There are a lot of articles being written about surviving this agriculture economy ; they have a lot of merit , and , for the most part , are telling you the same thing . So , here is my take on the subject . Farms have suffered reduced working
Farm Horizons • Feb . 6 , 2017 • Page 14
Will you survive or thrive in 2017 ?
����� ������� � ������� �� ����� ��������
Myron Oftedahl Farm Business Management Instructor , South Central College
��� ������� ������ �� ����� ���� ����� capital for the last three years , primarily due to lower grain prices .
Working capital is simply current assets minus current liabilities , so if you have more annual loan payments and operating loan payments than you have inventory , you are using working capital . The farm can survive , but keeping the bills current will become very challenging .
This brings me to the first challenge to survive or thrive . Know your numbers , enterprise budgets , cash flows , whole farm and enterprise analysis , tax returns , etc . You need to understand how one item impacts the whole . You need to know your actual and anticipated cost of production , so that you can market your crop or product profitably . In this current market , you need to be pricing both the grain in the bin and some of the anticipated new crop . You need to be prepared to make quick decisions concerning these marketings , and the easiest way is to have a marketing plan .
A marketing plan that is written removes the emotion , because you have taken the time to determine what your cost of producing that bushel is , and you have developed a plan using that information . Therefore , when you see the price goals that you have set , you can easily make a sell decision because you have already done the analysis .
The key is to know your cost of production and then set profitable sales goals .
Ed Usset jokes about grain bins being hope chests , wherein you put grain in the fall and hope that the price goes up . In fact , the price usually goes up during the year , but I still hear that someone needed to sell grain in September at a loss in order to make room for the new crop . That means that you were either unwilling to make a decision , or that you were more concerned with the tax liability than being profitable .
We need to move away from tax avoidance to profitability decisions . I