With a lot of hard work, a little luck and some cooperation from Mother Nature most producers are wrapping up the 2014 crop season.
As the season progressed, it’s natural to look at what worked well in 2014 and what might need some improvement in the future. Even though 2014 and 2015 margins may be at historically low levels, you may be able to tackle some challenges and gain efficiency in some areas that don’t require a large capital investment. Look for small “wins” for your farm in some areas that often get overlooked. This will add up to a great return on investment this fall.
Are you using the information that’s available to your farm to its full potential? The information available to producers about their yields, fertility, drainage and almost every other aspect of crop production has exploded in the last decade. Each farm is unique on how much money they have already invested in information technology.
A small “win” for your farm may be as simple as getting your wireless internet and computer hardware and software working for your farm up to its potential. For some, it may be as complex as having your precision farm equipment work with your accounting, crop insurance, budgeting and marketing plans. Find the solutions and professional help you need to get your information technology working up to its potential.
Are your crop budgets and marketing plans transparent, actionable and accessible? Your budget should wrap up your cost of production for 2014 and get a start on 2015’s income and expenses. Your marketing plan should be easy to communicate to a business partner, spouse, family member or banker. The best marketing plans have triggers for action with target prices and dates. The budget and the marketing plan should be easily accessible to you and the important partners in your business. This can be a very inexpensive “win” for your farm without a large investment.
Is your farm accounting system adding value to your operation? Your investment in the accounting tools and services for your farm can improve almost every aspect of your operation if it is used effectively. Keeping tax records is only a small part of what can be done with effective accounting. Look for these small “wins” with your accounting and services:
- Calculate your financial ratios and benchmark them with other operations.
- Find out if your investment in equipment or land costs are scaled to fit your operation.
- Determine the appropriate tax planning strategies
- Compare your budget to actual results
- Calculate the real cost of your family living
Some of these low cost “wins” for your farm may have the highest return on investment. Be realistic on what you can afford to invest in your business with the low returns from crop production, and start with small “wins” to gain a lot.
AgStar Financial Services is a cooperative owned by client stockholders. As part of the Farm Credit System, AgStar has served 69 counties in Minnesota and northwest Wisconsin with a wide range of financial products and services for more than 95 years.