Financial Management

How Agriculture’s Next Generation of Innovators Can Build Financial Acumen Now

Wed, 10 Dec 2025 15:13:43 GMT

Beginning farmers and the next generation in agriculture face significant hurdles, including the high cost of capital and limited access to land. Technology is allowing the older generation to stay in business longer, too, creating a difficult environment to bring people into farming.

As senior vice president of business development at Farm Credit Services of America, Jason Edleman is focused on helping young producers and beginning farmers develop stronger financial skills so they can make better and more informed business decisions on the farm.

“One of the ways we are doing this is by setting up our lending officers to also serve as coaches for about four years with a group of about 50 to 60 customers,” Edleman explains. “From balance sheet training to cash flow lessons to understanding your family’s living expenses, their goal is to help customers through one-on-one coaching and classroom-style lessons to hone basic skill sets that will help them be financially responsible.”

He says it’s surprising how many people would guess they live for about $35,000 a year when in reality it’s likely closer to $120,000 a year.

“As lenders, we think about these things all the time,” Edleman says. “But for a beginning farmer or young producer, those skills take time to develop.”

Empowering Risk-Takers with Financial Understanding

He is excited about the next generation in agriculture as they bring a lot of different skill sets to the industry that are new and exciting. They’re also very creative in how they’re going to market, too.

“Their adaption to technology and how they learn and grasp information is so much different,” Edleman says. “I use the example of how my son (who is not a farmer) learns. He watches a 3-minute YouTube video, and then he goes and does it. His generation is not afraid to tackle stuff, but they just need some access points to learn.”

Farm Credit Services of America (FCS America) wants to help fill those learning gaps, he adds. FCS America is doing that through its Starting Gate program designed to empower and develop the future of agriculture by providing young and beginning farmers with personalized coaching in agricultural finance. Participants work with FCS America professionals to build skills in budgeting, financial planning and risk management, creating a strong foundation for their business goals.

(Farm Credit Services of America)

For more than 20 years, they have been hosting the Side X Side Conference for producers 35 years of age or under or farmers who have been farming less than 10 years. It features educational sessions, inspirational speakers and networking opportunities all geared to help producers better understand the financial side of the business.

“We recognize the challenges our producers are having and believe this program and hands-on coaching can have a generational impact,” Edleman says. “Years ago, we realized from a financial acumen standpoint, a majority of producers can’t put their balance sheets together on their own and don’t have a good understanding of how a cash flow can help them in their operation’s decisions.”

He admits farmers may be good at the “napkin math,” and usually have all the numbers in their head. However, this doesn’t always translate when they tell their story to a lender and may not fully encapsulate all of their expenses.

“The more successful farmers understand financials – cost production, cash flows, balance sheet trends and what it means to their income statement – the better decisions they can make about the risks they can take,” he adds.

One of the best parts of the events is the networking that takes place.

“The boards in the back of the room are a great tool to build relationships,” he explains. “We challenge producers to put things on the board they are looking for. Maybe it’s a connection point on how to sell something, or maybe they need hay. Ultimately, they end up sharing ideas and sharing numbers.”

Several peer-to-peer groups have formed because of these conferences and now regularly meet to share ideas, best practices and build relationships, Edleman says.

Navigating Income Diversification and Side Hustles

Whether the new generation wants to add a second business or not, most have to find a way to dive into other sources of income such as contract finishing, hunting, spraying or trucking businesses.

“We’re seeing about 44% of young or beginning farmers have a side job whereas a traditional farmer probably is only closer to 36%,” he notes.

As lenders, Edleman says their goal is to help producers. Close communication and a greater financial acumen help producers better prepare for the unknowns in farming.

“I think this young group really shines because they’re not afraid to try new things,” he adds. “From drone technology to how they use AI to make decisions, they’re grasping things more quickly. I think that’s been a good thing as it creates other sources of income that these operations can leverage as well.”

Early Engagement and Succession Planning

For the “coaches” at Farm Credit Services of America, the extra one-on-one time allows them to really get to know their clients and bring up hard topics of conversation like succession planning.

“Personally, I don’t think any of us want to work on estate planning and think about the inevitable,” he says. “We’re trying to engage conversation around the fact that life doesn’t always shake out like we think. The more we can prepare people to think about these tough topics earlier, the better. We can’t change the direction of what that looks like, but we can continue to influence communication.”

Although coaching young and beginning producers one-on-one is where Starting Gate financial officers spend more of their time, Edleman says many are also branching out to teach classes and present on financial topics at technical schools and land grant universities.

“We’re spending more time engaging future farmers earlier,” he says.

At one technical school in South Dakota, lenders do mock interviews with students. They aren’t interviews to practice landing a job, however. They are interviews to practice seeing your lender for the first time.

“Where are young producers at when mom and dad go to see the lender? They’re at home doing chores,” Edleman says. “Their professors and our coaches help them apply for their first loan or learn what to ask during an interview. It’s a simple thing, but it’s a huge thing when you think about where they’re at in their journey.”

How to Get a Loan Approval: A Banker's Point of View

Tue, 18 Nov 2025 20:28:26 GMT

For most farmers, the next big project on the operation starts with a conversation with your banke, and being fully prepared before you walk into that meeting can significantly increase your chances of getting a loan approval.

Curtis Gerrits, senior lending specialist at Compeer Financial, has spent years helping producers get the financing they need. During a recent Professional Dairy Producers webinar, he shares what truly makes a loan application stand out and how farmers can set themselves up for a smoother approval process.

Get Your Financial House in Order
When preparing for a loan, Gerrits emphasizes lenders look first at clear and complete financial documentation. The process begins with the fundamentals.

“Some of the documents that are top of mind are your profit and loss statement,” he says. “Don’t just stick with the current year. Try to have access to the last three years.”

A profit and loss statement not only establishes whether a business is profitable but also helps lenders understand how the farm manages revenue and expenses over time. Gerrits encourages farmers to follow this with a current balance sheet that breaks down assets and liabilities in detail.

This balance sheet should include livestock numbers, acres owned and leased and a complete equipment list with updated values. Together, these documents paint a picture of financial health and management discipline.

For long-term planning, Gerrits stresses the importance of forward-looking projections.

“Probably one of the last things is to have a detailed projection,” he adds. “What is the business plan, and how is this going to impact your business?”

These projections help both the producer and the lender understand how an expansion, land purchase or capital improvement will affect cash flow and operational stability in the years ahead.

Details Matter
Gerrits says one of the most common pitfalls he sees is overlooking the finer points of financial reporting. Accurate and transparent records build trust and demonstrate professionalism, giving lenders greater confidence in the producer’s decision-making capacity.

“The attention to detail is probably a key thing that maybe gets overlooked from time to time,” he explains.

A lender needs to see exactly what makes up the operation’s income. This could include crop sales, livestock sales, custom work, direct-to-consumer revenue or any other streams that support the business. Clear categorization helps verify performance and gives lenders a better understanding of how the farm is managed.

Build a Strong Relationship
Beyond the numbers, Gerrits stresses the importance of working with a lender who understands the realities of farming. A loan officer familiar with agriculture can better interpret financial statements, spot trends and anticipate challenges.

“Working with a loan officer that understands your day-to-day is really important,” he says. “Having that good relationship where you can bounce ideas off of one another is a really great thing.

Gerrits also encourages producers to bring their lender onto the farm. Sometimes a walk-through can communicate more than a financial packet ever could.

“Put your boots on and take a walk through the barns and show them what you are doing and why the loan application that you are requesting is important,” he says.

Seeing the animals, the facilities and the workflow helps lenders fully understand the operation’s strengths and opportunities, and it gives them greater clarity when evaluating a loan request.

Be Honest About Tough Years
Producers should not shy away from acknowledging difficult financial periods or reporting losses on taxes. Gerrits reassures farmers that losses do not automatically disqualify them from financing.

“Do not get too hung up on the losses out there,” he explains.

A balance sheet can often show how those losses are supported or offset by strong assets, such as land, livestock or equipment equity. What matters most is transparency and context. And demonstrating that you have a plan to manage challenges and leverage your assets can build confidence with your lender.

Plan for the Future
Constant communication with your loan officer can make a big difference in the approval process. Gerrits says checking in periodically, even with a quick touch base, helps avoid surprises.

“Maybe you’ve already talked about: ‘Hey, in a couple of months we might have something come in, and I’m going to have a request for an operating line of credit,’” he says. “That way it’s already in the back of the loan officer’s mind, and they can start preparing or gathering the right information.”

A little preparation can also greatly speed up the loan process. Gerrits recommends giving your loan officer about one month of lead time before funds are needed, along with complete financial documents.

“At the end of the year, we’ll see some borrowers who need to borrow money to do some prepaids to help their tax situation,” he says. “It’s hard to turn things around because a lot of folks are coming in at the last hour. If you give them a month’s lead time with all of the information pertinent, all the financials and balance sheets, that will just help expedite it.”

Looking further ahead, Gerrits encourages producers to think generationally and begin planning for succession well before retirement becomes imminent.

“It is never too early to start a succession plan,” he says.

Early planning gives the next generation clarity about future roles and expectations, helping them prepare financially and personally for the responsibilities that lie ahead.

Own Your Numbers
Ultimately, Gerrits believes successful borrowers take responsibility for knowing and understanding every aspect of their financial position.

“Know your numbers first,” he says. “Don’t just rely on your loan officer to tell you how you are doing.”

Throughout the loan process, preparation and transparency go a long way. Clear financials, attention to detail and regular communication help your lender understand your goals, while on-farm conversations and honest discussions build trust. Being organized, consistent and informed does more than streamline an application, it helps you make better decisions, catch issues early and keep the operation moving in the right direction.

Unlock Financial Success: Working with Your Ag Lender

Wed, 10 Sep 2025 14:50:10 GMT

The latest USDA farm cash receipts forecast has corn, soybean and wheat prices driving a 2.5% decrease for 2025 crop receipts compared to 2024, and the agency’s forecast shows an 11.2% increase for total animal/animal product receipts. Pair that with production expense increases calculated at 2.6% for crops and 21.5% for livestock. Farmers are financially pinched.

“Good decision-making, good risk management are always differentiators in any market, but they’re especially true today,” says Jase Wagner, president and CEO of Compeer Financial.

This fall into the winter, farmers will meet with their lenders to discuss operating loans, cash flow and capital expenditures. And the risks feel higher than ever. While greater transparency may reveal vulnerabilities in the business, it is the No. 1 thing lenders say will help them get farmers through what could be a very tough series of years.
“Really be open and honest with your lender,” Wagner says. “Being honest with yourself about where you are and what your abilities to execute over the next couple years will be really important as things get tighter.”

To prepare yourself for working with your ag lender, Kelly Hardy and Jim Halvorsen, with CLA, share these tips from the accountancy perspective:

1. Build a team of outsiders that work together. That should include:

Banker
Accountant
Attorney
Grain Buyer
Marketing Advisor
Crop Insurance Agent
Mentors
Successors

2. Be proactive in who you work with.

“Work with lenders who understand farming,” Halvorsen says. “You should expect to give them information about [the] farm, answer their questions and have them understand your goals.”

As for how often to meet with your lender, Halvorsen says it’s a best practice to meet with your financial partners once a quarter.

3. Know the type of information needed to make the best decisions for your business.

“If your banker only wants your tax return, it’s a red light,” Hardy says. “You need to provide a financial statement.”

She says tax returns are not a measure of the business’s profitability or assets.
“Tax returns don’t say how much grain you have in the bin,” she says.

Also, she advocates for the financial discussions to be centered on investments in the business — not taxes.

4. Transparency is the quickest way to establish a long-term, successful strategy despite any short-term challenges.

“No lender wants to take your farm. They are there to help you,” Hardy says.

She says having honest discussions with the full set of information is what reveals opportunities, even if the discussions may show weakness in the current business.
With lower commodity prices, Hardy says the drop in income will be evident on balance sheets this year. Having a true state of the business discussion will also unveil a strategy for how to manage the current farm economy.

The Best Time to Start Your Retirement Plan

Fri, 06 Jun 2025 21:00:31 GMT

Farmers historically have struggled to invest money in anything other than their farm operation. However, by investing in retirement plans including an IRA, a farmer can more easily save up for retirement and make the transfer to the next generation much easier.

The power of compounding is the financial seventh wonder of the world. Based on your annual investment return, you can determine how quickly your investment will double by dividing it into 72. For example, if you average 3% on your money, it will take 24 years to double. However, if you can earn 8%, then it only takes nine years.

The younger you start to invest, even small sums, the more money you will have at retirement. Let’s compare the results of placing $10,000 into a retirement account at either age 20 or 40.

The farmer who does this at age 40 and then pulls the money out at age 70 will have $100,627. However, the farmer who starts at age 20 will have $469,016, and if they can earn 10%, will have $1,173,909.

The cost of maintaining a solo 401k plan is very inexpensive and married couples can set aside at least $14,000 into an IRA each year. The fees on those accounts are minimal and you can make sure to invest in low-cost ETFs or mutual funds. High-cost funds could quickly reduce your returns substantially.

Most of the earnings will result in the last 10 years, so the sooner you get started, the more funds you will accumulate.

Risk Protection Benefits
There’s another big reason to make this investment. Funds in a retirement plan are fully exempt from bankruptcy, and we all know farming can be a very risky business. The full exemption does not apply to IRAs, but the amount that is exempt is fairly large.

This amount gets updated every three years. On April 1, 2025, the exemption amount was raised from $1,512,350 to $1,711.975 through March 31, 2028.

Most farmers have IRAs less than this amount, so it’s likely they will have a full exclusion if bankruptcy was to occur. Amounts rolled over from a 401k plan or other retirement account, including earnings associated on that account, are fully exempt.

In some states, IRAs are fully exempt or at least partially exempt.

The bottom line is to invest in an IRA or retirement plan. I hope you never need the protection, but it is a good insurance policy.

Advice From a Rural Banker: How to Navigate Today’s Uncertainty

Thu, 15 May 2025 14:02:37 GMT

What is top of farmers’ minds as they manage their business today? John Steeves, head of rural banking for Rabobank, says in his recent on-farm visits, he sums it up as three things:

Cost structure: continued high inputs, particularly equipment
Availability of quality labor
Uncertainty in the market: access to foreign markets, tariffs and cross border supply chains

“Uncertainty is the only certainty,” he says. “In times of volatility, I always say cash is king. I would encourage farmers and ranchers to kind of focus on the cash position or access to cash and liquidity, whether that be liquidity on operating lines, or cash on the side. Whatever your case might be, it’s about how to help absorb potential unforeseen shocks and potential short term losses if they occur.”

Steeves points to Rabo analysis showing for the foreseeable future a 75% chance corn will remain under $5 and a 75% chance soybeans will remain under $11.

“This is creating challenges for our farming clients, for sure,” Steeves says. “This year more than ever, farmers should put a particular focus on cash flow and liquidity, set up for long term success and set up for any unforeseen shocks.”

When looking at the general farm lending landscape, Steeves says farm businesses are ready to face those challenges.

“Farmers and ranchers are good at this—have a plan, plan to manage your business, and hedge your risk,” he says. “I classify it as still good liquidity in the market, which is great for farmers, whether it be on the G&O side, cattle and other animal proteins. I think there’s still good access to capital, which is great. At the same time, we have heard rumblings in the market that some of our some lenders are pulling back.”

Steeves says now is a good time for farmers to engage with their banker and financial relationships.

“Review your plan with your financial partner, and actively engage in discussions about what the opportunities are,” he says.

Steeves shares more on the Top Producer Podcast with Paul Neiffer:

Boost Your Current Farm Accounting Software With This Tech

Wed, 26 Feb 2025 19:04:53 GMT

New Zealand-based ag tech company Figured wants to build upon your current farm accounting software to help you make real-time decisions.

“We want to bring the production data and information, like livestock being sold or bushels being harvested, and marry it with the financial information you already already have,” says Mitchell Parks, Figured U.S. account executive. “It creates color and insight into what’s happening on the farm so that you can make those smarter financial business decisions.”

During an episode of the Top Producer podcast, Parks and his colleague Erin Arick joined host Paul Neiffer to share how farmers can get an enhanced look at their finances through the Figured software.

Neiffer uses this analogy to describe the technology.

“With accounting software, like Xero or Quickbooks, you’re looking in the rearview mirror at historical data. Figured is designed to allow you to look through the windshield, so to speak. You’re able to use it as a management tool,” he explains.

Some of the ways you can use the software as a management tool include:

To create farm budgets
To calculate break-evens and profitability
To model long-term “what if” scenarios using different options

“You’re going to be looking at all the transactions that come through the accounting platform, and you can create profit centers to bucket those transactions where they happened on the farm. So, you can track profitability for different aspects,” Arick says.

It’s important to note Figured must be used with Quickbooks Online, not the desktop version. Other integrations are likely on the horizon as well.

“We are exploring integrations with a couple of the major producer tracking tools,” Parks says. “I’m sure we’ve all had instances where there’s been a spreadsheet with a bit of data written, and then we’ve emailed it across a couple of people, and by the time it’s come back to you, it’s not the same spreadsheet. How can we remove that from the equation? I think we can do that really well and know that we can trust that data and trust that everyone is on the same page when it comes to those financials.”

If you want to test out Figured without adding all of your farm information, the company has a U.S. demo farm that can be accessed on its website using a free login.

“It’s like a sandbox,” Arick says. “You can mess around in there to see what the outputs are and create trackers. It’s just not connected to a live QuickBooks Online file, but if you would wish to do that, you can create a trial and connect it to your QuickBooks Online or Xero file.”

Catch up on episodes of the Top Producer podcast

Farm Business Resolutions for 2025

Thu, 26 Dec 2024 17:13:52 GMT

We asked past Top Producer award winners to share what’s new for them in the coming year. Here are some of the responses they shared with us:

(Top Producer)

"2025 is the year of artificial intelligence (AI) for Carroll Farms. It’s a top-down push for training and implementation. The ability of AI to automate processes, write contracts, prepare reports, perform HR functions, and analyze data is stunning. I think the world could look dramatically different in five years as AI moves into all areas of our lives and businesses. “
~John Carroll

“This year is about going back to the basics like when I first started farming in 2015 in the last margin squeeze. I’m giving my personal family living budget a solid look, diving headfirst into the farm cash flow, developing a marketing strategy, and sticking to it. We’re replacing the tropical vacation with a staycation to do projects around the homeplace to eliminate some repair and maintenance bills. And for the fitness center I own and operate after all the updates and changes made this summer, I am going to let it operate for a year before any other drastic things are done. The only thing new thing I am trying is adding my significant other to my health insurance policy.”

~Maggie Holub

(Top Producer)

“I have sat down with my last two years of profit/loss (P/L) statement and “scrubbed” every line item. I asked where/what are the reductions or cuts that could be made. Then, I made a list of any/all line items that need to be looked at more in depth. I then am looking into these expenses one by one to understand if it is a merited expense or an “extra” that can be reduced. If it doesn’t provide a defined ROI, it is definitely out!
Cash rents that do not have a flex bonus have been negotiated and (thankfully) reduced appropriately. This is a reflection of a continual dialog year around about their farm and all-encompassing topics like profitability.

We have a continuous dialogue throughout the year with our lender(s) as to how we are doing business. Sharing these things listed above really helps the relationship and their confidence in our operation.”

~Dave Nelson

“I’m trying four new and/or different things for 2025.

Beef: We are moving to a fall calving schedule for our beef cattle. We have typically had spring and early summer calves. We are shifting to this schedule so that we can AI more efficiently and have better management of the schedule.

Labor: We are shifting our mindset on labor. We are re-evaluating how to structure part-time and seasonal workers to be most beneficial to both parties. We want the employee to receive maximum benefit for their time and talents as well as running our operation as efficiently as possible.

Advocacy: I am putting more focus on our media and promotion of agriculture and our farm operation. It has been somewhat of a passive project. I am working on making it deliberate and intentional this year. Promoting agriculture and educating the public is a great passion of mine.

Marketing Diversity: We are exploring new ways to connect with customers locally with the ear corn and freezer beef businesses. We continue to load containers for export and are looking at future marketing diversity in that entity as well.”

~Marcia Ruff

(Top Producer)

“At Splitter Farms, we are looking at 2025 as a reset year and getting back to firm foundations. We’re planning to focus on employee retention and development as well as improved landlord relationships, including consistent communication with them throughout the entire year. We are also scheduling in time for data analysis; we do a great job of data collection and we’d like to make analysis a priority again.”
~Matt and Janna Splitter

Read even more farmer New Years’ resolutions here.

USDA: Family Farms Still Dominate A Majority of U.S. Farms

Tue, 10 Dec 2024 20:38:54 GMT

Here are eight takeaways illustrating the landscape of U.S. farm productivity and financial resources.

Released on Dec. 10, USDA-ERS published its 2024 edition of America’s Farms and Ranches at a Glance . This publication, which pulls from survey data collected at the end of 2023, aims to give a snapshot of the U.S. farm economy.

Takeaway 1: In total, family farms accounted for about 96% of total farms and 83% of total production in 2023.

A big part of the study breaks down different characteristics of farms by type. The first differentiation is between family farms and non-family farms. Per the USDA, a family farm is a farm in which the majority of the business is owned by an operator and/or any individual related by blood, marriage, or adoption, including relatives who do not live in the operator’s household.

Among family farms, farms are divided by farm size measured by gross cash farm income (GCFI).

Most U.S. farms (86%) are small family farms (GCFI less than $350,000); these farms operate on 41% of U.S. agricultural land and account for 17% of the total value of production
Midsize family farms (GCFI between $350,000 and $999,999) accounted for 18% of agricultural land and 18% of the total value of production.
Large-scale family farms (GCFI of $1,000,000 or more) accounted for 48% of the total value of production and 31% of agricultural land in 2023.
GCFI includes sales of crops and livestock, government payments, other farm related income, and fees received by operators from production contracts.

Takeaway 2: Large-scale family farms dominate the production of many selected commodities

Large-scale family farms accounted for the majority of the value of cash grains and soybeans (52%), cotton (71%), dairy (77%), and specialty crops (59%) production
Small family farms produced 45% of the value of hay and 46% of the total value of U.S. poultry and egg output
22% of the value of beef production occurred on small family farms, while 39% occurred on large-scale family farms. Small family farms often have cow-calf operations, while large-scale family farms are more likely to operate feedlots
Compared with 2022, nonfamily farms comprised a larger share of the value of production, with their value of beef production increasing from 11% in 2022 to 26% in 2023.

Takeaway 3: Small family farms and non-family farms are potentially more financially vulnerable.

The data in this report was collected when net cash income was above the 10-year average. USDA measures financial performance by operating profit margin (OPM), with a noted high-risk zone of less than 10 OPM.

In 2023, between 52 and 85% of small family farms, depending on the farm type (retirement, off-farm occupation, low sales, moderate sales), had an OPM in the high-risk zone.
Around 53% of nonfamily farms had an OPM in the high-risk zone.

Takeaway 4: Use of credit and loans is an important resource for all farms.

The share of farms (28%) using credit in 2023 was lower than the previous 10-year average of 31%.
Within every type of farm, on average, 80% or more of debt came from traditional lending sources, including the Farm Credit System, USDA, FSA, and commercial banks, compared with trade credit or other sources.

Takeaway 5: Less than one-quarter of farms use government payment programs.

The percentage of farms receiving government payments ranged from 21% for small family farms to 44% for midsize and large family farms.
Small family farms received 76% of all payments from USDA’s Conservation Reserve Program (CRP)
41% of all USDA, Natural Resources Conservation Service (NRCS) working lands program payments were received by small family farms, which includes Environmental Quality Incentives Program (EQIP) and Conservation Stewardship Program (CSP).
Midsized and large-scale family farms accounted for 66% of the total value of production and received 71% of countercyclical-type payments, which include Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) and 61% of all other payments, which include Dairy Margin Coverage, agricultural disaster, and ad-hoc payments

Takeaway 6: 16% of farms participated in federal crop insurance programs. This is a slight increase from 14% in 2022.

66% of farms producing row crops (cotton, corn, soybeans, wheat, peanuts, rice, or sorghum) purchased Federal crop insurance.
17% of farms growing specialty crops, such as fruits, vegetables, and nursery crops, and 12% of farms producing livestock purchased Federal crop insurance.

Takeaway 7: Many farms rely on off-farm income.

Most (85%) of all U.S. farm households earned the majority of their total household income from off-farm sources
52% of family farm households had negative farming income
Overall, 42% of farm households have income below the US median in 2023.

Takeaway 8: New insights on unpriced stored grain highlight the risk management tool.

For the first time, the study asked about unpriced stored corn, soybeans and wheat.

The largest volumes were in post-harvest months.
The average share of total stocks as of December 2023 that was unpriced was 38.6% for corn, 32.9% for soybeans, and 20.4% for wheat
Unpriced off farm storage is less commonly used

Click here for the full report from USDA-ERS

Strategies for 2025: Balance Family, Finances and Farming

Sat, 07 Dec 2024 13:30:00 GMT

With three busy kids, my wife and I are constantly on the go. Between practices, work and school events there are plenty of nights when dinner at home is a challenge. Three years ago, we often found ourselves frequenting a local restaurant after a basketball game or grabbing food to go in between practices. Today, it happens a lot less. Our reason is, like so many others, the rise in food costs require we be better stewards of our finances.

As farmers look out into 2025, the last data from USDA’s Economic Research Service projects input costs to remain high. For corn, that means $871 per acre, and for soybeans, it’s $625 per acre. While trending lower, both remain well above the inflation kick-start of 2021. The bottom line is that when wages, or in this case, commodity prices don’t go up or remain somewhat elevated, and costs remain high, it’s hard to make the numbers work.

A Business Decision

Which is why, when we talk about sustainability, it starts as a business decision and making sure the farm can remain financially viable. Then it’s time to look at systems, strategies and technology. In the current environment, ideas must come with neutral to lower costs or real ROI. Conservation and sustainability measures are no different nor are they immune to the financial realities of today’s markets. That said, taking the long view on soil health, water and protecting the farm’s most essential resources is also vital to longevity.

Balancing Both

As you wrap up 2024 and take on the unknowns of 2025, I hope your operation finds a pathway toward sustainable success. The road might look different this year as you traverse the challenges ahead. This might be the year to do something different. Explore new ways to buy, hire or work. Evaluate the product mix, brand loyalties or selling points. If ever there was a year to look at the status quo with fresh eyes, 2025 could be the opportunity. As you embrace family and friends this holiday season, may the gift of farming continue to bless your home for generations to come.

No one knows better than you that the future of your farm depends on balancing practices and profits that sustain your land, resources and family . The stakes are evolving based on weather patterns, technology, market demand and more. What actions are you taking to remain resilient?

Farm Lending Update: Volume Increases For Larger Farm Operating Loans

Thu, 31 Oct 2024 16:53:10 GMT

According to the Federal Reserve Bank of Kansas City, the volume of new operating loans at commercial banks increased over 40% from last year. This has been the fastest volume increase pace since 2017. Also, for the first time in at least 20 years, the volume is greater for loans >$1 million than loans <$1 million.

According to the Survey of Terms of Lending to Farmers, larger loans and loans originated at small or mid-sized lenders drove the increase in short-term financing for the past two quarters.

Of note, loan maturities have declined (most notable for the larger loans) whereas earlier this year maturities were on the rise.

The average interest rates on all farm loans is slightly above 8% in Q3 2024.

Read more here from Cortney Cowley and Ty Kreitman

Avoiding the Pitfalls of Selling Sustainable Beef

Tue, 27 Aug 2024 18:16:43 GMT

Texas-based Burgundy Pasture Beef markets its products as, “100% Grass Fed. Sustainable. Wholesome.” but partner Jon Taggart says that’s a story that he can only sell one time for each customer.

“They’ll buy it once, but they won’t buy it twice if their experience with us is bad,” he says.

That story hasn’t always been the case for Taggart or for Burgundy Pasture Beef. Since they started in the mid-90’s, he says he’s “done it all in the beef industry.”

When the rising cost of inputs started seriously eating into his margins and Taggart says he realized they were “going broke spending money,” he knew a change was needed.

Their 100% grassfed operation now has beef coming off consistently throughout the year, being processed in their own USDA-inspected facility and then sold exclusively in retail stores in Grandview and neighboring metropolitan Ft. Worth and Dallas.

“There’s a market,” he says. “Obviously we’ve been successful for 25 years now.”

Recently, Taggart attended the Trust In Beef Sustainable Ranchers Tour stop in G-C Ranch to share insights from his three-decade career. Both through his lived experience and through his custom processing business, which caters to cottage producers, he has seen mistakes that can make or break cattle producers when growing, marketing, processing and selling sustainable beef.

Here are Taggart’s top tips for avoiding those pitfalls on your ranch:

Don’t Waste Your Genetics

“Once that animal leaves the ranch, your fixed costs are pretty much the same for trucking, processing, packaging and marketing,” Taggart says. “You’ve got to get as many pounds out of it as you can get.”

The money that’s spent on cattle genetics can be wasted if the cattle aren’t finished for their frame size when they leave the ranch, says Taggart.

“If you want the marbling and a decent grade, you have to give them time to take advantage of their genetics and you have to give them the resources to do it,” he adds.

Plan for the Whole Animal

According to Taggart, the pitfall that he sees most often is producers who don’t plan to sell the whole carcass.

“Somebody gets excited because a restaurant wants to buy steaks, but that’s only 15, maybe 20% of the carcass,” he says. “Then they’ll look behind them and they’ll have a pile of ground beef the size of a truck to deal with.”

First, Figure Out Your Market

Similarly, Taggart says, many producers don’t consider consumers in the equation when determining how to sell and package beef products.

“Going in, that’s the thing they need to figure out first,” he says. “It depends on the volume you want to do and your goals, and because of that, there are a lot of people selling halves, quarters, whole cows.”

It’s a very small market, considering the cost of beef these days— it’s a big investment for a consumer to fill a freezer, Taggart continues.

“Also, the consumer figures out that when they buy that whole animal, they get a lot of stuff they really don’t want,” he adds. “If they don’t have a good experience with it, they are gone forever from that market.”

Supply Starts On-the-Ground

“Since we built our processing facility in 2004, we harvest cattle 52 weeks out of the year. We only missed one week during the freeze of 2021,” he says.

What allows Burgundy Pasture Beef to consistently produce high-quality beef? Taggart says it’s his grass.

“When you look at finishing cattle on grass, I am a huge proponent of diverse grass mixtures,” he says. “I can’t stand a monoculture.

“In order to have that constant supply, you’ve got to have a level of nutrition in your pastures that will allow you to do that,” he adds.

Taggart recommends a mix of cool season and warm season legumes, annuals and perennials.

“In a monoculture, it’s going to reach its peak of nutrition one time a year all at the same time,” he says. “You can’t maintain that gain on cattle all through the year to have the supply constant.”

Learn more about Burgundy Pasture Beef and make your plans today to attend the 2024 Trust In Beef Sustainable Ranchers Tour for more insights into how to build a more sustainable beef supply chain.

Farmers Should Budget for Far Lower Returns Than They Saw From 2014 to 2019, Says New Farmdoc Daily Report

Mon, 05 Aug 2024 20:59:52 GMT

Longer term prices continue to look less optimistic for farmers, and farmdoc daily economists suggest farmers be prudent in starting to budget for much lower prices.

In a farmdoc daily report titled, “Increasing Pessimism About 2024 and 2025 Corn and Soybean Returns,” ag economists say that current levels for future contracts suggest that for budgeting purposes, prices for 2024 crops should be $4 per bushel for corn and $10.50 per bushel for soybeans.

CME Prices

(farmdocDAILY)

“Those prices would result in low returns in 2024, far lower than the last low-price period from 2014 to 2019,” the economists stated in the farmdoc report. “Much higher costs cause lower 2024 returns.”

The economists say those budget forecasts could change due to unforeseen events, but say it seems prudent to plan for much lower prices.

U of I report

(farmdocDaily, University of Illinois)

“The current December futures price for corn is consistent with cash prices below $4.00 at harvest, roughly $3.80 per bushel. Given usual price patterns, one expects cash prices to increase over the marketing season, and an average cash price of $4.00 per bushel for 2024 production seems reasonable,” the economists state in the latest report.

The report says futures markets are currently suggesting roughly similar prices for 2025 for corn. With the December 2025 contract trading near $4.60, economists say that indicates a cash corn prices at harvest in 2025 that could be in the low $4.30 range.

For soybeans, economists say it’s a similar story.

“The 2024 projected price for soybeans is $11.55 per bushel, well below projected prices in 2022 ($14.33) and 2023 ($13.76),” says the report. “November futures prices have fallen since February, now trading near $10.20 per bushel. Cash price at harvest below $10 per bushel are likely, with an overall 2024 MYA price of $10.50 being an appropriate projection.”

Economists say current futures prices suggest the trend of lower prices will continue into 2025.

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