It’s no secret. In 2016, many farmers’ balance sheets will look sharply different from those seen in the last 10 years. During that super-cycle of strong farm earnings, risks taken were often rewarded and decisions to leverage financial statements well-warranted. Conditions were ideal to bring family members back into the farming operation and many increased their net worth and working capital, allowing farmers to prepare for this new reality setting in. Commodity prices have fallen while input costs, land prices, and cash rents remain high – creating tight margins, to say the least.
In today’s reality, experts predict a rise in debt levels for producers, increasing the importance of debt monitoring and the level of trust between a borrower and a lender. Farmers who find ways to drive down their cost per unit of production and manage their debt closely can protect against loss and position themselves for continued success. [Read more…]