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Tips for Successful Grain Farmers – Part I

Updated: Nov 30, 2023

It’s no secret that farmers are the backbone of America, growing the ingredients that put food on the table and clothes on our backs. At Friendly Meadows, we want to see grain farmers thrive, so here we offer our first in a two-part series that will make your operation that much more successful:


1. Build positive working capital and short-term risk bearing ability.

It’s hard to run a business without working capital. So always ensure you always have positive working capital at all times.


As a business owner, it’s your duty to keep a close eye on your company's working capital. This will help you make sure that you always have enough cash on hand for daily operations. If your business is constantly running low on cash, it could be indicative of an issue with how you manage your finances.


Working capital is the amount of money that's available to pay for normal operations, including payroll and other expenses. It can also be used for expansion or cover periods where revenue is lower than it should be.


2. Pursue additional income sources.

Outstanding farmers don’t let their income streams go stagnant. Additional forms of income may be found on-farm, such as diversifying with livestock or taking on more custom acres. Or, an off-farm job can also be a good source of stable income. But there are many other ways to increase your returns for the time you spend farming or managing your land. Outstanding farmers take advantage of every possible marketing tool and haven’t stopped marketing just because they got another tractor, combine, or piece of machinery.


Farmers market sales


Sell farm products at farmers markets and other direct-to-consumer venues. “There is a large market for natural, organic and healthy food locally in the small towns where many commercial farmers also attend these markets. I always sell out of our produce at local farmers markets and sell more there than on my own farm. The network of customers is great, both locally and regionally,” according to Leading Edge Farm.


3. Develop solid financial acumen:

Acumen is the ability to make good judgements and quick decisions. This requires thorough record keeping and a solid understanding of your farm’s financials.


The financial records for your farm are critical to your success. They can tell you everything from how much feed you need to buy and what type of fertilizer is the best for your soil, to whether or not you should invest in an irrigation system. But proper record keeping takes time, and with all the day-to-day duties on a farm it can be hard to find time in a busy farming schedule.


What you need is a system that will allow you to record important financial data in an easy, efficient interface. This ensures that you can get the most out of your records and that they are kept accurate and up-to-date.


4. Use enterprise analysis:

The next step is using those sound financial records to do an enterprise analysis. Excellent farmers know how the pieces of their farm work together, and which operations are most profitable and least profitable.


Doing your own enterprise analysis can help you make the most out of your farm's investment. You'll learn how to allocate your time and resources, while understanding the underlying financial conditions that influence your decisions. Whether you grow fruits and vegetables, raise animals, or both, this knowledge can be invaluable to long-term success.


Farm income can be unpredictable. But, if you understand the big picture and have a system in place that helps you deal with setbacks, the future can look bright.


Making the most of your resources begins with learning how to read and analyze your farm's financial records. While records may seem complicated at first, they don't have to be. Your financial records are important because they reveal what is being earned and spent on your farm each year, as well as reveal your relative success or challenges in terms of profitability.

5. Understand family living costs:

There are many costs associated with running a farm. Besides the cost of owning your land, you have other expenses that should be monitored closely. These include quality feed, fuel for your machinery, packaging materials, marketing campaigns or other marketing efforts, and worker salary.


Understanding family living costs is key to keeping your business afloat. Great farmers know their family living costs – and how what they can or can’t afford when it comes to fluctuating price, margin, and profit environments. They are prepared to make adjustments.


There are two broad categories of expenses on a farm: fixed costs and variable costs. Fixed costs remain the same or vary little regardless of what crop you produce or which marketing channels you use. For example, fixed costs include mortgage payments, insurance, equipment maintenance, and workers’ salaries. On the other hand, variable costs depend on how much you produce and what crop it is. Your variable costs will vary each year depending on your needs or demands for specific products or services unique to your farm operation.

6. Cash Rental:

Cash rental is a farm owner leasing out their land as well as the home to be used on it. Cash rental can bring in additional income for those who own this type of farm and choose to take care of the home that they do not live in. Other perks include keeping your property tidy and getting rid of pests and unwanted wildlife. Cash rental is a farm owner leasing out their land as well as the home to be used on it. Cash rental can bring in additional income for those who own this type of farm and choose to take care of the home that they do not live in. Other perks include keeping your property tidy and getting rid of pests and unwanted wildlife.


Think of Friendly Meadows as your partner in farming success. We offer a selection of grain cleaners and separators designed to make your grain farming process easier, more efficient, and ultimately, more successful. For more information, give us a call today.

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