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.
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.