2021 promises to be an interesting year for farmers across America given the sharp contrasts expected to take shape in the farming sector. On one hand, farmers are expecting to get higher profits for their labours because of the projected increase in the retail prices of farm produce and small milk pasteuriser while on the other hand, projections also show that the prices of farm inputs (mainly animal feeds and fertiliser) are expected to shoot upwards. At the moment, stakeholders in the farming industry remain uncertain on how consumer purchasing trends and the cost of acquiring farm labour will be affected by market dynamics in this post-pandemic period and the policies to be enacted by the new administration. Based on the current outlook, 2021 could be shaping up to be a year of dismal earnings for most farmers and this will necessitate the implementation of cost-reduction strategies.
For financial prudence in this turbulent economic times, you may be going through your 2021 budget forecast looking for ways to save an extra buck where possible. As you scrutinise your budget to gauge where you to cut back on the expenses of running your farm, there are three key questions that should always be on the back of your mind. They are:
Will the Item That You Have Budgeted for Bring You Closer to Achieving Your Long Term Goals?
During this period, the most important expenses in your budget should be items that will help generate the much needed cash-flow in the short-term and also play a role in helping you get nearer to your long-term goals. When deciding what to keep or strike off your budget, do not just focus on how the item you have budgeted for will help in the short-term but also if it is a prudent financial investment in the long-term.
For example, you may be torn between investing the cash you have at hand on purchasing animal feeds and stocking your stores as they will help generate the much needed short-term cash flow, and, investing your money in upgrading your farm equipment and infrastructure which will end up providing a wide range of benefits in the long run. When deciding what to keep or remove from your budget, ensure that you keep an eye on the goals and objectives that you have set for the future.
Can You Control How Much You Spend on the Items That You Have Budgeted for?
In some cases, it may seem like certain expenses incurred at the farm are beyond your control but that is not always the case. True, you may not be able to control how much suppliers charge for things like fuel, power and certain farm equipment but on the other hand, you can make certain decisions that will have a great impact on the rate at which you consume these items.
How Long Will You Have to Wait So as to Get Returns From the Item You Plan to Remove From Your Budget?
When deciding the items to trim from your budget, you should carefully consider if you are looking to see immediate savings or if you are willing to wait for some time before the savings reflect in your books. Remember that some cost-cutting strategies like reducing the number of fertilizer bags you use on your land will reflect almost immediately while other strategies may take time to reflect.
That said, below we have compiled some of the top cost-cutting strategies you can implement within your farm in order to save more money this year …
Consider Speaking to Different Seed Suppliers Before Making a Purchase and Evaluate Whether You Are Getting Value for Money During Harvests From Your Seed Inputs
Producers of row crop seeds keep releasing new seed varieties which have new genetic traits. Each new variety that is released tends to come at a higher cost than the previous variety. If you are the type of farmer who always invests in buying the latest variety in the market, you can slash your budget by using a less expensive seed variety if the yields from your farm will remain the same. You can also save money by comparing the retail prices of different seed and farm input suppliers before making a purchase.
Consider Finding Less Expensive Farming Fields for Lease
If the costs of leasing your farming fields are constantly on the rise, you can lower your overall farming expenses by finding more affordable fields for lease especially if you are sure that you will still be able to maintain your current yield levels in the less expensive farming fields. Though changing farming fields may seem like a dramatic move, you can end up making savings in the short-term and long-term by making such a move.
Start as much conservation practices as possible within your farm
You can greatly lower the costs of operating and maintaining your farm by starting new conservation practices while at the same time improving existing practices. For example, a few minor changes on your irrigation and pest control practices can lower your utility and labour costs respectively.
Additionally, you can also slash the energy costs in your firm by exploring alternative sources of energy such as the use of solar systems. Apart from significantly reducing your monthly energy costs, solar systems can also be a revenue stream since you can sell any excess electricity produced by your panels to power supply companies.