In farming, details matter. In light of the current compressed commodity prices and tight margins, a penny saved is a penny earned. You have sharpened your management pencil and brought down your cost of production in the past few years. But, experts say, that trend will need to continue into the new year.
“2017 will be pivotal,” says Allen Featherstone, a Kansas State University ag economist. The reason: Net farm income and overall farm profitability has fallen for three consecutive years, according to USDA. The forecast for 2017 is just as dreary. To be profitable, farmers will need to analyze every dollar they spend to ensure its return on investment.
The upside? “Everyone will be really good managers by the time we are through this,” explains Mykel Taylor, farm management specialist at Kansas State.
Ways To Save. At a workshop this past month, Featherstone, Taylor and others shared some strategies to navigate a struggling farm economy. Here are some of their suggestions for whittling down production costs.
- For seed, chemicals and other crop inputs, ask for bids from multiple dealers so you can negotiate cost. Also, offer to pay in full at purchase to avoid financing charges.
- Consider buying inputs together with your neighbors. You might be able to get bulk discounts.
- Analyze if renting or leasing machinery is a better value for your operation versus owning it.
- Use the winter months to update all your production and financial data. Use it as the foundation for all your decisions.
- Recognize the opportunities when they present themselves. Knowing where to spend money requires the same analysis as identifying where to save money.
“None of these things individually will save you big money,” Taylor says. “But when you start adding up the little things—that may get you somewhere.”
Of course, you also have to weigh the trade-offs of quality versus price. One of our farmer-columnists, Chris Barron, has some great insights for you.
Opportunities Ahead. As Taylor suggests, 2017 will be an opportunity for you, your team and family to become sharp managers. Share your thought process with them as you make decisions this year. There will be opportunities to expand your business.
For more guidance, be sure to attend this month’s Top Producer Seminar. The 30 speakers we have on tap will share strategies for you to prosper in the years ahead. Register now at TopProducerSeminar.com.