Producer Page: Don't worry?!

Ouch……that is about all you can say about the market reaction to the latest USDA crop report.  But, rather than sitting around and worrying about things you can’t control (USDA, the weather etc.) your time is better spent by taking action to control the controllables in your operation.  Here is a list of suggestions:

  1. Your attitude—Be proactive and forward looking.  Your grandparents faced much tougher challenges than anything you wrestle with (Great Depression, World War II, Dust Bowl, etc.)   You can get through a market setback.  Take time to give back to your community and the less fortunate, as it will pay you back many times over in many ways.

  2. Review your management—If you are disappointed with your marketing the past few years……take steps to make improvements.  Write down a plan, select a marketing advisor, place orders to sell, be willing to sell in increments.   Do you have any idea where you are at in terms of profit & loss at any given time?  If not, make a concentrated effort to improve record keeping.

  3. Understand Maximum Economic Yield concept—In lean times especially, you need to understand the relationship between your production costs and your final yields.  Begin by knowing your cost of production by bushel or acre and making rational decisions on attainable yield goals.  As a profitable farmer, you need to get as much yield as you can….But…. you cannot chase contest field yields by pouring on inputs when the cost of the treatments exceeds the value of the additional bushels.  For example, set a realistic yield target and fertilize according to university recommendations for that goal with a solid soil test program. 

  4. Cost control—Look ahead to 2018 and carefully review your operation.  A marketing plan doesn’t only consider sale of corn and beans, it can also include timing and source of fuel & farm input purchases.  You can defer equipment purchases and capital improvements until cash flow improves.  You can be proactive on tax and health insurance cost management by working in advance with professional advisors to get your best values rather than waiting till the last moment and accepting a bad result.

  5. Lean Forward—Have a long term plan!  You should have a 3-5 year business map.  Cash flow projections and succession plans are potential parts of this concept.  A good relationship with your lender is important, so that he or she understands what you are trying to achieve and can help you get there.  Even more important are your family relationships… is essential that your spouse is on board and understands your business.  Echo that thought for any children or siblings who have a stake in your operation.   They can help by providing perspective!  Avoid keeping them in the dark until some sort of financial crisis. That can only lead to poor decisions and breaking of familial bonds.

  6. Risk Management—The lack of solid risk management is the biggest threat to most farms.  Do you have appropriate crop insurance?   Do you have adequate property insurance?  How about liability coverage?  Do you have an estate plan?   What are you doing about the potential threat to your asset base from long-term care costs?  Have you done an inspection of your farm to eliminate safety concerns (bin steps, electrical systems, PTO guards etc.)?  Have you informed your spouse or business partners about what they should do if you become incapacitated?  Do you have regularly scheduled medical care?  If you have not addressed these concerns…..WHY NOT?  The sudden event can wipe out a lifetime of hard work if a risk management process is not in place.

There…you see you don’t have time to worry, you have a list of things to do.  And these things will improve your operation and outlook.

Time to get busy!



Mark Producer Page headshotAbout Mark Warmka

Mark has worked at Peoples State Bank since 2003, serving as lead agricultural lending officer and bank Senior Vice President. He is also a member of the Board of Directors. Mark has an extensive background in the financial services industry, possessing both investment and insurance licensing and is fully accredited as a crop insurance agent.

He and his wife, Kate, an elementary teacher in Blue Earth, live on and manage the home farm near Easton. Their daughter, Amanda, is a Physician Assistant at UHD Hospital and daughter, Sara, is teaching and coaching at Fairmont Public Schools. 

You can reach Mark by email or at 507-553-3155.

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