Planting season is a time of great hope and optimism on the farm, yet often brings some feelings of anxiety or worry. Every farmer wonders how their year will turn out – that’s a natural question to be asking.

There’s a lot at stake. It can feel like many factors aren’t under our control. The year can begin to seem like a puzzle – one that you don’t yet have all the pieces to, but that already needs to start being put together.

When dealing with the farm’s finances feels like a puzzle, it can help to have good data and numbers to start pulling it all together. Specifically, getting solid projections in place at this point in the growing season – before the crop is in the ground – can help ease some of the pressure and anxiety most farmers experience around the uncertainty of a new crop year.

Winning in 2018

Everyone in farming knows how tight margins have been – and 2018 looks to be similar even though some input costs have lowered a bit. The farmers who will win in 2018 are those who plan carefully and use real-time projections and metrics for their farm as they make decisions, throughout the crop year.

No one can know what will happen in the future – or even in this next year. But having projections in place, doing good scenario planning and updating your projections can go a long way toward managing any uncertainty around how 2018 will turn out for your farm operation.

Look ahead

Your projections need to show different scenarios of how the year could go – I’m talking about forward-looking accrual-based projections here. This needs to go beyond cash flow projections, though those are certainly helpful as well.

Our ag finance advisors are experienced in creating forward-looking projections for our farmer clients. They also help the farmers interpret and then use their financial information in decision-making for their operations.

The best way to use a projection is updating it throughout the crop year – using it as a living, breathing document. You aren’t getting the most out of what your projections can do for you if you put one together at the beginning of the year and then it just sits on your computer or in a desk somewhere and you never look at it again. Same goes for if you put one together for the banker and then don’t use it.

The key is updating your projections throughout the year so you can get the clearest look at what’s going on in your operation. Timely updates can lead to better decision-making on the big choices you have to make at different points throughout the year. It also gives you a better ‘pulse’ on what’s going on in your operation.

That way, you’re not worrying about your situation or waiting until the end of the year to see how everything pans out – you know exactly how the farm is doing and can make decisions accordingly. Our ag finance advisors help clients keep on top of these updates, helping the farmers make decisions with their updated data.

The opinions of the author are not necessarily those of Farm Futures or Farm Progress.