Ways Farmers Can Better Deal With the Financial Side of In-Season Decision Making

You’re focused on crop progress right now, but it’s important not to overlook how your agronomic decisions can affect your financial success. Regardless of geography or crop type, June and July are typically the months when fruit growers face a series of high-stakes decisions.

How are weather conditions impacting your crop? How are your moisture levels? Are you dealing with any plant stress from heat? Which fungicides should you spray? What pest management strategies do you need to employ?

You come into every season with a rough idea of what you need to be successful. You committed to a crop plan, selected products and allocated your budget, but success generally depends on how you respond to the details you can’t plan for, and every decision comes with a different price tag, which may present more questions when it comes to how far your dollar will stretch to pay for what you need.

WHEN YOUR CROP PLAN MEETS REALITY

Changing conditions demand frequent updates to your plans. It’s common practice to adjust your crop plan, but are you updating your financial plan to factor in those adjustments?

Take for example, a blueberry grower who’s planned a full input program designed to maximize fresh-market yield. As the season progresses, weather conditions and market signals indicate that a portion of the crop may be redirected to a different market channel. That shift means the input strategy has to change for the remainder of the season, and as a result, the grower has a different set of financial implications to manage. If they revisit their financial plan when the input strategy changes, they may be able to realign their cash flow, adjusting the timing of payments for crop protection, harvest labor, or irrigation expenses.

In some cases, keeping your crop and financial plan in lockstep can also improve liquidity, reduce interest expense, and/or free up working capital for other in-season needs.

MAXIMIZE YOUR FINANCIAL FLEXIBILITY WITH INPUT FINANCING

It’s difficult enough to navigate agronomic decisions and produce a high-yielding crop, let alone adding this extra layer of complexity to account for the financial impact of those decisions. You may gain flexibility to manage economic decisions with a diverse capital management strategy and optimized cash flow.

For example, the method you use to pay for crop nutrition and protection products affects how much flexibility you have when conditions change. Here’s how that can play out:

• If you’re paying in cash, swapping products to respond to new, or unplanned pressures can strain your cash reserve when you need financial flexibility.
• If you depend on a traditional operating line from a bank or other financing institution, adjusting your financing to accommodate a product change means added paperwork, lost time, or in some cases, re-applying for credit altogether.
• If you use financing offers from a retailer at the start of the season, you can make eligible product swaps — like an additional fungicide application to combat wet conditions — without these additional headaches. You won’t have to sort out financing details, and your operating line of credit stays available to absorb other expenses, like adding resources for labor come harvest.

To capitalize on this flexibility, consider building the financial advantages of retail financing into your plan before the season starts rather than turning to it when you’re stretched thin. Being intentional from the outset and talking with a financial expert to help strategize which expenses to finance through a retailer, which to cover with your own capital, and which to pay for with your operating line means you have options when the unexpected arises. Working with partners who understand your crop and the nuances of your region can also help you put financial strategies in place to positively impact profitability.

While specifics vary by crop and region, financial decision-making pressure is universal for fruit growers. Those who align their financial plan with their crop plan, and leverage retail financing to preserve liquidity, are better positioned to respond to whatever the season throws at them.

A good starting point is to review where your capital is typically stretched the most at this point in the year, and work with your retailer to identify which inputs are the best candidates for financing before next season begins.