Published on Wednesday, 30 November -0001 00:00
The news media is constantly saying that the economy is failing, financial markets are in crisis, commodity prices are falling, stocks are rapidly losing value, and 401k's and retirement plans are declining. What will the future bring? How fast can the economy recover? How will this bad news affect your farm? The best way to find out how your farm can survive these times is to develop good management decisions based on sound cash flow planning, accurate records and market planning. During the recent rains and harvest delays, I took the time to look over our farm's 2008 cash flow to see how well we planned, and to determine what we actually spent to date. We were very careful about making wise choices in spending this year and tried to follow the plan. With much of harvest to go, I was very pleased to learn that we have followed the plan quite well for our 2008 crop year. We were right on with most expenditures and a few thousand ahead of the overall plan. If we don't see any huge changes or major unexpected repairs, the plan should be close to what we predicted and planned. We revisited the marketing plan and breakeven prices for each crop. It looks like there will be opportunity to make some good money for 2008, but things are getting tighter and marketing goals will have to be revised. Knowing your breakeven price for each crop on your farm is the key to managing risk and making sound marketing decisions. As we begin to plan for 2009, cash and working capital will be a key ingredient. It is hard to say if input costs for 2009 will drop as fast as commodity prices. Therefore, careful planning and wise decisions on 2009 prepays will be very important. Marketing the crop will be critical in 2009. Knowing your 2009 breakeven prices and goals for profit potential will help you develop a sound marketing plan. Have a safe and prosperous harvest. If you would like to learn more about cash flow planning or market planning for your farm business, contact Northland College at (800) 959-6282, and ask for a Farm Business Management Instructor in your area.