First, there was Erwin and Ida. Then Roland and Arlene. Today, it’s Ben and Lisa. 

Ben Riensche intones the names of his ancestors, and adds himself and his wife as he lifts his hand to a photo of the family farm in 1926.  

Riensche says he’s inspired by the visual evidence of that legacy each morning when he walks into the office at Blue Diamond Farming Co. in Iowa. In years like 2024, however, the layers of legacy can weigh down a farmer. 

And he knows he’s not the only one who feels it. And he knows some farms won’t last into another generation. And he knows Blue Diamond can be one that survives. He learned the hard way. 

“I started farming in the ’80s, and it broke me. Really, it broke me. I was shackled by it. I incurred debt for land and trying to get started farming, and it scared me into banking for 10 years,” before returning, Riensche says. 

Even though he came back stronger. Even though he’s now on the family farm. Even though he lived to farm again. He remembers. 

“I continually think the black cloud is going to come over me. These cycles still hit like a ton of bricks,” Riensche says. 

But he also knows using bricks one at a time can build a financial foundation. It’s that basic. 

“If I want a 10% improvement, I’ve got to do it 1% at a time, or maybe half a percent at a time,” says Allan Gray, Land O’Lakes chair in food and agribusiness at Purdue University.  

Related:This isn’t the ‘80s

It’s that simple. And that basic. 

To get back to basics, here are a few tips from Riensche and others to help farmers slog through this historically expected downcycle in the agricultural economy. 

Take one financial year at a time 

Though many economists predict grain prices will be down for more than one year and believe low prices could last two crop cycles or longer, the focus for farmers should be to pencil out each season. 

“I do think 2024 will be the toughest of the years,” says Matt Bennett, an Illinois farmer and co-founder of AgMarket.net. But what I want to urge you to understand is that we cannot burn equity. 2024 can’t carry into 2025.”  

“We’ve got to make good decisions. You’ve got to be analyzing profitability whenever you do anything, whether you’re buying inputs, whatever it might be,” Bennett adds. 

“The sooner we identify what’s going on, I think the better we can try to navigate this moving-forward world,” says ag consultant Matt Bennett. A farmer in Windsor, Ill., he presented at the 2024 Farm Progress Show. Credit: Pam Caraway

Know your costs 

If it doesn’t pencil out, don’t do it. That applies to a crop budget — knowing a farm’s working capital and staying focused on cash flow. 

“This is when a farmer needs cash,” says Steven Johnson, retired farm management specialist at Iowa State University Extension and Outreach. “They need to talk to their lender, work closely with their lender.” 

Johnson recommends that farmers consider revising the scale of their operation and selling off non-earning assets. Additionally, he says, farmers will do well to pay off 2024 operating expenses and term debt, and focus now on realistically writing a plan for marketing in 2025. 

Finally, he expects banks to ask for financial statements earlier than normal and to closely peruse a borrower’s Uniform Commercial Code-1 statement, commonly referred to as a UCC. 

“The farmers that know their costs and manage their finances are golden,” Johnson says. “Everybody wants to loan them money.”  

With a prolonged downturn expected, the smart money is on streamlining costs early. Production costs vary by farm and by field, and plans should, too. 

Which fields return a profit?  

This period in the ag economic cycle is likely not when most farmers will expand. It is a time to look at which land pays. Is the rent set appropriately? Is that potential new ground priced for profit? 

Riensche recently did something he never expected to do. 

“I sold a farm that was not strategic just because I wanted to raise working capital,” Riensche says. “I didn’t have to, but I could. It was a farm far, far away. It didn’t really fit strategically in my operation. It was hard to get to and wasn’t the best producer.” 

He sold it to the family who farmed adjacent to the field. It made sense for that farmer. 

What made sense for Riensche was to put half the cash in the bank to increase his liquid capital and use the other half to buy land closer to his home farm. 

“My dad always said you buy a farm to make money. Whether you farm it or not is incidental,” he says. “In retrospect, yeah, it was a very weird feeling selling the most precious asset — land. But, man, looking back, it was a pretty good decision.” 

Equipment decisions are tricky 

It’s one thing to decide against buying new equipment. It’s another thing to manage a crop with broken-down machines. And it’s altogether a new tax game if you sell a piece of equipment that was already depreciated. 

“Oh, my goodness, new paint burning off an engine smells delicious,” Riensche says. He suggests sharing equipment, or offering custom services to get more use out of equipment. To help drop input costs, a row crop farmer can use corn or services to barter with livestock producers for manure. 

“This is where you form alliances. You form connections,” Riensche says. “I’m afraid not everybody is going to live through this cycle. But we can work together to help each other through.”  

Negotiate with everybody 

Bartering is one way to get needed items without breaking the bank. Shopping for the best deal is another. Leaders on the ag industry side of farming aren’t tone-deaf. 

Pivot Bio recently announced a 30% price cut on Proven 40, a nitrogen seed treatment for corn. The company also offers 0% financing through 2025. All told, that brings the price down to $18 per acre, says Chris Abbott, Pivot Bio chief executive officer. 

“In this environment that’s a difference maker,” Abbott says. “We’ve got to set our farmers up to succeed. … You can’t not plant seed. And you can’t not use fertilizer. We had to attack the buckets of spend that we know every grower has to deal with.” 

Farmers who have financial options can better choose what works best for their operations, says Jordan Howe, Nutrien Financial area manager. 

“We view ourselves as being able to give our growers more flexibility with their capital,” Howe says.  

With a self-financed program, the company is able to offer between 0% and 4% financing. Since initiating its in-house program five years ago, Nutrien Ag Solutions has loaned $2.5 billion to more than 17,000 grower-customers. The company offers terms and due dates that align with a farmer’s cash flow, Howe says. 

The program gives farmers the opportunity to make the best decisions for their operations, he says.  

“When we have a more competitive interest rate, we’re going to save money on interest expense,” he says. “One of the very valuable options is to utilize that money we save on interest expense to buy a premium value-added product that will provide exponential profit. All of a sudden we’re adding ROI.” 

Consider a soil bank withdrawal 

Regardless of the money ledger, a field may have a soil bank that’s flush. Given the commodity prices and profit opportunities in 2021 and 2022, many farmers pushed for high yields and fertilized to support those goals. Going into 2025, a farmer can test those soils to determine what’s really needed to support a 2025 crop that may only bring breakeven prices. 

“You might have to draw some savings out of the bank of soil fertility,” Riensche says. 

Bennett agrees. “I’m not an advocate of robbing a crop,” he says. “But guess what? After ’21 and ’22, our fields should be in really good shape, because most of us applied a lot of fertilizer.” 

Write a marketing plan 

Volatility is the byword in ag commodity markets. The goal is to market at the midpoint. Though you may not reap profit in the peaks, count staying out of the trough as a win. It doesn’t have to be fancy. It certainly doesn’t have to be pretty. 

“I would not get too far out of your marketing base,” Riensche says. “If you have a pattern that works for you in marketing, then stick with it.” 

For corn, Riensche plans a year at a time. For soybeans, he markets in six-month blocks.  

“We have two hemispheres producing soybeans,” he says. “Corn is a North American crop.” 

Insure against revenue 

Revenue insurance products help manage risk and have a role in cash flow considerations. 

“The big kahuna in this canyon is crop insurance,” Johnson says. “And it’s a bigger safety net than it’s ever been because you’re using a revenue-based product — yield times price.” 

In an era of narrow margins and inconsequential reference prices, crop insurance and its complexities may be easy to dismiss. Johnson encourages producers to look closer at the products available. Talk to an insurance adviser now, he says. Don’t wait until March. 

Consider clean-energy income 

Regenerative agriculture products. Carbon programs. Solar farms. They’re easy to debunk but could be a revenue stream. 

“I’m actually talking to a solar company myself,” Bennett says. “I told them ‘no’ three times, and every time they come back with more money. I’m starting to listen just a little, based upon a variety of factors. I don’t begrudge anyone who does a clean-energy project. You probably are never going to come up with the kind of [farm] income that you would with one. 

Riensche is looking to the next generation in his operation to navigate new opportunities in regenerative agriculture. 

“The young people in my operation have shown me there’s real money in this,” he says. “Having a good regenerative strategy is a really good growth strategy for your farm.” 

Ultimately, strategy and forethought wins the season. “This is a good time to sharpen our game,” Riensche says.  

Then he says with a laugh: “And then we’ll have a short crop, prices will go up, and we’ll forget everything we learned.” 

Diversify 

Not with another crop, but with a complementary business venture. 

Johnson suggests farmers “consider non-farm income and alternative sources for revenue, utilizing existing assets.” In other words: How can you make more money using stuff you already own? 

One way is to create a new market for something you already grow. Missouri farmers Matt and Kate Lambert added a corn maze and pumpkin patch to their corn and soybean operation. Income from that agritourism venture now covers their family living expenses.