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6 cost-cutting tactics to consider this year

TAGS: Management
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Farmer survey reveals plenty of savvy strategies that may work on your operation.

Farmers are always looking for clever ways to cut costs and maximize profits, no matter whether grain prices are low or high. While universities, agribusinesses and others usually have plenty of sage advice to offer, farmers often want to hear from their peers as well.

That’s not always easy to do, especially in the middle of a pandemic where conferences and other events have gone virtual, and when even the local coffee shop might be a little less crowded than usual.

So, in the latest Farm Futures grower survey, we asked respondents to answer the question: “What are some lesser-known cost-cutting tactics you deploy on your operation?” Some common themes emerged among the responses. Here are six to consider as you ready yourself for the 2021 growing season.

1. Always be mindful of money. This was a common theme among those surveyed. One way to cut costs is simply being mindful of everyday decisions.

“Watch everything you spend money on and analyze the most economical way to do the things you need to,” noted one Minnesota respondent. “[There are] no ‘easy’ luxury items in the mix of farming anymore.”

Another Minnesota farmer offered this advice: “watch money in, money out.”

“Just watch every cent spent,” added an Alabama respondent.

Related: "Is it time to start working with a marketing adviser?"

2. Trim family living expenses. A couple years ago the University of Illinois reviewed data collected from more than 1,306 farm families enrolled in the Illinois Farm Business Farm Management Association (FBFM). The researchers found that total family living expenses peaked in 2012-13 and has been on a general decline since then, moving to around $6,500 per month by 2018.

The researchers then did something even more interesting – they averaged out total family living expenses for each tillable acre. The 10-year average was $109 per acre. That’s not exactly pocket change, and the farmers Farm Futures surveyed were sensitive to that fact.

“Ironically, living in a COVID-19 world helps that goal because we can't go anywhere for travel and cannot go out to eat like we used to!” quipped one North Dakota farmer.

“We’re just more conservative, funding the needs and cutting back on the wants,” added another Minnesota farmer.

3. DIY. “We do most of the work ourselves,” said one Pennsylvania farmer, a sentiment echoed by many other respondents.

That can be a delicate balance sometimes, added a Missouri farmer: “I do most work myself but not afraid to custom hire instead of buying more equipment.”

You can still get a lot of mileage out of a “do it yourself” attitude, according to one Wisconsin farmer.

“We do almost every job in-house,” he wrote. “Field tiling, spraying, drying, trucking, excavating, and most repairs.”

Related: Supplies tighten as equipment sales increase

4. Machinery matters. Speaking of repairing equipment, several respondents asserted it is often smarter to repair used equipment rather than constantly trade it in for newer models. Preventive maintenance is also a smart way to avoid big-ticket fixes on down the line.

Several respondents also mentioned they share equipment with neighboring operations, a strategy that can reap a lot of economic benefits if done correctly.

5. Time for tech. Multiple farmers noted precision ag and other technological tools help them gain an economic edge in their operations.

“We try to use technology for everything we can,” says one Minnesota farmer.

Several respondents said they make variable rate applications as a way to save money. But VRT benefits go beyond just dollars and sense. When done correctly, the technology can also lead to better crop quality, standability and even improved time management.

Related: This is why we traded for two newer-model tractors

6. Bonus round. Survey respondents didn’t offer a lot of commentary on the following cost-cutting strategies, but they were mentioned over and over again to improve the bottom line:

  • No-till or reduced tillage
  • Cover crops
  • Purchasing inputs online
  • Paying for inputs in cash to get discounts
  • Walking away from less profitable rented ground
  • Working off the farm
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