Considering all the factors affecting the economy, there has not been such a time in economic history as this. “We believe 2023 may present more risk and more volatility,” Jim Knuth, Senior Vice President of business development at Farm Credit Services of America warns. He continues to express that producers should expect to experience tight financial times as the gap between input costs and prices continue to worsen.
Planning for safety
Producers should consider cost structure, maintaining sufficient working capital, and not prepaying for low-interest debt this coming season.
In planning for your farm, consider your operation as a whole to understand the cost and profit needed to break even and plan for crop insurance. Knuth encourages producers to meet with their respected broker or marketing services to plan for profitable prices and commodities.
Here are some financial tips Knuth asks farmers and producers to consider heading into the next financial year:
- Cash is king. Preserve your working capital as it is your risk-bearing ability for the short term.
- Maintain low-interest debt. It is unwise to pay off loans now as new debt will come at a higher expense.
- Be mindful of the cost structure. Keep in mind how taking on new debt will affect your operation.
- Understand your costs and break even. High-margin environments will not last forever and are expected to be different next year.
- Understand and strategize your financial situation holistically. Look at farming or equipment decisions only after gauging your holistic financial position.
- Consider risk management tools and organize a risk management plan that works best for your operation.
Crop decisions
According to Tryston Beyrer, crop nutrition lead for western North America at Mosaic, November is probably your final opportunity to collect soil samples before the winter freeze.
Beyrer asserts that knowing how changeable their soils are will be helpful this year in helping to make site-specific judgments. Collecting samples and ensuring that macro and micronutrients are present where necessary is one-way farmers may save money. Growers should consider several factors, including the pH of the soil and the concentrations of nitrogen, phosphorus, potassium, sulfur, zinc, manganese, and boron.
Growers should order seeds as soon as possible and study the soil’s nutrition. The sooner the seeds are selected for the upcoming planting season, the more likely they receive the seed, treatment, and trait in that genetic package.
According to Beyrer, this is also a good opportunity to analyze harvest data and consult with an agronomic about how to make the most of your acres. Additionally, he advises farmers to secure their fertilizer supply now and benefit from the sales that suppliers frequently run around this time of year.
References:Walter, C. (2022) Prepare for the pinch of 2023, Successful Farming. Successful Farming. Available at: https://www.agriculture.com/farm-management/business-planning/prepare-for-the-pinch-of-2023 (Accessed: November 14, 2022).