Farm Progress is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Serving: IN

More Ways to Prepare for Tight Financial Times

TAGS: Extension
More Ways to Prepare for Tight Financial Times
Ag economist lays out plan to help avoid getting in tight spots.

Mike Boehlje doesn't see a disaster coming of the proportions of the early 1980s in agriculture. But he does see tight times ahead after several years of excess profits many farmers enjoyed, especially grain farmers. He says those types of profit simply aren't sustainable.

Boehlje is a Purdue University Extension ag economist. Here are four more suggestions he has for tightening the financial ship in the farm operation and sailing through what could be dicey waters ahead.

Weigh purchases: This may be a period to weigh purchases carefully vs. keeping cash reserves on hand to whether tough times, Mike Boehlje says.

First, hold onto some of your financial reserves. If you have cash or liquid assets built up from better years, hold onto some of it, instead of tying it all up in machinery or other investments. That will help you weather tough times.

Boehlje says Warren Buffet, one of the richest men in the world, has been asked many times why he retains large cash reserves when he could invest the money and get a higher return. His answer is always the same, Boehlje says: "So if I want to buy something, if the right deal comes along, I can buy it."

Two, be more conservative in spending money and in buying inputs and assets. Be more aggressive in finding the least cost for inputs to hold costs down.  Some ag dealers claim farmers have already been aggressive, and there's little more margin left to give, but Boehlje anticipates more shopping around for the absolute lowest price on inputs.

Third, slow down your rate of growth. This may not be the time to think about large expansions. Be sure you can handle the operation that you have.

Fourth, invest more carefully in new opportunities or ventures that come along. He's not saying to pull your horns in completely, but he is saying to be careful managing your financial resources and make them count.

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish