CASSIA COUNTY, Idaho (KMVT/KSVT) —Farmers are deep into financial planning as they prepare for the upcoming growing season, with many already placing orders for essential supplies despite uncertainty about acreage contracts.
While most people return to work after the holidays, farmers like Mitchell Searle are reviewing their financial books and making critical decisions about the year ahead.
“Farm finances are, I would say for most farmers, that’s their least favorite part,” Searle said. “Most farmers want to work, want to be outside, want to be working with the animals or driving the tractors, things like that. But the financial side is where you got to take the time, sit down and make sure you’re actually making money.”
The financial planning extends beyond balancing books. Farmers must place orders for essential items like seed during winter months, often before knowing how many acres they will plant.
“Beet seed, potato seed, corn seed, a lot of that happens through the winter,” Searle said. “You’re ordering seed for an amount of acres that you aren’t 100% sure you’re going to have contracts to plant.”
This year’s decisions carry additional weight as crop prices have dropped significantly from last year. Searle said farmers need to focus on controlling expenses.
“Control your expenses, whether that’s equipment, not upgrading, not trading, just make do with what we have,” Searle said.
Financial planning often involves meetings with lenders. John Preston, relationship manager with AgWest Farm Credit, said those meetings typically happen after harvest and examine three key factors.
“We look at what they owe versus what they own,” Preston said. “We’ll look at how much working capital they have, that’s current assets minus current liabilities, to be able to take care of short-term needs. And then we look at what their repayment ability is to be able to service debt payments.”
Searle emphasized the importance of understanding farm finances in an industry with narrow profit margins.
“Farming is a low margin return game,” Searle said. “So if you don’t know your numbers, you could be losing money very easily. You have to stay competitive. You have to have a sharp pencil to know, hey, yeah, this is making me money.”
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