As farmers face especially challenging economic times, the stakes couldn’t be higher or the advice more succinct, say three farm economists.

Their advice to farmers could be summed up in four words: Know where you stand.

“One of the things I would tell producers is to stop, look around, take an inventory and see exactly where you are and what you have,” says Max Runge, an Alabama Cooperative Extension System economist.

Runge says they should also ask themselves some pointed questions: What resources do I have? What can I do to improve the situation? And equally important, what are some of the things I can do that I haven't done before?

He says the first steps should include soil testing, a careful inspection of your balance sheets and income statements, reevaluation of your tax strategy and a candid assessment of overall goals.

But the most paramount concern is efficiency, Runge says.

“You need to look at the best ways to spend your money,” he says.

“This is the time to be efficient — not necessarily cheap, which may get you into even more trouble.”

Runge says producers also should schedule some time to speak with their vendors and creditors, whose condition may be surprisingly similar.

“Talk to them and let them know what you're doing and what your concerns are,” he says, adding that “if there are problems farther down the road, these proactive steps will go a long way toward building good will.”

He also advises watching the markets, volatile factors that could exert a major influence on planting decisions in the future.

“It used to be that we could make crop plans at the last minute, but we’ve reached the point where so many factors — seed and fertilizer costs, for example —have forced us to plan five or six months ahead of time," Runge says.

Runge recommends delaying those decisions for as long as possible without missing pricing opportunities.

Runge's colleague, Farm Economist Robert Goodman, says farmers also need to use the gains from the 2008 crop year to strengthen their position next year.

“If you look ahead to next year, input prices likely will be high, while commodity prices will be low,” Goodman says.

And this hard reality calls for belt tightening, Goodman says, it’s best to take those precautions around the farm that will place you in a better position to deal with any hard times that may occur.

“This is the time for paying down debt and refurbishing or renewing equipment, such as redoing your cotton picker instead of buying a new one,” he says.

Getting their financial house in order will put farmers in a better position to secure loans from their credit institutions, if the need arises.

Summing it up, Goodman says his advice to farmers is to “play it close to the vest by paying down debts and conserving and reusing inputs as much as possible.”

Farm Economist James Novak says it is also wise for producers to take an inventory of available government assistance programs.

Novak says farmers should be aware of the risk protection available from several sources. These include traditional price support programs, commodity loan programs, and a variety of crop, livestock, and whole-farm revenue insurance programs.

Also available are crop, livestock, revenue and group risk insurance, which can help producers manage specific production risks that may occur between planting and harvest.

Another option is Supplement Agricultural Disaster Assistance, a new permanent disaster assistance program available under the 2008 Food Conservation and Energy Act.

“This option encompasses several provisions to assist with managing whole farm and specific commodity losses stemming from natural disasters and other unavoidable causes,” Novak says.

Novak also advises a cautious look at the new Average Crop Revenue Election program, commonly known as ACRE, a new program that replaces counter-cyclical program payments and based on farm revenue.

“You can opt into ACRE in any year — 2009 through 2012 — but once you're in it, you're locked in for the length of the farm bill,” Novak says.

Farmers opting to participate in ACRE must take a 20-percent reduction in direct payments and a 30 percent reduction in loan rates — the reason Novak advises studying the program carefully before committing.