Top 10 Farming for the Future Considerations
01-30-2017 in Events
During periods of low profit margins, it can be easy to get caught up with the current conditions of the market and overlook the preventative measures needed to ensure future profitability on the farm. Business and financial planning experts at the Coalition to Support Iowa’s Farmers recent Farming for the Future Conference highlighted the key risk management strategies farmers can implement to sustain their farms as a business and as a way of life.
1.Set Clear Goals – Whether you’re considering growing the farm or bringing back the next generation, set clear goals as a family to guide your management decisions.
2.Communicate Concerns – Keep the line of communication open between you and your lender, banker, accountant or leasing professional. Managing risk doesn’t prevent it completely, but it will increase the comfort level of your business partners and family members.
3.Develop a Farm Business Plan – A farm business plan is your roadmap for success. Develop a comprehensive blueprint of your farm and review the plan annually to identify your financial goals, market projections and overall performance.
4.Separate Farm Records from Personal Expenses – Good record keeping involves separating your farm records from your personal expenses. Utilize record keeping tools such as QuickBooks or Excel to organize your finances.
5.Document Non-Financial Records – In addition to tracking farm expenses, it’s also important to document non-financial records such as crop production reports, livestock management notes and breakeven points.
6.Manage Your Margins – Saving is essential to seizing new market opportunities when they arise. That’s why it’s important to maintain your liquidity and cash flow in the short term.
7.Invest in Equity Protection – Just as we insure our crops, it’s important to adopt the same mentality for livestock production to preempt uncertainties. Sell futures, buy put options or consider other marketing strategies.
8.Tap into Farm Assistance Programs – A variety of loans and tax credit programs are available to young and beginning farmers. Seek these opportunities to finance your growing operation before graduating to other conventional funding methods.
9.Know the Five C’s of Credit – When meeting with your lender identify your capital, disclose your collateral, consider the conditions, or terms, of your loan, show character, and demonstrate your capacity to succeed.
10. Persevere and Prosper – Where there is economic turbulence, opportunity follows. Identify the strengths and weaknesses of your farm today to prepare for the challenges and opportunities of tomorrow.
CSIF is a non-profit organization that assists livestock farmers who want help interpreting rules and regulations, guidance on good site locations for barns, counsel on enhancing neighbor relations and tips on how to protect the environment at no cost. For more information, call 1-800-932-2436 or visit www.supportfarmers.com.
The Coalition to Support Iowa’s Farmers was created by farmers to help farmers raise livestock responsibly and successfully. It’s a joint partnership involving the Iowa Cattlemen’s Association, Iowa Iorn Growers Association, Iowa Egg Council, Iowa Farm Bureau Federation, Iowa Pork Producers Association, Iowa Soybean Association, Iowa Turkey Federation and Midwest Dairy Association.
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