doesn’t care if you have brand new machinery,” Gulke points out. “The market wants to know who’s the cheapest seller.”
Attend the Tomorrow’s Top Producer conference June 16 and 17 in Nashville. This business conference for farmers age 35 and under will include sessions on risk management, succession planning and leadership. To register, visit www.TomorrowsTopProducer.com