Farmers Say Cost Management and Crop Diversification are Key Tools in a Tight-Margin Year

Farmers across the U.S. continue to navigate narrow margins and tight budgets.

Indiana farmer Tim Gauck says it’s even more important for farmers today, to know their numbers. “Knowing your cost of production, where your break-even point is, is so important,” he says. “We’d all like to have the highest price or the best machinery or the most land, but the important thing is making a living, and you do that by knowing what your costs are.”

Stephen Butz, a farmer from Kankakee, Illinois tells Brownfield Ag News that diversification has been one way they have addressed profitability. “We have grown non-GMO soybeans for quite a few years,” he says. “Obviously, you’re still based off a regular soybean price, but able to get that premium for non-GMO soybeans.” Butz says they’re also going to add non-GMO white corn to their rotation to add value to their operation.

EDITOR’S TAKE:

Knowing your breakeven number and diversifying the operation is always good advice, in good times and bad. When margins are tight, knowing the breakeven number can help a farmer/rancher recognize a market opportunity that can make the difference between a good year and a poor year financially. In good times, the breakeven number will help with timing market sales and tax planning. Similarly, diversification can help moderate risk, be it from markets or even weather. Paying attention to what is working and eliminating or changing what is not can also be the difference between a good and bad year.

Training your team to explain the tax advantages associated with that new truck purchase is helpful. Using CADFI to match the payments to a farmer’s/rancher’s income stream can also be very helpful. Being able to explain how AgPack® can provide significant savings in operating costs on the farm/ranch can be the difference between sale/no sale.