SALEM, Ohio — As farmers prepare for another year of tight profit margins, they’ll need to carefully consider all of their input and operating costs. During a talk at the 2016 Farm Science Review, OSU Extension Educator Chris Bruynis, of Ross County, gave producers some helpful tips as they prepare for the new year.
“We’re now in that period that we’re going to have to adjust to the new norm, which is lower crop prices, lower milk prices, and lower cattle prices in general,” he said.
Here are some of his suggestions:
- Know your financial situation:
Get a balance sheet together and know your working capital, your farm’s risk capacity, and how much money your family needs to live on.
2. Understand your soil fertility levels:
Know your soil fertility levels and whether something truly needs added — the location and how much. Consider the cost of different corn seeds, but don’t do something that “would really dig into yield.”
3. Diversify your enterprise:
Consider another enterprise, such as switching more corn acres to soybeans. Do a better job of marketing your grain and lock in prices when they’re favorable. Also consider selling any equipment that you no longer use, or that you do not use enough to be productive.
4. Renegotiate rentals:
Negotiate a lower cash rent, but remember, this could be difficult since many property owners have seen increases in their property taxes. If landowners won’t budge, and you can’t be profitable at the current rental rate, you may have to part with some ground.
5. Add additional revenue streams:
Consider taking a part-time job, possibly even ag-related or using your existing farm equipment to offer an additional service.
6. Talk with your lender:
Be up front and honest about your situation. Make sure your lender knows your game plan for survival.
7. Work with your neighbors:
You might be able to share some equipment, such as your sprayer, combine, or truck. But remember to make a good plan that works for all parties, so the equipment will be available for each party when needed.
8. Preserve equity:
While no one likes to think about quitting farming, farmers cannot sustain a continued loss of equity. They need to consider their age and how likely they are to recover their losses. If you’re a young farmer of 35 or so, there might be sufficient time to recoup your losses, but if you’re into your 60s, it might be a good time to consider retirement and rent your land out to another operator. You can ensure yourself a steady flow of rental income, and if grain prices improve later, you can always consider farming your own ground again.
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