Documenting more than just the obvious will pay off at critical times
Dust off the old filing cabinet and pull the cardboard box of receipts out of the closet: Keeping good records is essential for making the smartest decisions on your farm.
“With the size and scope of many farm businesses today, keeping accurate farm records is more critical than ever,” says Chris Bruynis, assistant processor and Extension educator at Ohio State University.
Consider good record keeping a risk-management strategy that protects you when you make a crop insurance claim, need to prove regulatory compliance, are going through a farm transition, need to access capital and as you make decisions for your future.
Win crop insurance claims
“Keeping good records of field activities is valuable to crop insurance companies and to the farmers themselves when they’re looking to protect themselves against counter claims,” says Shep Whitcomb, FarmLogs product marketing manager. Being able to show weather conditions over the growing season or when and where you applied herbicides and insecticides can help your case, he adds.
For crop insurance, keep track of weather conditions, wind speed, temperature and when you applied pesticides throughout the season. Be sure to do this on a field-by-field basis and in some cases, you’ll need to break it down to sections within a field.
Prove regulatory compliance
You might need the same type of records to prove your regulatory compliance, too. If you’re subject to check-ins for spraying, it’s critical to keep your records up to date.
“I was in Michigan earlier this year talking to a customer who is a certified applicator and he can be spot-checked at any time,” Whitcomb says. “If he is in the field and doesn’t have records up to date, there will be repercussions.”
Be sure to keep track of chemical and fertilizer applications and the weather conditions present when and after they were applied.
Prepare for a farm transition
For producers preparing for a farm transition, or who might have one thrust upon them by an unexpected event, it’s important to pass down the history of the farm to the next generation. If the next generation doesn’t know what was applied or tried in previous years, he or she might repeat the same mistakes.
Earn your lender's trust
“Banks and lenders are looking with a lot more scrutiny before giving a loan,” says Andrew Meyers, Granular’s head of customer success. “I don’t know how folks will get operating loans without detailed plans and records this year.”
When margins are tight, banks are more careful about lending. Keeping close records of cash flow and income statements and updating your balance sheets regularly go a long way toward building confidence in your success.
Reflect and plan for next year
While creating plans to show your lender, it’s a great time to reflect on your production practices this past year. “The only way to improve is to measure and make changes,” Meyers says. Did no-till make a difference? Did that seed or chemical you tried pay off? Are there areas where you need to invest or cut? “Keeping good records and using analytics is the difference between surviving and thriving,” Meyers says.
Learn Which Records You Need to Track
With everything that goes into farming, how do you know what records to keep? Penn State Extension sheds light onto what records you should prioritize:
- Financial—Keep a detailed check register or chart of accounts, cash flow, income and an up-to-date balance sheet.
- Production—Keep records on a field-by-field basis, including pesticides used, tillage practices and yield results.
- Weather—Knowing the weather that hit your crops helps you analyze hybrid or variety performance. Crop insurers also need to see what caused failure to speed up and prove claims.