Commodity prices are low, belts are tight and every farm management decision counts. What does it take to be financially successful in today’s market? Gary Schnitkey, University of Illinois economics professor, shares results from a recent U of I and Illinois Soybean Association study that identified seven common characteristics or habits of profitable farmers.
“This is a tough business,” Schnitkey notes. “Everybody that’s around is a good manager, so we’re looking at that slight edge.” The research team classified three different profitability groups using four years of Farm Business Farm Management data. There was roughly a $10-per-acre profitability difference between average farmers and financially successful farmers in the study.
Schnitkey shares these seven habits of financially successful farmers.
1. They dive into new ideas. “They aren’t on the bleeding edge of innovation, but they’re innovative,” Schnitkey says. The farmers attend meetings to learn new practices, use fungicides and seed treatments, and carry high levels of crop insurance. Several of the study participants run two planters at the same time — one for corn and one for soybeans.
2. They do their own research. The farmers use on-farm testing to evaluate new technologies and practices.
3. They look at ROI. On-farm product or practice evaluations are based on return on investment, not just yield.
4. They push yields. “They are excellent production managers,” Schnitkey says. The farmers produce 1 to 2 bushels more per acre, on the same soil types, compared with their average counterparts.
5. They count every penny. Financially successful farmers pay less per acre for fertilizer, seed, seed treatments and pesticides. “They are using the latest technologies, but they’re not paying more for them,” Schnitkey notes. “They are excellent at cost control and keep machinery costs low.”
6. They ask for help where they need it. Do you know your strengths and weaknesses? Financially successful farmers hire consultants to help address areas of weakness, Schnitkey says, such as private agronomists or marketing consultants.
7. They seek premiums. Whether it’s non-GMO beans or seed production acres, financially successful farmers receive a premium price for their soybeans.
How can farmers learn to adopt financially successful habits? The University of Illinois and the Illinois Soybean Association will hold a series of half-day seminars in January and February that will cover topics like management and profitability in today’s environment.