8 Financial Factors Farmers Need to Consider for 2019

Posted November 29, 2018 by Administrator in Agribusiness, Featured | 0 comments

Farming has always been a risky occupation with slim margins, and 2019 will be no exception. Both livestock and crop farmers are feeling the financial squeeze, dairy farming and row-crop sectors in particular. Thankfully, not every trend is bleak. The following are several developments farmers need to be aware of to maximize their profits.

Positive Factors Affecting Farming Finances

There are several positive trends affecting the farming industry. These include:

  • Unemployment is the lowest it’s been in over five decades, coming in at 3.7%. Many agribusiness employees are also seeing an increase in salary.
  • Experts expect consumer spending to remain stable as farmers continue to produce strong yields.
  • Farmers have new opportunities at growth due to an increased interest in fresh foods, craft beer, and other ventures that call for specialty crops.
  • Farmland value is stable with some small increases. This is significant for farmers who borrowed against their equity.

Negative Factors Affecting Farming Finances

While there are several notable trends to look forward to, farmers need to be aware of the negative aspects poised to influence the industry as well.

  • Yields may be strong, but prices are not. In addition, just because a farmer can produce more doesn’t mean he or she has enough space to store it before selling it. It may behoove farmers to produce slightly less to keep production costs down.
  • Experts expect the cost for crop production to increase in 2019.
  • A decrease in crop profitability isn’t correlating to a decrease in rent. A visceral desire to control land can make rent negotiations tough, especially when there are other farmers willing to pay steep rent costs.
  • While stable farmland prices is a good thing for established farmers, it’s a challenge for those trying to get their foot in the door. Farmland value remains high, placing it out of reach for up and coming farmers.

Running a successful farming operation requires balancing risk against profit. For example, overreaching or poor planning can turn a successful yield into a financial disaster. Farmers who take the time to learn and plan for the above trends can navigate around the negative while capitalizing on the positive. To learn more about reducing your farming risk, contact the experts at Cline Wood.

This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.

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