Can you change your farms economic outlook in 2019 and beyond
December 14, 2018
I recently read an article debating where a company should spend marketing dollars. This debate centered around trying to increase current customer purchases versus bring new customers into the company. The main point of the article was it is cheaper to entice current customers to increase their product purchases by a few extra boxes, but company revenue increases are low or limited. Enticing new customers costs quite a bit more but can also bring greater increases in revenues and greater profits. Most companies chose the cheaper route and never realize their true growth potential. As I read this article I though about how this age-old question applies to the agriculture business model and our current ag recession.
As the harvest season comes to a close and farm gate prices continue to trend lower, most farmers I know or talk with usually start a dialogue about how they can tweak their business model. Things like can I increase or decrease my planting population, reduce my fertilizer use or can I make that 10-year-old piece of equipment last one more year. All done with the idea of reducing the cost of production or increasing yields enough to give 1-2 dollars of extra income per acre. But we should be more like those successful growth companies who focus on bringing in new customers. Now is the time you should be looking at changing the economic outlook for yourself and your farm over the next 5-15 years.
First are you a good land steward? Have you incorporated cover crops and no-till into your farming operation? Incorporating both practices will give you long-term increases in soil fertility/organic matter along with reducing soil and nutrient run-off into our streams, rivers, lakes and eventually the Gulf of Mexico. Long-term studies on both practices show increased farm profits and a significant reduction in environmental damage to our lakes and waterways.
Second are you looking at options outside your normal farm operations? Are you considering adding small grains to your rotation or planting some acreage to a high-value crop like industrial hemp with a high CBD oil content? Have you looked at contracting and growing a food grade crop or doing some type of value-adding processing on your farm? A good growing business should be exploring all these options to bring new sources of income to your business.
Third and most important of all, you are not looking toward the future if you do not have a farm secession plan in place? Do you have a plan for leaving your business to your heirs? If you have no heirs or your children’s interests lie outside of agriculture, have you investigated your options for helping a beginning farmer gain access to land and equipment?
Stewardship of our lands and helping prepare the next generation to farm must be our primary responsibility! Our public policy, field crop research and educational offerings at Michael Fields Agricultural Institute are designed to help build healthy soils, eliminate topsoil/nutrient run-off, bringing the next generation into farming and help grow the agriculture economy. We trust you are making a similar commitment in your business operations!
As we get ready to celebrate the holidays, we wish each of you a joyous and successful new year. As always, if you are in the East Troy area, please stop for a visit or if you are financially able, we ask you to help us have a successful 2019 by donating online by clicking the Donate button above or on our Facebook page.