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Tips for Successful Grain Farmers – Part II

Updated: Nov 30, 2023

Grain is the staff of life, as the saying goes. That’s because nearly two-thirds of the world population would starve without these essential ingredients. As a grain farmer, you play an important role in the American economy. At Friendly Meadows, we want to help your business thrive and make sure that we're providing all of the resources you need to be successful. The following article will discuss how grain farming is a great way to start a farm, as well as the types of products farmers can sell. There are many types of grain farming, but it all starts with taking care of the land. When it comes to growing crops, a farmer must be able to plant at the right time and harvest at the right time. Farmers can grow a variety of different grains (such as rice, wheat and corn), depending on current market trends and local weather conditions. Here is our second in a two-part series of helpful tips that will make your operation that much more successful:

1. Sell underperforming or nonperforming assets:

If you own a business, then it's likely that you have certain assets that require an inordinate amount of your time and capital in order to operate them. Identifying these "underperformance" or "nonperforming" assets is a necessary step before deciding their fate.

The good news is that underperforming or nonperforming assets should be sold before they become a drain on the profitable parts of the operation.

Identifying these "underperformance" or "nonperforming" assets is a necessary step before deciding their fate. The bad news is that most reasonably intelligent business owners are unaware of the true extent of their financial troubles.

Examples include:

"Inventory" (aka "Lose Money" or "Freight") – This is a stock of inventory that can be sold, then bought back at a later date. If you account is not set up to track this, then you will be liable for the cost of the inventory and not know what you're carrying on your books from quarter to quarter.

2. Develop a marketing plan:

Marketing is another business skill that sets successful farmers apart. It has two critical steps – developing a marketing plan at the start of the season, then executing it. Be a proactive seller.

Plan. Plan. Plan. That’s the secret of every successful farmer, whether the operation is large or small, organic or conventional, upstart or established.

Developing a marketing plan at the start of the season will make you a proactive seller rather than a reactive one. It will also help prevent you from being overwhelmed with take-home produce.

Successful operations develop a plan that deals with crops, weather, labor and markets. A marketing plan is developmental in nature, not critical at the start of the season. It is much easier to make changes along the way rather than having to scrap a marketing plan at midseason because it’s no longer working for you.

Developing a marketing plan and sticking with it throughout the growing season will give you more control over your operation.

3. Understand the financial impacts of their decisions:

Agriculture is one of the biggest sectors in the world and it employs millions of people. One of the most important things for any farmer to do is understand the financial impacts from their decisions so that they can make educated ones. Whether you are a single farmer or part of an expansive farm operation, it's vital to know how your choices will influence your financial future in agriculture. In order for a farmer to maximize their financial situation, they must understand key information about income, capital, costs and risks.

4. Think holistically about cash flow and costs:

Every farmer needs cash flow, but it’s often best to approach the question holistically. It’s important to think about working capital per acre on all your acres, and machinery costs per acre on all your acres. If you can achieve this on each of your farms, you will be well positioned for success. It might be necessary to reduce costs on some acres so that you can provide adequate working capital and machinery to all of your acres.

You should work to ensure that every acre has a healthy working capital balance and enough machinery for the task. If a farm’s working capital is negative and it doesn’t have sufficient machinery to carry out the job, the negative working capital per acre is only temporary.

5. Maximize profit vs. yield:

Find the sweet spot. Make sure you’re getting a return on investment on each acre. When you plant your cash crops, it is important to consider what they are capable of producing for you.

Consider that there is a trade-off between profit and yield. For example, if you want the highest yield possible for your corn crop, then it will likely be more profitable than if you wanted the highest profit per acre. You can find this balance by finding the sweet spot. Figure out which option gives you the most return on investment (ROI) on each acre of land planted with cash crops.

6. Pursue getting better, not just bigger:

It’s tempting to pursue growth before you’re ready. If you get bigger before you are ready, your operation’s problems may be compounded because the skills and systems required to run a larger operation are not in place yet. Start with strengthening all corners of your farm, consolidating equipment, streamlining work processes, and securing reliable labor before contemplating expansion. Keep your current operation running smoothly while simultaneously improving your chances for future success by building an infrastructure that supports sustainable growth.

The first time you buy new equipment and hire new workers is an exciting time. You have heard all the reasons why this step is important, and the farm will become more valuable if you take it. The people from the equipment dealer who talked to you have been telling a consistent story about how much more efficient everything will be once you buy it.

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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