The ball has dropped, the new calendar is up and the holiday decorations have all been put away. It’s a new year, a fresh start with new opportunities. As you’re crafting your list of personal resolutions, now is a good time to reflect on how you will approach your farm goals for the 2023 year.
Economists are being very cautious looking ahead to the coming year. Even though grain prices were at their highest for farmers in 2022, most are fairly certain those are not going to hold. And if they do, the downstream effects catch-up… a.k.a. the price of everything else.
However, as a farmer, ups and downs in farming economics are old school for you. Been there, done that.
Just as your hands have calluses from hard work, you’ve learned to let the world roll off your back. You can’t control the weather any more than you can control the markets, and, out of necessity, you’ve learned how to prepare for the rainy day. To add to that wealth of knowledge you already have, here are a few tips to think about for a successful 2023.
Manage. Maintain. Mindful.
That’s it. That’s all there is to successful farming (insert a jolly belly laugh here).
All joking aside, if you work on these three things, your production may have a brighter 2023. Just keep in mind that precision is a must—for everything from inputs to capital on hand, now is not the time for “close enough.”
Manage.
- Put technology and an agronomist to use. The advancements in soil testing should leave no one guessing at what and how much inputs to add to their soil. With the price of inputs, this is an area you have to carry out with precision. Find a good agronomist to help with your decision making if you don’t feel you have enough knowledge in this area.
- Preserve and add to your emergency fund. Cash-on-hand and working capital will ensure you have short-term risk handling ability.
- Track every dollar coming in and going out. It may sound tedious, but knowing where each dollar is being spent may bring unnecessary expenses to light. In similar fashion, knowing exactly what is coming in and not guess-timating will help avoid any unseen shortfalls.
Maintain.
- Maintain your farm. Sounds simple enough, but when days are busy and time is limited, it’s easy to put minor issues off. Whether it’s changing a belt on the combine before it wears out or fixing the shingles on your shed before you have water damage, by being proactive with your equipment and facilities, you can avoid larger expenses down the line.
- Hold off on paying off low, fixed rate loans. Unless you don’t foresee needing any new loans in the near future, hang on to that extra cash until interest rates come back down. You also can use the low interest on your taxes.
Mindful.
- Be mindful of purchases. While this goes with tracking a budget. Understanding how new purchases will impact your over operation. Especially if you take on new debt. We all know the saying, “You have to spend money to make money,” but before committing to a large purchase, take time to fully consider the pros and cons.
- Know your costs and breakeven points. While this may be difficult to capture in the upcoming year with global unknowns, do your best to play out every possibility—in Scenario A, here’s what needs to happen; In Scenario B, here’s what needs to happen, and so on.
- Take care of yourself—and we’re not just talking about your waistline. Your greatest asset is you. Whether it’s being mindful of how you lift, jumping off machinery or where you’re placing your hands around moving parts, always be mindful of safety. Farming is a high risk job. According to the US Bureau of Labor, more farmers die each year compared to law enforcement, firefighters and EMS. Your farm and your family need you to stay safe!
While we don’t want to focus on doom and gloom, we do want you to have a profitable 2023. With proper planning, attention to detail and possibly a little more pencil pushing, you can approach this coming year with a strong plan in place—-and strong plans can overcome a weak economy.
