What is in this article?:
- Financially successful farmers share at least six things in common
- Decisions made in profitable years make the difference
- Current price levels for 2014 harvest delivery are hovering right around producers’ break even prices at average yields.
- A strong capital reserve position can go a long way toward reducing financial stress in an operation.
- Producers who change or update their equipment when it makes economic sense and not necessarily for income tax benefits seem to be the ones who come out ahead.
I am asking producers this question – Were you born after 1975? Producers born after 1975, most likely, did not have an ownership role in their farm operation between 1998 and 2001 and have not experienced very tough times.
Those years were very difficult for producers in Tennessee as the combination of low yields and low prices put many producers out of business. Based on census data, one-fourth of full-time farmers in the eight county area of West Tennessee that I work went out of business during that time. This is not to say that what is expected over the next few years will be like 1998 – 2001, but it should be noted that commodity price levels of the next few years will most likely not be as high as the last three to four years.
Not to be an alarmist, but the next few years I think will be more difficult than the last few. Producers in Tennessee and surrounding states might say the last few years have been difficult enough as we have battled floods and drought and an extended harvest season. However, one major difference is prices stayed at favorable levels at harvest whereas we are looking at a situation that with average production commodity prices could be quite a bit lower at harvest and certainty below breakeven at average yields.