A Simple Way to Improve Farm Financials

The Dow Jones Industrial Average may be sitting at record highs, but there’s a big difference between the fortunes of Wall Street traders and farmers across the country.

Last week, Purdue University (Go Boilermakers!) released the results of a survey of 400 U.S. producers on their confidence in their financials. While farmers indicated that their financial positions are stronger than they were in 2016, they raised concerns that they may not be able to reach their 2017 financial goals.

Today, we’re going to talk about the data in this report and why it matters.

More important, I want to introduce new readers to a simple way that I believe farmers will be able to improve their financial positions in just a few minutes a week…

We’re talking about a way farmers can make more money for their grain, save time, and improve efficiency.

Let’s get started.

The Financial State of the American Farmer

According to the Purdue University/CME Group Ag Economy Barometer, farmers believe their financial state is better than this period last year. The barometer reading of 131 is well above last June’s reading of 112.

It’s also a significant jump from the 12-month low indicated just before the 2016 election.

Back in June 2016, just 3% of producers said that their operations were better off financially than the previous year. In June 2017, that figure hit 13%, the highest reading since the tracking began in October 2015.

What is driving the optimism?

Jim Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture, points to three key factors:

  • Improving revenue,
  • Moderate production costs; and,
  • Downward pressure on rental rates.

“Revenues on many farms increased as a result of record – or near record – crop yields in 2016. Also, corn and soybean futures prices strengthened from late summer through early winter while production costs, especially fertilizer, moderated when compared to last year. Farmland rental rates also continue to soften as part of the farm economy’s long-term adjustment to tight crop operating margins,” Mintert said in a press release. “All of this contributed to improved current financial conditions for many farm operations. Our survey data suggests that for some farm operators, financial conditions have bottomed out.”

While this is good news, there’s a serious warning indicated in the data.

Roughly 28% of producers indicated that they think this year’s financial performance will fail to meet the forecasts assembled in early 2017. And while the number of farmers who said their financial conditions were worse off this year fell from 67% in February to 44% in June, this is a massive number of producers worried about their annual balance sheet.

Purdue researchers suggest that the increasing concern is due to “adverse planting and growing conditions in the Eastern Corn Belt this spring.

They also cite recent declines in corn and soybean prices.

Will Politics Improve for the Agricultural Community?

The survey results also come at a time that producers are increasingly concerned about the regulatory environment. Even with Sonny Perdue running the USDA, there has been a wealth of criticism over the administration’s policies.

Yesterday, Barry Flinchbaugh, a farm policy analyst and professor at Kansas State University, has rated the policies of Trump’s team a “C” so far.

His criticism has centered on immigration, deregulation, trade and the farm bill.

That sentiment appears to carry over to Purdue’s survey. There is more confidence that farmers will see a more favorable regulatory environment than in previous surveys, but just 40% of respondents share this belief.

Though producers anticipate that new negotiations on NAFTA will benefit them, the bulk of farmers anticipate little tax relief or even higher taxes in the future. Roughly 30% of respondents said they expect higher taxes on agriculture within the next 12 months compared to the 18% who anticipated a decline.

Meanwhile, 52% of farmers anticipated higher taxes over the next five years compared to the 18% who expected a decline in taxes.

When we look at all of this data, two major themes emerge. First, farmers are still very concerned about things out of their control in weather, regulation and production costs.

Second, they’re not anticipating much relief from Washington or Wall Street anytime soon.

This is why it’s important for farmers to find ways to improve their margins without any upfront costs that could impact their bottom line.

What if I told you there is an easy way to improve your grain marketing in just minutes a day. And we’re talking about a simple tool that can help you can sell your grains for 5% to 6% higher than what you might be able to receive from local buyers in your market.

In minutes, you can improve your financial situation by selling your grain on FarmLead, a online marketplace that brings thousands of buyers around the United States to your farm.

Save Time, Earn More, Start for Free

I am immensely frustrated by the fact that so many hard-working farmers may be losing sleep at night thinking about their balance sheet. In fact, it’s one of the reasons why I joined FarmLead this year.

If you don’t know about FarmLead, you’re not alone. The company recently expanded its operations into the United States this year. The online marketplace allows farmers to post their grains online to thousands of buyers around the nation.

It takes just minutes to sign up and post your grain. Then the buyers come to you.

This is important for two reasons. First, farmers no longer have to work the phones to sell their excess grain, potentially for less than what the value is in today’s markets.

Second, more buyers in one place helps improve the offers for your grain.

It’s simple math.

The more people at the table, the more competition there is for your grain, inherently increasing the price you can earn for your grain production.

Not only does this improve the overall price of the grains, it saves farmers precious time. Rather than calling around for buyers, they can post their grains and focus on other important issues impacting their bottom line.

Saving time and earning more money? That sounds like a winning proposition.

But here’s the best part. It’s free to post your grains online at FarmLead.

This is the only thing that I can think of that can help farmers get more money for their grains without paying money upfront.

Think about it… today’s fancy technologies to improve yield, global research to identify the best time to buy and sell, or the new tractors that can shave time off in the field… all of them have costs up front.

FarmLead, you can start negotiating for your grain right now, trade in cash or on basis, and connect with buyers who are eager to fill their quotas and give you the best price for your grain.

Get started right here, or take a look at our marketplace.

After you start getting the best value for your grain, you’ll worry less about your balance sheet and have more time to get back to the things in life that matter most.

If you and those individuals surveyed this month by Purdue start using FarmLead to sell grain, we may see far more positive results in the months ahead.

And that would be a welcome change.

About the Author
Garrett Baldwin

Garrett Baldwin is a content strategist and editor at FarmLead. He covers the global grain markets and public policy issues related to the agricultural industry. He is a graduate of the Medill School of Journalism at Northwestern University. He also holds a Master’s Degree in Economic Policy from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University, and an MBA in Finance from Indiana University.

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