From what I’ve experienced, farmers are extremely competitive.  How else do you achieve such consistent improvements in farming year after year?  It’s just the way you are wired.  You might have the bumps and bruises from the season, and the harvester has barely cooled, but does a great coach revel in the victory for an extended time?  Now, while the season is fresh on your mind, is the perfect time to watch the game film. If you are like most farmers I know, you always look for improvements in the field.  Do you apply that same philosophy to the Profit and Loss statement?   

To help mitigate the doldrums of the Crop Financial Cycle that can occur, a post season analysis that we call the FF4℠ stage, is paramount.  With harvest finally in the books, the opportunity to prepare for next season is at hand.  You’ve planned, planted, adjusted, executed and pushed through to the end, and you are finally able to look back on the season to assess the results.  Since yield is finalized and crops are in storage or delivered against contracted sales, you can know project a more accurate revenue number.  Variable costs are also done with, and the rest of your payables are known, so it’s easy to project the bottom line.  The sooner this is known, the more flexibility you have to make decisions for next year. That flexibility could enable you to pick up the farm that comes up for rent, take advantage of early cash discount on inputs, or bid confidently on that great equipment buy at auction.  Additionally, it’s a good idea to inform your lender of the projected income, even if it’s in the red.  The bank can help with bridge financing or can provide cash flow if needed.   

Knowing the financial position of your operation can give you confidence and help you better prepare to make pricing decisions for next year...even before the current crop year is in the books.  Starting the year with profitable sales on the books also gives your lender confidence that you are cultivating the financial part of your operation too. This year, take more than just a peek at 2021.  Get set for next year, then rest, knowing that you are fully prepared.