By Jordan Howe

Growers across the U.S. and beyond are coming off a tough 2024 season, and they aren’t bringing a lot of optimism into 2025. Farm stress is high, and sentiment is low. Some growers still have financial stability after several years of decent margins before 2024, but it’s not a great situation for many.

In November, the Senate Ag Committee reported that as many as 1 in 5 farmers are financially at risk. The economic outlook is particularly worrisome for young growers, who are heavily leveraged and likely lack strong cash reserves to fall back on.

More so than in past years, growers need to be extremely calculated when it comes to managing their bottom line, assuming new financial risks and understanding their overall financial position, including the levers they can pull to improve profitability.

2025 will be a year to pay attention to these critical areas of farm finances:

Budgeting and establishing budget certainty

Managing razor-thin margins in 2024, growers do not have a lot of financial flexibility to carry into 2025. Their focus should be on budget efficiency, doing more with less and being judicious with every purchase, including crop inputs.

Look for cost savings and be prudent with your budget, but that doesn't mean you have to cut corners or go without products that affect the health and potential of your crop. Work with your crop adviser to confirm that you are leveraging your budget effectively and accessing critical products without overspending.

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Another area that can affect farm budgets is interest expense. Economists are predicting that 2025 will bring a declining rate environment. As rates continue to fall, growers may find new appeal in variable-rate financing. However, outside of major economic dislocations, it usually takes a couple of years for rates to go down to levels we were used to before 2022.

That means there still is value in looking for low, fixed-rate options this year to help create certainty for the current budgeting period.

It's also a good time of the year to pull back and think about the big picture. Growers who banked savings when market conditions were more favorable may find it to be an opportunistic time to invest in machinery or other upgrades that offer return on investment benefits.

You also can explore ideas to diversify your farm’s revenue stream without creating new expenses. For example, farm tourism programs are a popular way to bring in additional revenue, especially during harvest season.

After you’ve gone through your budget and confirmed all essential expenses, take another look at the revenue side of your operation and think about ways you can creatively increase revenue.

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Don’t overlook cash-flow considerations

There is no question about it: 2025 is a year you're going to need cash, and the landscape for farm lending will challenge farmers to source capital. Lenders are going to take a more conservative approach, thanks in part to projections for diminished farm income, weak profit margins and an overall increase in lending activity.

Young growers who have historically relied upon an operating line to cash flow their operation will need to consider other options to source capital this year.

One solution to improve your cash flow is to have a clear picture of your costs going into the growing season and to research a variety of payment options, including a blended strategy that uses cash, prepay and financing.

Using a combination of different sources of capital is an easy way to proactively manage your cash flow and align your financial plan with your crop plan. Input financing also can help maximize your cash flow. Look at financing options that complement your operating line of credit and enable you to preserve that capital for other expenses.

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Work with trusted experts who can help you identify the best programs for your specific operation, with payment due dates timed to your harvest schedule. When margins are tight, this is a smart financial strategy that can help cash flow your operation throughout the entire season.

Create a roadmap for financial success

Success this year is going to look different than it has for the last several seasons. We have to embrace a new mindset — the days of $5 or $6 corn, for example, are in the rearview mirror. This means establishing new goals for your operation, which are likely pretty different than they have been.

It’s also important to remember that we have a long history in the ag industry of market ebbs and flows. The downturn won’t last forever.

Building your financial planning acumen and muscle memory now will put you in a better position to take advantage of growth opportunities when we see commodity prices rebound and the market inevitably starts to swing up again.

Jordan Howe is an area manager with Nutrien Financial and oversees operations across the Corn Belt, Western U.S. and Canada. He provides leadership and innovative solutions to help growers increase their buying power and maximize every opportunity for success. Learn more at NutrienAgSolutions.com.