At its June meeting, the Board of Governors for the Federal Reserve System left federal interest rates unchanged.
And with only single digit percentages of the corn and soybean crops left to plant, John Maman of Nutrien Financial encourages farmers to revisit their financial plan now that the crop is in the ground and agronomic conditions can be assessed.
“Any time there is a switch or change or enhancement to the agronomic conditions, farmers should consider a change to their economics so the breakeven point doesn’t move or be reduced. This is how they can continue to grow and be successful regardless of uncertainty,” Maman says.
He adds financing should be a complement to optimize yields—not an impediment.
As such he offers three key steps.
- Know your breakeven for every crop
- Develop an economic plan
- Review the plan through the season at key times
“When you are taking the time to evaluate your plans and make adjustments it can take the worry out of the uncertainty,” he says.
The Federal Reserve is expected to cut interest rates 2% via multiple swaths, but their meeting this past week did not contribute to that projection.
Maman adds while every farm pays attention to dollars and cents differently, all can benefit from having a foundational understanding of their breakeven. From there, adjustments can be made in light of economic or agronomic conditions.
The benefits of such include:
- Maximize liquidity, cash flow
- Keep multiple financing lines up
- Know the levers to use for terms, rates and incentives on products
- and maintain the integrity of the crop
And Maman says an early season review is a good place to start.
“For example, we are building awareness of our programs that pair with our strategic suppliers. We need to be able to assess on the agronomic intent of the crop. So as farmers look at their fungicide application, we can also provide financing for adjuvants to make that spray pass more effective and adding a nutritional to make that application more efficient. At the same low rates, we can match a bundled solution to the acre.”
Nutrien Financial products are available to all Nutrien Ag Solutions customers pending credit application and approval. With offers that started around seed purchase financing, today, products also include crop protection, fertilizers and full acre solutions.
“Our goal is to meet the growers at their farm’s end row with advice built to their acre—all encompassing conversations around agronomics and economics,” he says. “Regardless of interest rates and commodities prices, we can bring value to the farm gate.”
While the current ag economy is in a downcycle, Maman says now is the time to double down on financial planning.
“When commodity prices were high and rates were low, it wasn’t front of mind, but you need to keep the breakeven top of mind,” he says. “There’s money to be made managing the agronomic and economic plan. And even more so when things tighten up. Always know you’re breakeven so even in challenging years you can be more successful.”
He adds, “Somebody in a down market will always succeed. Some will grow. There’s an underlying success individuals can find, especially when they are able to surround themselves with the right people. And I see great success for those who revisit the plan as often as they need, no matter what the market or economy throws at them.”
