Editor’s note: Next-gen Agribusiness is a new column from Dakota Farmer that focuses on financial and management advice for next-gen and beginning farmers.

by Hollie Rudy

Farming isn’t the easiest career to break into, and most young growers aren’t in a financial position to dive in headfirst. Finding land and capital can be a challenge, and growers need to take on a heavy debt load to build an economically viable operation.

Cash can also be hard to come by in the early stages of your career, so it’s no surprise that many young growers rely on income from off-farm jobs to help with cash flow needs.

Young growers often transition into full-time farming slowly to keep a steady, reliable flow of income from off-farm work while building their operation. If you go this route, tracking indicators of financial stability will help determine when you’re in a good position to make the leap to full-time farming. Here are a few tips to be less dependent on off-farm income:

Know basics of Farm Finance 101. Many growers farm because they want to carry on a family legacy and have a genuine passion for working the land. You need this, but at the end of the day, a career in farming also requires an understanding of the business and what it takes to be profitable. That starts with your business plan, setting realistic goals and developing a vision for the success of your operation.

With the big picture defined, you can start to puzzle together a financial plan to meet your goals. Review your income statement and balance sheet so you have a sense of your breakeven point, and the levers to pull to make a dollar on each acre. If you don’t have a strong background in accounting, involve trusted partners with business acumen to help you make informed decisions.

Get involved early on. If you are, or aspire to be in a position to take over a family operation, push to be involved in the business side of the operation early on so you have an idea of your farm’s financial situation. Knowing your cash flow needs and debts tied to the business will help determine at what point your farm is financially viable, and consequently, when you can focus 100% of your energy on your farm as off-farm income becomes unnecessary.

Solve credit conundrum. Costs are high in farming. Young growers may find themselves in a tough position starting out because they have to make several big-ticket purchases out of the gate.

Most likely, you’ll need access to financial resources, which may require a solid credit history. Young growers need to pay attention to their credit and focus on the building blocks of a strong credit report to improve access to capital.

Lenders look at the “five C’s of credit” when determining credit worthiness:

Even if you don’t have a credit history, you can still play some strategic cards to improve your credit score:

To make farming a full-time career in 2024, you need smart money management skills. We’re in a bear market, which is a new territory for younger growers. Do your research and build a strong understanding of the financial and economic considerations required to be successful.

Rudy is a territory manager with Nutrien Financial. She provides financing expertise to growers throughout Minnesota and the Dakotas to increase their buying power and maximize every opportunity for success. Learn more at nutrienfinancial.com.