Breaking Even in a Broken Market for Grain Farmers
The fallen grain prices and stubbornly high input costs have many grain farmers facing a perfect storm. The question on everyone’s mind is: can I break even? While the situation is undoubtedly challenging, it's not insurmountable. With careful planning and strategic adjustments, you can weather this storm and position your farm for long-term success.
Sharpen Your Pencil
The first step is to conduct a thorough financial assessment. This involves a careful review of your break-even point and a close examination of your current financial situation.
Our local experts can help you analyze your financial health and explore flexible financing options that can alleviate cash flow pressures for the next several years. Consider refinancing existing debt, restructuring loan terms or exploring alternative financing products.
In addition to evaluating your financing, take a fresh look at your projections for the year. Estimated sales numbers may need adjusted to align with today’s realities, which may reveal proactive planning needs as we approach fall. And if you haven’t already created a cash flow statement or marketing plan, consider this a great time to get started with these strategic farm financial management tools.
Enhance Your Marketing Strategy
Effective grain marketing is more critical than ever. A grain marketing advisor can provide valuable insights in real-time and support. They can help you develop a marketing plan tailored to your specific needs and assist with making timely decisions.
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Networking with other farmers and professionals may offer different perspectives as well, including your crop insurance agent. Can you leverage your crop insurance policy to forward-market grain?
And while you’re there, talk to your agent to ensure your coverage adequately protects against yield and price declines, as well as potential weather events for added peace of mind.
Manage Input Costs Strategically
Controlling input costs is another key to surviving a challenging market. Develop a plan to purchase inputs at the most favorable prices and streamline your supply chain to establish the most cost-effective purchases, applications and equipment options. Ask your suppliers and contacts how you might reduce expenses and consider buying in bulk or partnering with other farmers to leverage economies of scale.
Evaluate your equipment and asset base to identify needs and potential cost-saving opportunities such as selling underutilized assets to generate cash and reduce overhead. And if you have capital purchase needs coming up, be sure to discuss financing needs with your lender to create a forward-looking plan.
Remember You're Not Alone
While the current market conditions are tough, it's essential to maintain a positive outlook and refrain from making decisions out of frustration or defeat. Concentrate on factors within your control, such as cost management and operational efficiency, with the belief that incremental changes can impact your farming operation in a positive way.
Lastly, track the changes that you make so you can discuss them with a spouse or trusted partner, to help you stay on track and give you encouragement to keep going.
Don't hesitate to reach out to your lender or crop insurance agent for personalized guidance and support. We are here to help you navigate these challenging times. And if you need mental health and wellness resources, check out our free, confidential tools via TELUS Health One.
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Let us help you develop a plan to weather the storm and build a stronger, more resilient farm operation.
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