Good Management Plan Can Add Balance To A Challenging Crop Year

Most farm businesses have felt the squeeze of several challenges since harvest.  A seemingly never ending bitterly cold winter, uncertain commodity markets and the slow movement of grain are often the the topic of conversation at local coffee shops.  The mythical ‘average’ year appears gone forever and we are left with the extremes – too hot, too cold, too wet, too dry, prices up and prices down.  It makes it hard to plan what to do next.  Or does it? 

The solution for me has always been to make a plan, and yes I have a spreadsheet for that.  The management plan needs to account for too hot, too cold, too wet, and too dry.  Simply put, if yields end up lower, or all the acres don’t get seeded, or prices drop unexpectedly, how will those changes affect your bottom line.  If you can sort through all the scenarios and figure out the best way to handle the challenges before the crunch hits, most producers will make better decisions along the way.  You might even be easier to live with if you are not worrying about everything all the time, and that is said looking straight in the mirror.

Every producer wants a silver bullet for profitability, but to stay in the game you have to at least be good in all things.  It's like sports - you have to invest your energy in both offense and defense.

Doing the numbers is the important cornerstone for your management plan defence and no budget exercise is complete without them.  A good place to start is determining your cost of production for your all your farm enterprises. 

Once you get your costs determined you can start making changes to examine the impacts of too hot, too cold, too wet, and too dry to see exactly how your cost per bushel changes and what needs to come out of the budget to make everything work. Try to get every planned and unforeseen expense into the budget – expensive repairs, major purchases and see how things balance.  It is either in the budget and ready to go or not in budget and not going to happen.

Marketing is your best offence.  Achieving top profitability is mainly about yield, but above average marketing can have amazing results.  Some producers will get to $350 per acre revenue with 32 bu yield and $10.93 per bu and some will get there with 42 bu at $8.33 per bu.  That’s what better marketing can do for you.

The old adage is truer today than ever - we don’t plan to fail, we fail to plan. Contact your local farm management specialist for more information.