Winter is too cold and too long. It gets even longer when prices are low and the markets aren’t moving (see “Where’s the volatility?”). You need a few constructive tasks to help you through the next few months. Allow me to make some suggestions.
It’s always healthy to look inwards at your own operation to see if you are as efficient at grain production as you want to be. FINBIN is an incredible source of real farm data from farm management associations across 20 states that shows average financial performance at actual farms. This is your chance to do some benchmarking – comparing the financial performance of your farm operation against the best performers in your area. How do your machinery costs, fertilizer costs and seed costs, etc. match up with your peers? You may find the process to be quite humbling. Stay positive! The point of a benchmarking exercise is to identify your weak spots and specific areas for improvement.
FINBIN is managed by my University of Minnesota colleagues at the Center for Farm Financial Management (CFFM), and access to the website is free. I consider FINBIN to be the most powerful – yet woefully underutilized – self-assessment tool on the web. Use it!
Are you thinking of reshaping your business – taking your farm in a different direction? Maybe the time is right to explore organic production, or the production of a specialty crop. Either way, your partners and/or financial supporters are going to want to see your business plan. AgPlan is a website developed to help you develop a plan. It walks you through the entire process, offering tips that help you develop each section of a plan. AgPlan offers sample plans with links to additional resources for each section of the plan. You can even add access for trusted reviewers to the process.
A smart farmer once told me that he encouraged producers to quit making “commodities” and start making “products.” Products give you more say in distribution and pricing. Good idea, but you are going to need a plan. AgPlan can help. Like FINBIN, AgPlan is managed by CFFM and free of charge.
Does a visit to your banker leave you confused? Why is a current ratio, cash flow statement or debt-to-equity ratio so important? What you need is help in interpreting financial statements and IFSaM is the answer. The acronym may be ugly, but IFSaM offers nearly 50 short videos to help you interpret common financial statements. Again, this is managed by CFFM and free of charge.
Finally, renting land is common practice in agriculture, but few things can be more complicated that a good lease agreement. Ag Lease 101 – created by the North Central Farm Management Extension Committee – helps both land owners and operators learn about alternative lease arrangements. The site features lease publications and samples of written lease agreements for cropland, pastures and buildings. Powerful, timely and – you guessed it – free.
Eventually, volatility and opportunity will return to grain markets. Unfortunately, the “when” is controlled by outside forces. Until then, you have the chance to look inward at things you can control. Get busy!