Along with harvest planning, this is a critical time of the year for farmers to take a good look at their marketing and financial situation.
Generally this time of year, crops are either in preharvest condition for corn or in a layby state for cotton. Soybeans are usually somewhere in between, depending if they are early planted or late planted.
Granted there still are field operations going on such as soybean fungicide applications, cotton and soybean insect sprays, and maybe final weed control applications for all but the late planted crops. Of course those with irrigation systems will continue to make applications until maturity and depending on rainfall. This is also the time of year that farmers take time to attend educational field days and conferences that can assist them in planning for the future.
Farmers should use this time of year to:
- Update their 2017 cash flow plan. A recent Farm Futures survey indicates that 45 percent of farmers worry about their ability to pay back debt. Instead of worrying about the unknown, a quick yield and price assessment to estimate income along with examination of remaining outflows for the year can prevent problems before they occur. Include in the outflows- operating loan, equipment & land loans, cash rent, and an estimate of remaining expenses. Keep in mind there might be farm bill payments from the 2016 crop year coming in. If you estimate a shortfall, start exploring now ways to address it particularly with your lender. It is always better to keep them in the loop rather than surprise them after harvest.
- Update their marketing plan. The same Farm Futures survey indicates that 22 percent of corn production is priced and 29 percent of soybeans are priced, which is less than normal. Only 26 percent of the farmers surveyed think that they priced enough 2017 production to make a profit. Continue to be proactive in your marketing. Will you be able to fill your contracts? Talk to your local elevator for alternatives. Evaluate whether additional contracting should be done before harvest. Hopefully, any storage that will be needed has been evaluated and or secured for this crop. Have you considered any post-harvest strategies? Have you explored selling to potential end users such as ethanol plants or livestock producers? This could be a year when storage might be a viable alternative, particularly corn.
- Start tax planning. If you wait until December, it is too late. Did you carry over any income from 2016? Talk to your accountant and share your cash flow assessment. Any major tax planning should always be for economic reasons as well as saving taxes.
- Evaluate harvesting power. Do you have the combine or picker power to efficiently harvest your crop on a timely basis? Do you need an additional harvester either through purchase, lease, or by having some acres custom harvested. Put a pencil to it! If you need assistance in this evaluation, contact your County Extension office or Area Farm management Specialist.
In Tennessee, the general consensus is that crops look above-average. Crop progress reports show crop conditions better this year for corn, about the same for soybeans, and slightly better for cotton. A good crop is definitely needed to keep farmers cash flows positive.
As we do start to get into harvest, please keep safety on the forefront. Have a safe and profitable harvest!