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Extension > Local Extension Offices > Meeker > County Agriculture Educator > Articles > Keep a Close Eye on your Farm Profitability

Keep a Close Eye on your Farm Profitability

Source: Karen Johnson, University of Minnesota Extension

When I talk with local farmers, bankers and FBM instructors, the first thing that gets brought up is how tight farm finances are. The current farming economy is creating difficult conversations. However, when it comes to farming businesses these difficult conversations are the most important conversations to have. Now is the time to be proactive and not bury our heads in the sand.

Earlier this week, I received the opportunity to attend the 2017 Farm Management Profitability Conference in Lamberton. Throughout this conference, the one theme that stuck with me was that there are no silver bullets to change the way our farm balance sheets look. We need to focus on small changes that make a difference in our bottom line. 

Throughout our farm finances, there are a number of places to look to make these small changes. The first of which is the items that we are spending money on. Evaluate your traditional expenses. What items are working for you? Which items are not? When it comes to producing crops, knowing and understanding each and every one of your fields is vital. Perhaps a soil test would be helpful to give you a better idea of inputs that are needed. Take time to identify the fields that make the most sense to spend additional money versus other lower quality fields. 

How about your income? One way to help manage your potential income is by having a proactive, not reactive grain marketing plan. Edward Usset, Grain Marketing Economist with the University of Minnesota, indicated that “Great marketing is not finding the high price. It’s finding an extra 10-20 cents per bushel with a solid plan that avoids mistakes”.  A basic written marketing plan with prices and dates can be very helpful to get crops sold during the ideal time of the year. Understanding the historic runs in the markets is also beneficial to creating a successful marketing plan.  

The final thing to keep in mind is that there is lots of information and resources available to help manage your farm finances. We are fortunate in MN to have access to the FINBIN database at www.finbin.umn.edu to view farm financial and production benchmark information. Also available to help are a number of outstanding bankers, FBM instructors, and Extension educators. Don’t be afraid to ask for help!

Unfortunately, there is no silver bullet. However, there are ways to manage your income and expenses to help your bottom line. For more information, please visit the University of Minnesota Extension – Agriculture Business Management website at www.extension.umn.edu/agriculture/business.

Contacts

Karen Johnson
Extension Educator, Ag Production Systems
(320) 484-4303
ande9495@umn.edu
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