Farm Business Management
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Cash Flow and Income Considerations for S.D. Farms: Part 2
This is the second article of a two-part series examining cash flow and income for South Dakota grain farms. This article will look at crop insurance, prices for 2020 crops, and changes in input prices.
Cash Flow and Income Considerations for S.D. Farms: Part 1
Grain farming is facing a reduced income outlook for 2020. Unpriced old crop revenue has decreased and projected revenue for 2020 crop is reduced. Offsetting these decreases are chances that some input prices may fall, fuel related expenses and possibly higher payments from commodity title programs.
Planting Projections 2020
South Dakota producers recently indicated they plan to plant 12.9 million acres of corn, soybeans and wheat in 2020, plus an additional 620,000 acres of sunflowers, 345,000 acres of oats and 45,000 acres of barley, as well as 270,000 acres of sorghum and 11,000 acres of dry edible peas.
What Kind of Records Are You Keeping?
Measurement of the actions and efforts of everyday life on the farm or ranch leads to better management and efficiency. Many farmers and ranchers keep many records. Utilization of the records for improved management would be the next step to take to improve efficiency.
Cash Flow is Critical
Strong business management skills and systems do not go out of style in times of uncertainty. These skills will help the business work through downturns in commodity prices. Cash flow budget accuracy is critical in developing and controlling the business.
Time to Sign up for 2018 Farm Bill
This winter it is time to study up on the Farm Bill elections and make an appointment with the local Farm Service Agency (FSA) in order to put the program in place for the farm. The deadline to make the election is March 15, 2020.
Large Farms More Dominant in South Dakota Crop Production
Large farms play a more dominant role in South Dakota crop production, according to the recently released 2017 U.S. Census of Agriculture. As of 2017, large farms of more than 2,000 acres operate 66.8% of South Dakota total cropland aces compared to 47.7% as of 1997.
Grain Merchant and Processor Consolidation, Concentration, and Competition
A general trend in the last century has been for greater consolidation among Grain Merchants and Oilseed Millers and Processors. The U.S. Census Bureau tracks the number of firms and/or establishments and value of sales (market size) by industry sector every 5 years as a part of the Economic Census. In addition to the number of firms and sales, the Census Bureau publishes concentration ratios for each sector. One concentration ratio they publish is the amount of sales attributed to the four largest firms in that sector. The percentage of sales of the 4 largest firms is a measure that aids in identifying the type of market structure that exists.
Farm Size and Efficiency
Growth is a common denominator of various business objectives. A business may want to grow profits, sales, market share, etc. The growth of a business itself usually refers to growth in equity, or growth in assets after debts have been paid. Farms, from a business perspective, are no exception. Farmers seeking to grow equity need to be willing and able to retain earnings and cannot be overleveraged.
Choosing an Advisory Board
A board of directors is a vital part of the governance and constitution of many corporations. A board of directors is formally involved in the business and is legal responsible for the overall governance of the corporation.