Farm management is developing and implementing decisions meant for operating and organizing a farm to maximize production, thus maximizing profits. Farm management relates to agricultural economics for details on the markets, economic institutions, prices, and agricultural policies. Multiple systems and principles are involved in farm management, and you must equip yourself with the required tips to grow your farm.
Some things are within your control, and some are beyond you. Both internal and external factors will affect your farm’s activities differently. Nonetheless, you need to implement separate tips and have a set of considerations to excel in your farm business.
Below are several considerations and tips for growing your farm:
1. Decide on Buying or Renting
This is probably your first decision as it will affect all your financial projections. Meeting with your partners and discussing whether you should buy or rent a piece of land for your farm project is essential. This will depend on many things, from the location, prices involved, the type of farming you want to practice, and much more.
Nevertheless, the decision should be made depending on your financial position and project projections. Intensive research is necessary to ensure you make the best possible decision for this case to avoid future setbacks. Furthermore, buying and renting farmland is ideal, but it depends on the circumstances and the farm project’s goal. It’s essential to consult with experts to get the best advice on the matter.
2. Build Working Capital
You can have an entire plan drawn on a document, but you’ll need funds to bring it to life. Many experts have incredible ideas, and most are equipped with or have plans to acquire startup capital. This is often the typical approach by many farmers, focusing more on getting the project up and running.
However, daily operations are very critical in achieving the ultimate goal. As a farmer, you need working capital to offset the typical expenses, including inevitable purchases and wages for your casual workers. You should save up or approach a financial institution to ensure you build up working capital for all the operations. This will avoid any stagnation of the process.
3. Scale Back Option
The ultimate goal of a farm project is to make profits. Considering this, you should meet all the necessary thresholds to achieve that. Many uninformed beginners would typically argue that the bigger the land, the better the produce, but that’s not usually the case. Most farmers working on a large scale often incur the most losses as they have a lot to lose.
A bigger farm can be productive and give the best yields, but it can also have a poor harvest. It’s better to scale down and focus on a small area. This gives you enough control to monitor your crops’ performance and learn more about the dos and don’ts as a small area is easily studied and tracked down.
With time, as you understand plant cycles and weather patterns, you can advance to a bigger farm space and implement your findings. This will lower the risk.
4. Keep Financial Records
It would be best to track your farm’s financial records to ensure you make all the right financial decisions. Having accrued accounts regularly, weekly or monthly, helps you know where you stand as a business. It gives you a clear understanding of your funds and the amount you earn from your farm business.
Such financial records also help you know the kind of funding that you require and how you can manage to utilize it. This information is particularly important when approaching the farmland financing agency. It makes it easier for them to structure a farm loan and its terms that will favor both parties. Financial records show your repayment ability and give you an upper hand in substantial financial negotiations.
5. Buy Better
Minimizing production costs is important in maximizing profits. This doesn’t mean you invest in average input, but a more intelligent approach to ensure that you shop better. Since you can’t control market prices and products’ availability, you are in a pole position to dictate your purchases. Always consider the best deals to make worthwhile buying decisions.
6. Consider Consumer Preferences
“Customers are always right” is a phrase that people bypass, although it carries much weight. It would be best if you considered what the consumers want. Your business should be driven by market demand and consumer preferences. This will ensure sales as you will supply what clients are awaiting. It will also help you strike healthy competition with fellow farmers.
7. Try Custom Farming
You can try custom farming if you have excess land or access to suitable land deals. Your farmland financing agency can consult with this to develop the best plan. You can lease extra land you’re not using or buy and rent it out if you don’t intend to practice farming on it immediately.
8. Improve the Existing Farmland
Another financially sane approach to growing your farm is to improve the existing farmland. If you can’t buy more farm ground, you can upscale the quality of the land you currently own to increase its value. This will help you make more cash off the land you already have. The main focus should be on improving soil fertility, which will solve many problems.
9. Consider Off-Farm Capital
If you can’t save the farm from the output you make, or the profits in question cannot help you facilitate bigger and better moves, outsourcing for off-farm capital is a good move. You can decide to get funding from financial institutions, friends, and family. This will help you grow and have that extra input to make a few technical advances to your production.
10. Establish Standard Operating Procedures
SOPs are necessary to any business regardless of the field, and agriculture is no exception. You must come up with contingency plans to deal with any emergency. Alternative strategies help you approach all matters confidently, unlike being left in a position where you don’t have a way forward to a sticky situation.
11. Invest in Pocketbook-Padding Technology
Technology investments in a farm might be expensive on one-off payments, but they are money-saving moves in the long run. Advanced production technology and scouting apps can help you reduce the time and resources used during the process and help you determine the expected crop-production levels. Such information is helpful in rental negotiations and farm loan terms.
Growing your farm is critical to your agricultural business as you’ll enjoy better yields and profits. However, you must make the proper financial decisions to avoid unnecessary expenses and maximize production. Contact United Farm Mortgage for all your farmland financial needs.