Looking for ways to help make ends meet this year? Gary Schnitkey, an agricultural and consumer economics professor at the University of Illinois at Urbana-Champaign, offers three strategies to find extra room in your budget without cutting something out.
Find A Fit In Federal Programs
“What we’ve seen farmers do in the past is take high-coverage level of revenue protection, and in northern and central Illinois, we see 80% to 85% coverage levels predominate. That will likely be a good place to remain, because we still have a lot of risk,” Schitkey says in a recent webinar with Compeer Financial. “I might suggest that we think about adding ECO [Enhanced Coverage Option] this year. RMA has increased the subsidy levels on ECO so that relative to what you paid last year, it’s going to be less expensive.”Schitkey also suggests taking advantage of ad hoc federal payments, such as Emergency Relief Program (ERP) and the proposed FARM Act.
“Make sure all those payments happen, and get farm practice and soil health payments if you’re doing those things,” he says. “All those things will help in the coming years by reducing risk and covering what’s going to likely be a tight time.”
Maximize Profits, Not Yield
A study by Farm Business Farm Management (FBFM) found the difference in expenses between high-profit grain farms and low-profit grain farms averaged $157. High-profit farms also typically had non-commodity crop income, such as non-GMO soybeans or food-grade corn.Precision Conservation Management (PCM) also found the low-profit farms were also using nitrogen application rates above university recommendations, had higher pesticide costs and made additional tillage passes.
When it comes to maximizing profit over yield, using the recommended fertilizer application rate plays a big role. PCM data shows that while higher rates of nitrogen can bring higher yields, the added expense just doesn’t pencil.
“In a lot of cases, we’re trying to get the highest yields. Those last several bushels often come at a pretty high cost to get,” Schitkey says.
- Evaluate Rental Agreements
Schitkey’s final strategy is to re-evaluate land rental agreements–a tactic he admits isn’t easy. He suggests:- Take a marketing approach. How is the farm going to attract new landowners?
- Build a farm resume and work on a sales pitch.
Consider how much a farmer can and will pay for cash rent farmland
Your Next Read: Where Do Farmers Plan to Cut Costs in 2025? Here Are the Results from the Latest AgWeb Poll
