Want To Farm In 2020? Preserve Working Capital Now

03:28PM Oct 26, 2018
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As producers look to 2019, many are wondering what it will take to stay in business given analysts don’t expect the farm economy to bounce back in the near term. While it isn’t a new tactic, economists, including Jim Mintert from Purdue University, say the No. 1 thing farmers can do to ensure they’re still farming in 2020 is to ruthlessly preserve working capital.

“I think the challenge for producers here through the rest of this year and through the winter is going to be to focus on preserving their working capital,” he told Tyne Morgan on AgDay. “That's been a strategy for several years now and I think that's still in play this year.”

When it comes to preserving working capital, Mintert says holding back on capital expenditures will be key.

“Be very cautious with capital expenditures,” he cautioned.

While he says farmers have cut back appropriately, there are still many challenges ahead.

“I think the challenge is, how long can you can you retain your existing set of machinery?” he asks. “In many cases, fortunately, we came into this downturn with very strong asset base on most farms, which has maybe made that a little easier that might have otherwise been.”

While farmers have been focused and diligent about preserving working capital, Mintert says it’s a strategy and a message that will remain in place for at least one more year.

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