4 Ways To Better Financial Management On The Farm

The outlook for fruit and veggie growers across the country this year is challenging, but there are things you can do to get set up for success. It starts with diligence when it comes to managing your finances. Here are useful tips as you solidify your financial plan and respond to ever-changing market conditions.

1. Align your crop and financial plans. When your crop plan changes due to weather, evolving crop nutrition and protection needs, or other factors affecting operational costs, revisit your financial plan and adjust accordingly. Keeping all of these details in lockstep allows you to make better decisions and improve cash flow, even during busy periods.
2. Diversify your capital management. You need access to capital for bills and expenses that are due all the time, not just after harvest. Financially minded growers bring a deeper level of strategy to lay out the most profitable way to pay for expenses by blending different sources of capital, including cash, prepay, bank lines of credit (LOCs), and financing offers, to get the most value out of their budgets.
3. Review financing terms carefully. Most people look closely at interest rates and shop for the lowest offer, but the terms of a loan can impact your bottom line even more significantly. Calculate total borrowing costs by considering both interest expense and financial impacts of the terms (e.g., timing of payment due dates, early payoff fees, variable rates). Choose terms that align with your crop schedule to avoid payments due before revenue is accessible.
4. Monitor your financial health regularly. Keep a checklist of monthly tasks, such as monitoring expenses, reviewing budgets, assessing cash reserves, and due dates, so you always have an idea of your cash flow needs. Tracking these details regularly, you’ll see how your break-even point and total-acre investment change throughout the season, which can inform better decisions to boost profitability.

You can’t control the market or the weather, but you can control your spending decisions. Being strategic about how you manage your finances will create flexibly and enhance profitability now and for the long-term.