Last week, I wrote about how the FF1℠ stage of the Farm Financial Four℠, helps you build a plan and get the appropriate amount of capital for that plan.  Even during the years when all the operational aspects of planting have gone smoothly, it is likely that your cost structure has changed and of course, markets have changed.  FF2℠ is all about adjustment and preparing for the rest of the crop year, considering where you are and can go, versus where you started. 

Crop farmers have the amazing ability to be the eternal optimist, which is important for owning a business where success is often dependent on factors outside of your control.  But, sticking to our sports analogy from last week, what if the experienced starting quarterback contracted COVID-19, and can’t play against the cross-county rival this weekend?  If you’re the coach, do you still trust the “air raid” offense to your height challenged, skinny, freshmen QB?  To increase the odds of victory, the coach would adjust to the freshmen’s strengths, abilities, and design a game plan to give him confidence. 

Similarly, for crop farmers, optimism won’t propagate success.  There’s work to do on the financials.  A substantial amount of capital has been invested in the crop and those external factors might have affected your plan drastically.  Wet fields due to excessive rain will influence your rotation and increase costs due to replanting. You had to hire some custom work because re-planting put you behind on your herbicide program.  Even positive changes need to be accounted for…maybe you bought diesel at a considerable savings compared to the plan, or CFAP money was available for your particular operation that added some unexpected liquidity.  All of these change your breakeven and have to be known when making crop marketing decisions as seasonal opportunities arise in late spring and summer.

In crop farming, the same external factors that can challenge your success can also provide you with a gift. The NASS/USDA September stocks report did that this year. Either way, the best practices for financial success, in the short term and long term, are to assess, plan, adjust, and execute to the best of your ability. This is where the act of farming and the business of farming must be running the same play.

Allen Lyon