As you open a new ledger for 2017 for your farming operation, the working capital picture may not look too pretty. Bankers are calling 2016 a burn year, a year when many farming operations burned up the last of their working capital. Gary Coleman, with Farm Credit Mid-America, says having an open, honest, and frank conversation with your lender is the first step to making a financial plan. “Bring your numbers in, bring your projections in, sit down with your loan officer and have a conversation about what your plans are and what your goals are for 2017,” he stated.
Coleman says, for some, 2017 will be the year some hard decisions will have to be made and some old ways of doing things may have to change, “Is that high cost cash rent property really the best fit for your business? Are there other ways to reduce your input costs or even think differently about how you structure your operating loan?” Coleman is quick to point out there is a way to farm and even to farm profitably in 2017 — it is just going to take a well-considered plan.
He maintains there is even way to buy needed equipment in these tight times, but you may have to prioritize and only purchase one piece of equipment this year. “Spreading repayment out over a longer period of time is another option,” he said. “Not just 3 years but, in some cases, perhaps 5 or even seven years.” This may also be the year when your lender has an even bigger say in your crop rotation.
You can watch the complete conversation with Gary Coleman from FCMA on our latest Better Farming video. It is on line right now at HAT.com and the HAT YouTube channel.