5 Tips from an Ag Lender
As planting season approaches, it’s important for growers to prepare financially. Effective financial planning can help producers budget for essential inputs, secure necessary financing, and manage cash flow, ultimately leading to a profitable and successful season.
1. Budget for Inputs
Creating a detailed budget for inputs like seed, fertilizer, and equipment is crucial for effective management of finances. By outlining all required expenses for the upcoming season, growers can prepare to cover these costs. By developing a cash flow budget, farmers have a better understanding of their expenses and plan accordingly.
2. Secure Financing Early
Operating loans are an important source of financing for many farmers, particularly during the high-cost planting season. It’s best to begin the process of securing financing early since it can take time to gather all necessary documentation and secure the loan. Working with an agricultural lender can help farmers find financing options and access the capital needed for a successful season.
3. Manage Cash Flow
Managing cash flow is essential for any successful business, and agriculture is no exception. Farmers should have a plan in place to control their cash flow during the planting season. This may involve establishing credit lines, inventory management, and closely monitoring expenses. By carefully managing cash flow, growers can ensure they are able to cover expenses and keep their operations running smoothly.
4. Monitor Market Conditions
Market conditions can significantly impact the profitability of farming operations. Growers should monitor market conditions carefully and adjust plans accordingly. This may involve altering production methods. By staying informed about market conditions, farmers can make better-informed decisions about their operations and improve their chances of success.
“Utilize up-to-date prices for commodities and expenses when determining cash flow, “advises Joe Erickson, Conterra Midwest relationship manager. “Staying current on market conditions will help you manage your operation’s goals and expectations.”
5. Seek Expert Advice
Finally, farmers should seek expert advice when developing their plans for planting season. Working with an experienced ag lender can provide valuable insights and guidance on how to manage financing effectively. These lending professionals can help farmers to identify potential risks, explore financing options and develop a financing plan that meets their individual needs.
Planning is essential for a successful planting season and beyond. Farmers should take the time to develop a detailed budget, secure financing early, manage cash flow, monitor market conditions, and seek expert advice when needed. By following these tips, growers can ensure they are prepared for the financial needs of planting season and position themselves for long-term success.
Conterra Ag Capital is a private lender, focused exclusively on agriculture. Joe Erickson works directly with clients and lending partners throughout the Midwest and Eastern Cornbelt. Conterra lending experts are located nationwide, providing flexible farm and ranch loans, crop operating loans, development and alternative lending to America’s farmers, ranchers and agribusiness.
Disclaimer: Please note that the information provided in this article is for educational and informational purposes only, and should not be construed as financial or investment advice. While we have made every effort to ensure the accuracy and reliability of the information presented, Conterra Ag Capital and its affiliates make no representation or warranty as to the completeness, correctness, timeliness, suitability, or validity of any information contained in this article. You should always consult a qualified financial advisor, tax professional, or other qualified professional for advice on your specific financial situation.
